How much rent can one afford?

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kate1234
Posts: 164
Joined: Sun Aug 17, 2008 4:19 pm

How much rent can one afford?

Post by kate1234 » Sun Jun 10, 2018 2:42 pm

My friend is 65 and is divorcing and selling the house after a long marriage. She has owned every house she has lived in for many decades but this new chapter of life requires more temporary living arrangements until she can get her bearings and start to craft whatever is next. She just got a new job to bring her some income and stability. Her savings and retirement are adequate to carry her through should she decide to retire at 70, so although she’ll want to save some of her earnings, she doesn’t need to be spartan. Her youngest has one more year of college and I know she wants to help some.

Back when we were all young we had rules of thumb about how much of our income should be spent on housing. But I and she have forgotten what those rules were. Can you refresh me on where she should start when deciding how much rent she can afford?

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randomizer
Posts: 1547
Joined: Sun Jul 06, 2014 3:46 pm

Re: How much rent can one afford?

Post by randomizer » Sun Jun 10, 2018 2:47 pm

I think is depends on where you live. HCOL area: 40%. LCOL: 10%.
87.5:12.5, EM tilt — HODL the course!

runner540
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Joined: Sun Feb 26, 2017 5:43 pm

Re: How much rent can one afford?

Post by runner540 » Sun Jun 10, 2018 3:08 pm

Keep housing/rent under 25% of income, to be able to save and spend on other categories. But, if you can spend less to get a place you're happy with, do that.

sailaway
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Joined: Fri May 12, 2017 1:11 pm

Re: How much rent can one afford?

Post by sailaway » Sun Jun 10, 2018 3:12 pm

When I was first thinking about it, I was told 25% of net (although you could get approval for 25% of gross). Now days, I have seen as high as 30% of gross. The lower you can go and still feel comfortable and homey is obviously best.

mjb
Posts: 128
Joined: Sat Nov 30, 2013 11:43 am

Re: How much rent can one afford?

Post by mjb » Sun Jun 10, 2018 3:16 pm

The rule of 20% gross income tends to be a safe maximum. It gives wiggle room if costs rise or income falls. Of course, lower is better.

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