The rent you can afford on a salary of $50,000—or any salary, for that matter—is not the same as the amount for which you qualify. Qualification is often based on a rule of thumb, such as the “40 times rent” rule, which says that to be able to pay a certain rent, your annual salary needs to be 40 times that amount. In this case, 40 times $1,250 is $50,000. Therefore, if you make $50,000, you qualify for $1,250 per month in rent. 

Key Takeaways

  • How much rent you can afford on a $50,000 per year salary is dependent on a number of factors, such as the cost of the area you live in, how much disposable cash you need, and what your other expenses are.
  • Some estimates of reasonable rent are based on percentages, such as the "40 times rent" rule or the "30% rent" guideline. However, these calculations are imperfect and too general for many people.
  • A better bet is to add up monthly expenses—utilities, transportation, food, loans, credit cards, savings, insurance, and other spending—and subtract them from your after-tax pay. What money is left is for rent.

Problems With the "40 Times" Rule

One drawback to this formula is that the calculation uses gross income—your income before taxes and other deductions. Although you make $50,000 a year, the amount you have to spend—your take-home pay—is less.

Another issue with the “40 times rent” rule is that it is a general rule and doesn’t take into consideration your particular financial situation. It doesn’t calculate your expenses. Instead, it simply assumes that if you spend one-fortieth of your salary on rent, what’s left will be enough to pay all your other bills and obligations.

Mortgage lending discrimination is illegal. If you think you've been discriminated against based on race, religion, sex, marital status, use of public assistance, national origin, disability, or age, there are steps you can take. One such step is to file a report to the Consumer Financial Protection Bureau or with the U.S. Department of Housing and Urban Development (HUD).

A Better Rule of Thumb

A slightly more realistic guideline suggests spending 30% of your take-home pay on rent. This rule allows for taxes, retirement, and other deductions before arriving at a rent figure. On your $50,000 salary, if your monthly take-home pay is $3,500, for example, your monthly rent should not exceed $1,050.

There’s still the issue of your specific expenses. For that you need a budget, especially considering that $50,000 may not go too far if the cost of living is high where you hope to find an apartment.

The "40 times rent" rule says your salary should be 40 times your monthly rent, but this fails to account for taxes, and for the specifics of your financial situation. A better bet is the "30% rent" guideline or an approach based on your budget.

The Budget-Based Approach

The best way to determine how much rent you can afford is to add up your actual monthly expenses and subtract them from your monthly take-home pay. This budget-based approach takes more time, but it is more accurate and helps you avoid unpleasant surprises, such as running out of money and finding that you can’t pay one or more bills.

Utilities

Start with utilities, such as water, sewer, trash, electricity, oil, and gas. Water, sewer, and trash are often included in rent but not always. Other utility costs include cable, Internet, telephone, and even security and maintenance in some apartment complexes.

The cost of electricity and oil and gas can vary depending on the age and condition of the apartment. A well-insulated apartment, for example, will cost less to heat. The best way to determine the likely cost of utilities in a new apartment is to ask the landlord or several current residents.

Food and Incidentals

This category includes groceries, cleaning supplies, paper towels, and other items that you use and replace on a regular basis. If you already have a grocery budget, use that as your basis.

If you are moving out on your own for the first time, establishing a grocery and supplies budget isn’t difficult or time-consuming. An hour a week should be plenty of time to plan meals, and the savings can add up.

Transportation

Your monthly car payment, gasoline, oil, and maintenance will make up most of your transportation budget. Include parking and tolls if they are a regular expense for you. If you rely on public transportation, use those costs instead. If you own and use a car and also use public transportation, include both.

Loans and Credit Cards

You must account for debt payments, such as student loans and revolving (credit card) debt, as part of your budget. Keep in mind that the more you can pay, especially on revolving credit, the faster the balance will come down. Don’t just pay the minimum due unless you have no other choice.

Renter's Insurance

Renter's insurance protects your personal belongings from loss or theft and provides liability protection in the event you are sued because someone is injured on or in the property you rent. These protections are not provided by your landlord.

Retirement and Savings

Contributions to a company-sponsored 401(k) or retirement plan will be deducted before you are paid and do not have to be counted. Any savings that come out of your take-home pay, however, do.

Discretionary Spending 

Clothing, dining out, gym membership, and hobbies are just a few things that fall under this miscellaneous or discretionary-spending category. It’s the most flexible part of your budget and can be scaled down or even eliminated as needed.

Your Rent Allowance

Subtract your monthly budget total from your monthly take-home pay, and the amount left is the most you should pay for rent—what you can realistically afford. If the amount is too small for available apartments in your area, take a hard look at your discretionary spending first and other categories as needed.

You may also need to weigh the options of moving to a less expensive locale or sharing an apartment with roommates. In many communities, a salary of $50,000 may not stretch too far, especially if you have student loans to pay off.

The Bottom Line

Apartment search sites, such as apartments.com and abodo.com, can help you find available apartments in your price range. You may want to check out these sites before you create your budget, just to get an idea of what your goal needs to be.

One important final factor has to do with your personal priorities. If investing for retirement is a high priority—or saving up for a new car or travel is important—you may want to scale down your expectations for a place to live and put more funds into what matters to you more.