How Much To Spend on Rent [The Ideal Rent-to-Income Ratio] | Mint

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One of the most exciting parts of becoming an adult is moving out of your old place and starting your own life. However, as is the case with most major life events, moving out comes with a lot of added responsibility. Part of this duty is knowing how to budget for living alone when shopping for the perfect apartment, condo, duplex, or rental house. So how much should you really spend on rent?

In this article, we’ll go over how much of your income you should be spending on rent and why. Keep reading for all of the details or navigate to the sections that interest you most by clicking on any of the links below:

What Does Rent-to-Income Ratio Mean? 

The first step in deciding how much you should spend on rent is calculating how much rent you can afford. This is done by finding your fixed income-to-rent ratio. Simply put, this is the percentage of your income that is budgeted for paying rent.

If you have a high rent-to-income ratio, this means that a significant amount of your total monthly income is going straight to rent. If you have a low rent-to-income ratio, on the other hand, this means that only a small chunk of your total monthly income is being used to pay rent. Generally, the lower your rent-to-income ratio is, the better, as this indicates a greater degree of financial freedom and flexibility. 

What’s the Ideal Rent-to-Income Ratio for a Tenant?

30% is widely considered to be the standard rent-to-income ratio. If you’re spending 30% or less of your monthly income on rent, then you’re most likely in a healthy financial situation. When you spend more than 30% of your income on rent, you may find yourself limited when it comes to spending on other expenses and putting away money into your savings. As you become too overburdened by housing expenses, you may become house poor.  

In cities across the country, many landlords require tenants to demonstrate that their monthly income is at least three times the rent. But this isn’t always the case — in cities with high living costs, like New York and San Francisco, it isn’t unusual for tenants to spend more than 30% of their income on rent. In expensive cities, many people are willing to trade some amount of financial stability for the opportunity to live in popular metropolitan areas. 

Average Rent-to-Income Ratio by City

As mentioned above, rent-to-income ratio can vary depending on whether you live in a city with higher or lower living costs. Here’s a list of the average rent-to-income ratio in some of the nation’s major cities:

  • Los Angeles, CA: 45%
  • Miami, FL: 42%
  • New York City, NY: 40%
  • San Diego, CA: 40%
  • Chicago, IL: 34%
  • Seattle, WA: 34%
  • Denver, CO: 30%
  • Austin, TX: 28%

How Do You Calculate Rent-to-Income Ratio? 

Figuring out your rent-to-income ratio is a fairly simple process. You’ll just need to plug the appropriate values into the following equation: 

[Monthly Rent] / [Gross Monthly Income] x 100 = Rent-to-Income Ratio %

To further illustrate how it works, let’s take a look at an example of how to calculate rent-to-income ratio. For this example, we’ll say you have a gross monthly income of $4,000 and are considering moving into an apartment with a monthly rent of $1,500.

[1,500] / [4,000] = 0.375 x 100 = 37.5%

So, in this scenario, your rent-to-income ratio would equal 37.5%, which is a bit high. With this in mind, you may want to consider renting a less expensive apartment or start thinking about ways to lower your other expenses. 

How Much Should I Spend on Rent? 

Now that we’ve gone over what rent-to-income ratio is and how to calculate it, let’s get down to the big question: how much should you be spending on rent? The exact number is going to vary depending on your income, the area you’re living in, and the other expenses in your life. The following is some common sense advice, along with some other factors to consider when figuring out your living expenses

30 Percent Threshold 

As a general rule of thumb, allocating 30 percent of your net income towards rent is a good place to start. According to government studies posted on, people who spend more than 30 percent on living expenses are considered to be “cost-burdened,” and those who spend 50 percent or more to be “severely cost-burdened.” 

When calculating your income-to-rent ratio, keep in mind that you should be using your total household income. If you live with a roommate or partner, be sure to factor in their income as well to ensure you’re finding a rent range that’s appropriate for your income level.

If you’re still unsure as to how much rent you can afford, consider using Mint’s rent budget calculator. Remember to consult a financial advisor before entering into a lease if you’re unsure about whether you’ll be able to make rent.

50/30/20 Rule 

After you’ve set a fixed income-to-rent ratio, consider the 50/30/20 rule to round out your budget. According to this popular budgeting rule, 50 percent of your income goes to essentials, 30 percent goes to non-essential, personal expenses, and the remaining 20 percent goes to savings and investments. In this case, rent falls under “essentials.” Also included in this category are any expenses that are absolutely necessary, such as utilities, food, and transportation.

Let’s consider a hypothetical situation in which you make $4,000 per month. Under the 50/30/20 rule, you would have $2,000 (50 percent) per month to spend on essential living expenses and groceries, $1,200 (30 percent) to spend on non-essential living expenses — such as going out to eat or entertainment — and $800 per month to put towards your savings account, retirement accounts, and other investments.

Cost of Living Expenses

Now that you’ve budgeted for rent and essential utilities, it’s time to create a moving checklist and make a plan for how you’re going to furnish your apartment. One of the biggest shocks of moving out on your own is how high the cost of moving and filling a home can be. From kitchen utensils to lightbulbs and everything in between, it can be pricey to make your space perfect.

For the most part, furniture falls under the 30 percent of personal, non-essential expenses. Consider planning ahead before a move and saving for home goods so that you don’t go into major debt when it comes time to move out.

According to, other move-in costs you should plan for include:

  • First month’s rent
  • A security deposit
  • Extra rent if you have bad credit
  • Utility deposits for electricity, heat, water, etc. 
  • A credit or background check fee

Stretch Your Monthly Budget 

If your budget is slightly out of reach for your dream apartment, try to nix unnecessary costs to see if you can make it work. Look for ways to cut down on utilities, insurance, groceries, and rent.

Utilities: Water, heat, and electricity are all necessities, but your TV service isn’t. Cut the cord on TV and mobile services that may not serve you and your budget anymore. Consider swapping out your light bulbs for eco-friendly and energy-efficient light bulbs to cut down your electric bill.

Insurance: Instead of paying monthly renters insurance rates, save a fraction of the cost by paying your yearly cost in full. If you have a roommate, ask to share a policy together at a premium rate.

Groceries: Swap your nights out for a homemade meal. By simply cooking one meal at home every week on a night you would normally go to a restaurant, you can end up saving huge amounts of money in the long-term. Just create a budget for groceries at the start of each month and add up costs when grocery shopping to ensure your spending stays on track.

Rent: One of the best ways to save on rent is to split the bill. Consider getting roommates to save 50 percent or more on your monthly rent.


A lease is not something to be entered into lightly. Biting off more rent than you can chew can lead to unpaid rent, which can damage your credit score and make it harder to find an apartment or buy a home in the future. By implementing these best practices, you’ll hopefully find a balance between finding a place you love and still having room in your budget for a little bit of fun.


  • “Renting an Apartment or House.”, Federal Trade Commission, 
  • Schoen, John, and Sarah O’Brien. “Here’s the Share of Income That Goes to Rent in Cities across the Country.” CNBC, CNBC, 7 Mar. 2019, 
  • Schwartz, Mary, and Ellen Wilson. Who Can Afford to Live in a Home? A Look at Data from the 2006 American Community Survey. United States Census Bureau , 

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