How to Determine How Much You Can Pay in Rent

By eHow Personal Finance Editor

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It takes just a few simple calculations to determine how much you can afford to pay in rent.

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Instructions

Difficulty: Easy

Things You’ll Need:

Financial Calculator
Real Estate Attorneys
Notebooks
Personal Organizers
Writing Pens

Step1

Calculate your total monthly household net income after taxes, including your spouse's income if you're married, and any child-support or alimony payments.

Step2

Multiply your total monthly net income by .30. This number will give you a general idea of the amount of rent you can afford to pay.

Step3

Add up all of your other monthly expenses, such as car and credit card payments. Include estimates for food, entertainment and transportation.

Step4

Add together the rent amount from step 2 and the amount from step 3. Make sure this total does not exceed your monthly income. If it does, adjust the amount of rent you can afford.

Tips & Warnings

Housing in some areas costs much more, so set your target accordingly when you plan a move to another city or state.
Landlords look at the ratio of your debts (including estimated rent payments) to your income in considering your rental application - but your credit history is another important factor.

Comments

Anonymous said

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on 9/27/2006 If you calculate all your expenses and don't have any money left over, consider changing either your rent expectation or other expenses. What will you do if your car needs repair, or if you fall ill? You need to have emergency money, and let's face it, it's very easy to forget to add an expense to the list when creating a budget. Give yourself some wiggle room on the bottom line price.

Anonymous said

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on 11/22/2005 You ought to add up the estimated costs for electricity, gas, water, cable TV, phone and so forth. If you need to pay for utilities, you need to factor these costs in - especially if you rely on air-conditioning or live in a cold climate.

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