The flat looks perfect. The rent is a stretch. How do you know whether it’s a stretch you can handle or the start of a bad year?
There’s a simple starting point that housing advisers have used for decades, and a calculator makes it quick. This rent calculator turns your income into a sensible maximum rent, then checks it against the debts you already pay.
How to use the Rent Calculator#
- Enter your income before tax. Use your gross income and choose whether it’s per month or per year.
- Set the share for rent. Leave it at 30 percent or try a lower figure for a safer budget.
- Add your monthly debt payments (optional). Include loans, credit cards and car finance.
- Read the result. You get a monthly, weekly and yearly rent, and the income landlords may ask for.
The 30 percent rule#
The most common advice is to keep rent at or under 30 percent of your gross income. It’s a rule of thumb that comes from housing policy, where spending more than that’s often called being “cost burdened”. It’s easy to remember and it works as a first filter.
On a gross income of 4,000 a month, that’s 1,200 in rent, 14,400 a year or about 277 a week.
What different shares look like#
Thirty percent isn’t a law of nature. Some people choose 25 percent to save more, and in expensive cities many pay 35 or more. This table shows the monthly rent at three shares:
| Monthly income | 25% | 30% | 35% |
|---|---|---|---|
| 2,000 | 500 | 600 | 700 |
| 3,000 | 750 | 900 | 1,050 |
| 4,000 | 1,000 | 1,200 | 1,400 |
| 5,000 | 1,250 | 1,500 | 1,750 |
| 6,000 | 1,500 | 1,800 | 2,100 |
Your other debts change the answer#
Two people with the same income can afford very different rents. If one of them pays 600 a month on a car loan and a credit card, the 30 percent rule overstates what they can really handle.
When you enter your debt payments, the calculator also applies a common lender guideline: total monthly debts, rent included, should stay under about 36 percent of income. For 4,000 a month, that’s 1,440. Subtract the 600 in debts and you get 840 for rent, well under the 1,200 the plain rule suggests. The calculator shows the lower number and tells you it was capped.
The landlord test#
Many landlords, especially in the US, ask for a gross monthly income of about three times the rent. At 1,200 rent that means 3,600 a month, which the 4,000 earner clears. In the UK, landlords often ask for an annual income of around 30 times the monthly rent. Requirements differ from landlord to landlord, so think of the 3× figure as a guide.
Things the rule leaves out#
- Gross, not take-home. The rule uses income before tax. If your take-home is much lower, aim lower.
- Bills. Utilities, transport, service charges and renters insurance aren’t in the rent figure.
- Irregular income. If your pay jumps around, use your average over the last 12 months.
- Annual rent. In some places, including Nigeria, rent is commonly paid a year or more in advance. Divide the yearly amount by 12 and compare that with your monthly income.
- Savings. A rent that fits on paper but leaves nothing to save is still a problem.
The 28 and 36 rule#
A common guide is that housing should take no more than 28 percent of gross income and total debt payments no more than 36 percent. The calculator caps rent so that rent plus your other debts stays under 36 percent. With a monthly income of ₦400,000 and ₦60,000 of other debt payments, 36 percent is ₦144,000, which leaves ₦84,000 for rent. A 30 percent share alone would suggest ₦120,000, so the debt cap makes the real limit ₦36,000 lower. Paying off a loan raises what you can afford.
Frequently asked questions#
A common rule is up to 30 percent of your gross income. On 4,000 a month that’s 1,200. Lower it if you have debts or want to save more.
Many landlords want to see a gross monthly income of at least three times the rent. At 1,200 rent, that means 3,600 a month.
The 30 percent rule uses gross income, which is before tax. If you want a safer budget, apply a lower percentage to your take-home pay instead.
Debts reduce what’s left for rent. This calculator also keeps your total monthly debts, including rent, under 36 percent of income.
Divide the annual rent by 12 and compare it with your monthly income. Remember that you need the whole amount upfront.
Landlords and lenders use gross income, but you pay from take-home pay. A rent that is a third of gross can be 40 percent or more of what lands in your account. For your own budget, check the share of take-home pay too, and leave room for transport, utilities and savings.