Rent Affordability Calculator
Determine a sustainable rental budget based on your income using the common 30% rule to avoid rental stress.
Quick Use Samples
Income & Expenses
Monthly Debt Payments
Affordability Results
Affordability Guidelines
Monthly Budget Breakdown
Rental Tips
- • Budget for bond (4 weeks rent) and moving costs
- • Consider utilities, internet, and insurance costs
- • Leave room for rent increases and emergencies
- • Factor in commute costs to work
With a total gross annual income of $75,000, your estimated net (after-tax) monthly income is $4,888. After accounting for your estimated living costs of $1,380 and debt repayments of $0, the maximum recommended monthly rent is $1,466. This is based on a comprehensive analysis of your budget, aiming to leave a buffer for savings and unexpected expenses.
Budget Breakdown
Rental Stress Indicator
Rental stress is when a household spends more than 30% of its income on rent. Based on your income, your rental stress threshold is **$1,466/month**. Spending above this may impact your ability to save and cover other expenses.
Average Rental Prices (sydney)
Average rent for a 1-bedroom apartment in sydney is around **$2,400/month**. Use this as a guide to see if your budget aligns with the market.
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What is a Rent Affordability Calculator?
A Rent Affordability Calculator helps you determine a sustainable rental budget based on your income. It uses common financial guidelines to suggest a maximum amount you should spend on rent to ensure you have enough money left over for other expenses, savings, and discretionary spending.
Behind the Formula
The calculator is based on the '30% rule', a widely used personal finance guideline which suggests that you should spend no more than 30% of your gross (pre-tax) income on housing costs. The formula takes your annual salary, calculates 30% of it, and then breaks this down into a maximum monthly and weekly rental amount. It also allows you to adjust the percentage to match your personal financial situation and risk tolerance.
Expert Insights
- The 30% rule is a useful starting point, but it's becoming increasingly difficult to follow in Australia's major capital cities, where rental markets are extremely tight and expensive. Many people, especially those on lower incomes, are forced to spend a much higher proportion of their income on rent.
- Real estate agents and property managers use your income as a key qualifying metric. They typically want to see that your gross income is at least three times the rent, which aligns with the 30% rule.
- 'Rental stress' is a term used in Australia to describe households in the bottom 40% of incomes that spend more than 30% of their gross income on rent. This is a key indicator of housing market unaffordability.
Actionable Tips
- When calculating your budget, don't forget the upfront costs of renting, which include the bond (typically 4 weeks' rent) and one month's rent in advance. These can add up to a significant initial outlay.
- Consider the total cost of a property, not just the rent. A cheaper apartment further from your work might end up being more expensive overall once you factor in higher transport costs.
- If you have a roommate or partner, calculate your affordability based on your combined income. This can significantly increase your borrowing power and open up more housing options.
Real-World Examples
A Single Professional
Someone earning an annual gross salary of $80,000 uses the calculator. Based on the 30% rule, their recommended maximum weekly rent would be around $460.
A Student on a Part-Time Income
A student earning $30,000 a year finds that their affordable rent is only $173 per week. This makes it clear that they will need to find a share house with roommates to afford living in the city.
A Couple Renting Together
A couple with a combined income of $150,000 per year has a much higher rental capacity. The 30% rule suggests they can comfortably afford a property up to $865 per week, giving them many more options in the rental market.
Glossary of Terms
Gross Income
Your total income before any taxes or other deductions are taken out.
Rental Bond
A security deposit paid by a tenant to a landlord at the start of a tenancy. It is held by a state government body and is refunded at the end of the tenancy, provided there is no damage to the property.
Rental Stress
A situation where a low-income household is paying more than 30% of their gross income in rent.