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How Much Rent Can I Afford?

When it comes to choosing the right place to rent, there are multiple factors to take into consideration. You never want to commit to a lease that is more than you can afford. Multiple people make that mistake all the time because they will only consider what their income is and not all of the expenses that they may have to pay. 

What is gross income vs net income?

You may hear the term gross income or net income multiple times whenever you research how much you should allot to spend on rent each month. So what is the difference between gross income and net income? According to Investopedia, gross income is “ Gross income for an individual—also known as gross pay when it’s on a paycheck—is the individual’s total pay from his or her employer before taxes or other deductions. This includes income from all sources and is not limited to income received in cash; it also includes property or services received.”

And net income is “Net income, also called net earnings, is calculated as sales minus cost of goods sold, selling, general and administrative expenses, operating expenses, depreciation, interest, taxes, and other expenses”

So in simpler terms, gross income is how much you make before your taxes and insurance ar4e taken out and net income is the amount you receive on your paycheck. You should always use your net income when calculating how much of your monthly income should go toward rent. This is because taxes vary depending on where you live, and every employer has different expenses that come out of paychecks. Net income may be more difficult to calculate, but it is a much more accurate representation of how much you can afford each month.

How much of my income should I put toward rent?

According to financial advisors, their expert opinion is to not pay more than 30% of your net monthly income on rent. And when considering the bigger picture, you should not spend over 50% of your net income on all of your expenses. This includes rent, utilities, trash service, car payment, etc.

When preparing a budget for your expenses you need to take into consideration how much money you would like to save after all of your expenses are paid.

If you are not sure how to calculate this budget, you can use the Zillow rent calculator and it will take your income and expenses into account.

How to Budget

50-20-30 Budget Rule

Have you heard of the 50-20-30 budget rule? This is a budget breakdown that says to put 50% of your net income towards expenses. This can be anything from rent and bills to groceries and gas. Then you need to put 20% of your net income toward how much you want to save. And lastly, put 30% of your net income toward things you want to do. This could be money you want to spend on new clothes, a vacation, going out to eat, having a personal trainer, etc.


When you first find a rental there are expenses that you may not think about. For example, you will likely need a full month’s rent to go toward the security deposit before you can move in. There are also deposits that come with turning on utilities and pet deposits if you have animals. This can sometimes be a one time fee, or a monthly fee. Depending on where you live, you may have to pay for amenities such as parking or concierge services.

When calculating how much to budget toward utilities, take the average of the last 3 months of all of your bills and divide that by how many times you were paid during those 3 months. Some expenses you may need to consider include

  • Electricity
  • Gas
  • Water
  • Internet
  • Trash
  • Car note
  • Cell phone
  • Cable

3 Time My Rent

There is a saying that you need to make 3 times your monthly rent. While this is not always necessary, many landlords will actually only take applicants who do make 3 times what they are charging for rent. We do recommend that you pay no more than ⅓ of what you get paid in a month.


If you are moving into an apartment, you may have a roommate who is moving in with you. If this is the case, many roommates will choose to split everything in half. While this may work for some people, it is not the only way to split costs. You should have an honest conversation with your roommate about what you can each afford. One of you may make more than the other. And another thing to consider is if one of you has a larger room or a better parking spot. If someone has a pet and the other does not, then the roommate with a pet should be paying the pet fees. If you have these discussions before moving in together, you can avoid arguments down the road that stem from financial frustrations. 

Now that you have set your budget, it’s time to find the perfect apartment for you and your budget. Here at Apartment Hunters, we do the searching for you so you can have your dream apartment without going through the stress of apartment hunting.