Real Estate – How much can I afford to rent?
As a general rule of thumb, landlords want to see the total cost of a prospective tenants rent be less than 33% of their income. That means if you make $100,000 per year (pre-tax) your combined rental payments should not exceed $33,000 for a 12 month lease = $2,750 per month. This helps ensure the tenant will be able to afford the rental payment each month. Of course this is not a perfect equation because fixed costs such as student loans, car payments; etc can impact your ratio and liquid funds.