How Much Should I Spend on Rent?

Did you know that more than 45 million American households rent their homes? According to Redfin, the number of renters has grown by 2.7%¹ in the past year, much faster than the number of homeowners. As renting becomes more common, it’s also getting more expensive.

If you’re asking yourself, “How much should I spend on rent?” you’re not alone. The right amount depends on your income, other expenses, and lifestyle. The following tips can help you figure out a monthly rent budget that works for you.

How much of my income should go to rent?

Deciding how much to spend on rent each month depends on your income, expenses and where you live. Instead of focusing on a specific dollar amount, consider using one of the following strategies to help you figure out what percentage of your income should go toward rent.

The 30% Rule

A common guideline is the 30% rule, which suggests you spend no more than 30% of your gross (before taxes) income on rent.² However, this rule dates back to 1969 and doesn't account for today's higher cost of living and additional expenses like insurance premiums, student loans or childcare.

The 50/30/20 Rule

Another approach is the 50/30/20 rule: allocate 50% of your income for needs (such as rent, utilities and groceries), 30% for wants, and 20% for savings and debt payments. This method can provide a more realistic estimate of what you can afford for rent compared to the 30% rule.

It's also important to consider that rent prices have been increasing and are likely to continue rising in 2025. For example, according to a 2024 survey, 85% of landlords increased rents, with nearly one-third raising them by 6-10%.³ This means it’s a smart idea to start budgeting a higher percentage of your income for rent than you did in the past.

Ultimately, determining how much to spend on rent involves evaluating your personal financial situation and the current rental market in your area.

How do I know how much rent I can afford?

The first step in calculating how much rent you can afford is checking your monthly budget. If you don’t have one yet, you can take some time to make a budget that works for you. Take a look at your existing monthly expenses and your income.

When calculating how much rent you can afford, remember that there’s more than just the cost of rent itself. Make sure to budget for other potential expenses, such as:

• Application and/or background check fee
• Security deposit
• First and last month’s rent
• Renters insurance
• Monthly parking
• Pet fees
• Utilities (electric, water, gas and internet)

How much do you have left over? This can help you determine how much you can comfortably afford to put toward your rent.

How can I save money on rent?

Try to find ways to lower your rent-to-income ratio. See where you can cut back on extra purchases or reduce monthly expenses.

• Consider a roommate: Paying rent on your own can be a lot of weight to carry, no matter where you live or how much you earn. Think about sharing your new place with a close friend or family member, or someone else who needs a roommate. Just be sure to get references and a background check if you decide to live with someone you don’t know.
• Rent a room: If you don’t need an entire apartment, it might make more sense to rent a room in someone else’s home. Again, get references and do your research before you move in with someone you don’t know.
• Find a cheaper location: Fancy amenities and a prime location can sound like the perfect spot to unpack, but if the price isn’t realistic for your budget, you may have to rethink your checklist. Finding a cheaper place may not check all the boxes, but it could allow you to find a place you can comfortably afford to live in.
• Find a move-in deal: Plenty of apartment complexes offer concessions — special move-in deals that encourage you to sign a lease. The landlord or management company may reduce your rent for the first month or even offer a period of free rent if you move in during a certain time. This could save you a ton since moving costs add up pretty quickly. You can take the money you would have spent and put it in your savings account or pay for something you need for the new place like new dishes or furniture.

A new lease on your financial life

Finding the perfect apartment is exciting, but staying within your budget is key. Along with rent, don’t forget to factor in utilities like electricity, gas and the internet — these costs can add up fast. If you need a little extra help to make your move easier, a OneMain moving loan can cover expenses and give you a smoother start in your new home.

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1. https://www.redfin.com/news/renter-household-growth-q3-2024
2. https://www.nerdwallet.com/article/finance/how-much-should-i-spend-on-rent
3. https://www.baselane.com/resources/rental-market-trends/

*This article has been updated from previous postings 2021-2022. Jessica Leshnoff, Melina Duffet, and Kim Gallagher contributed.