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Homeownership rates reached 66% in the first quarter of 2023, which means about 34% of American households rent. While renters enjoy relatively maintenance-free living as their landlords shoulder the risks of homeownership, asking rents have surged over 77% since 2020, according to a study by iPropertyManagement. As of June 2022, the average asking price was $2,016 per month.

See: How To Get Cash Back on Your Everyday Purchases

High rent is risky for tenants — you can be evicted in as few as 30 days if you can’t pay. Learn how sticking to a realistic rent budget helps you avoid stretching your finances too thin.

How Much Should I Spend on Rent?

If you pay more than 30% of your gross income toward rent, you’re considered overburdened by U.S. Department of Housing and Urban Development standards.

Thirty percent may well be affordable if you have no significant debt. It might even feel a little conservative if you live especially frugally, in which case you might be tempted to bump up your rent budget to $1,500 — one-third, or about 33% of your gross income. If, on the other hand, you have a $400 car payment and several hundred dollars in student loan payments each month, $1,350 might be a stretch.

No matter where you fall in terms of expenses, a good rule of thumb is to limit your rent to 30% of your gross income, less debt payments.

How Do I Calculate the Maximum I Should Spend on Rent?

Here’s how to calculate the maximum amount you should spend on rent:

1. Add up your household income to determine your gross monthly income.
2. Add up all your debt payments.
3. Subtract your debt payments from your gross monthly income.
4. Multiply that amount by 0.30 to see how much rent you can afford to pay.

Where Can I Find Affordable Apartments?

Rents vary according to the apartment’s location, size and amenities. Looking at apartments with fewer amenities and the minimum size in which you can live comfortably is a good first step toward finding an affordable home. Compromising on location stretches your budget further.

Option 1: Suburbs

Suburban rents are rising faster than urban rents, but you can still save thousands of dollars a year by trading city living for the suburbs. In Charlotte, North Carolina, for example, the median urban rent is $2,025 per month, according to Zillow, but rent in nearby Harrisburg is just $1,295. In Atlanta, you’ll pay a median of $2,175 in the city versus $1,850 in Decatur.

Option 2: Outlying Areas

Push the limits of a manageable commute to really save big. The average rent for a one-bedroom apartment in Manhattan is $4,614, according to RentCafe. Drive 90 miles west to the Pocono Mountains in Monroe County, Pennsylvania — where a sizeable percentage of the population commutes to work in and around Manhattan — and that $4,600 will get you a five-bedroom, 3,500-square-foot home in a park-like setting with mountain views — with $900 to spare.

Other Costs To Consider When Renting

Moving into a new rental can be expensive. Many landlords charge an application fee, and you’ll have to make a security deposit and pay at least the first month’s rent before you move in — and in many cases, the last month’s rent as well. Pet owners may need to pay a separate pet deposit. Some landlords even charge a move-in fee to cover the cost of preparing the home for you.

You’ll also have recurring costs to consider when renting an apartment or house.

Renters Insurance

Renters insurance protects you against losses if a covered event causes damage to or loss of your personal property or forces you to live elsewhere while your home is being repaired. It also offers liability protection in case a guest is injured in your home. Many landlords require tenants to have renters insurance. But even if it’s not required, it’s a good thing to have. The cost is usually less than $25 per month, depending on the value of your belongings, and it covers such common situations as theft of your property even when taken from somewhere other than your rented home.

Trash Pickup Service

Apartment complexes usually provide trash pickup, but you might have to arrange for it yourself if you rent a single-family home or townhome in a town that doesn’t have free municipal service. Expect to pay $30 to $40 per month for curbside pickup, according to Forbes — well worth the cost to avoid the inconvenience of having to haul it to a landfill or transfer station yourself.

Utilities

Utility costs vary from tenant to tenant. Contact the utility company to find out how much previous occupants paid if the landlord can’t give you an estimate. Expect to pay a deposit if you have spotty credit or have never had a utility account in your name.

Minor Maintenance

Some leases hold tenants responsible for minor maintenance. The lease might specify certain repairs, such as light bulb and HVAC filter replacement, or set a dollar amount above which the owner pays.

Lawn Care

If you rent a single-family home, duplex or townhome, there’s a good chance you’ll be responsible for taking care of the lawn. You can do it yourself, in which case you’ll need the right equipment, or hire the work out to a lawn care service.

Parking Fees

Rental properties don’t always include free parking. Even if yours does, you might have the option to upgrade from an open parking lot to a garage or covered parking space. If renting a single-family home, you might need a permit to park in the community.

Amenity Fees

Many apartment complexes and communities managed by a homeowners association offer amenities such as pools, golf and racquet sports. You might need to pay a membership fee to use these facilities. In some cases, the fee is mandatory whether or not you use the amenities.

Look at the Big Picture

In the end, an affordable rent is one that lets you make all your housing-related payments and pay your other bills without stretching your budget too thin. Also, consider your long-term goals. Taking a no-frills apartment frees up money you can devote to an emergency fund or a down payment for a home purchase.

Information is accurate as of July 26, 2023.