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Here’s How Much Rent You Can Afford Based on Your Salary

August 20, 2025

4 min Read

Written by Laura Beck

Edited by Ashleigh Ray

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Finding an affordable place to live is one of the most important financial decisions we make. With housing costs rising in many areas, it’s critical to find a rental that fits within your budget. One common rule of thumb is the “40x” rent rule. While not universally applicable, understanding this guideline can provide a helpful starting point for figuring out your rental budget.

Also see how saving money on rent can come at a cost.

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A Useful Guideline

The “40x” rent rule states that your annual gross income should be around 40 times your monthly rent payment. For example, if your annual pre-tax income is $50,000, the rule suggests your monthly rent should be no more than $1,250 — that’s $50,000 divided by 40. The theory is that if you spend more than 1/40th of your income on housing, you’ll be “rent burdened” and struggle to afford other necessities.

“The ’40x’ rent rule is practical, because it keeps your rent within a reasonable portion of your income,” said Jeff Rose, founder of Good Financial Cents.

“By ensuring your yearly salary is at least 40 times your monthly rent, you’re likely to keep your rent around 30% of your gross income,” he said. “This is a sweet spot that experts suggest for housing costs, allowing enough room in your budget for other expenses, like food, transportation and savings. Sticking to this rule helps you maintain a balanced budget without stretching your finances too thin.”

“If you spend too much on rent, which is a fixed monthly expense, it can make it difficult to afford other essential living expenses, like utilities, groceries, gas and insurance,” said Erika Kullberg, a personal finance expert and founder of Erika.com.

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“It’s natural to want to find as nice of a place to live as you can afford, but you won’t be able to enjoy relaxing in your home if you accidentally spend too much on rent and can’t cover your other expenses,” she said. “Putting too much strain on your budget can lead to taking on high-interest credit card debt, which can put you in a really tough financial situation.”

In expensive areas, you may have trouble finding livable rentals meeting the “40x” rule. In more affordable markets, “40x” may allow more rental than you require. But overall, basing your rental budget on a “40x” income multiplier offers a simple, logical starting point everyone can calculate.

When To Pay More or Less Rent

While a valuable guideline, the “40x” rent rule isn’t an automatic deal-breaker. Depending on your total financial picture, paying slightly above or below this benchmark may make sense.

Paying More

If you live in a very high cost area like New York or San Francisco, you may end up allocating 50% or more to rent to live centrally or have access job centers. You may have to offset this by cutting other costs. Likewise, if you’re early in your career, paying 50% or more of your income for rent to live downtown and be centrally located may be worthwhile.

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Paying Less

If you’re carrying a large amount of debt, like large student loans, high car payments or medical bills, paying that down should be your main priority. Consider paying under “40x” rent to have more available for those obligations.

Perhaps you earn an inconsistent income with seasonal dips or irregular commissions. In this case, limiting rent that matches a 30-times salary or less can help when earnings decrease. If additional costs in your area are high, like taxes, insurance or utilities, renting below a 40-times salary accommodates them.

The “40x” rule shouldn’t make or break your rental decision alone. Think critically about your full financial situation when setting a workable rent amount. But in most cases, you’ll want your housing costs to be reasonably close to that 40-times income multiplier.