How Much Can I Afford for Rent Each Month

Michael DiMella - 02/13/13

Wondering how much you can afford for rent each month? Here is a simple guideline to keep your rent affordable and the “Rule of 36” to easily find the answer to “How much can I afford in rent each month?”

1/3 of Your Income Towards Rent to Keep It Affordable

Typically in the Boston rental market, landlords don’t want to see tenants spending more than 1/3 of their monthly income in rent. Staying at 33% or less of income towards housing is a typical recommendation for sound personal financial management, so in the landlords mind, they feel safe if tenants are under that mark. The tenants can pay rent, yet still have enough income left over to actually live their life and not be in a huge money crunch each month to pay the rent. At least that’s the thinking anyway!

To convert this to a simple “rule” we can see that 33% of your monthly income is just another way of taking your annual income and dividing by 36 to come up with a monthly affordable rent. Working backwards to illustrate this:

If the monthly rent of an apartment is $2,000, then 3 times the monthly rent is $2000 x 3 = $6000 (monthly income required to keep housing payments less than 1/3 of income)
$6000 x 12 months = $72,000 (annual income required to keep housing payments under 1/3 of income)
Backtracking with the annual income and monthly rent from above, you can see $72,000 / $2,000 = 36
Hence the Rule of 36!

Using the “Rule of 36” To Determine How Much You Can Afford in Rent

Bringing it all back together, to use the “Rule of 36” simply and quickly, all you need to do is take your annual income (and that of your roommates), and divide it by 36 to come up with your Monthly Affordable Rent! Simple!

As an example, if you make $100,000 per year then divide that by 36 to get $100,000 / 36 = $2777 in monthly rent that you can afford
If you have roommates, just add up your incomes and use the total for your combined income, then divide by 36

When looking at it this way, the math is pretty simple, but to make it even easier (don’t worry, you can thank us later! 🙂 ), we created this handy table of incomes and the corresponding affordable rent. To make it even more useful, if you click the affordable rent number, you’ll be taken to a list of Boston apartments on market right now in your price range!