What percentage of your income should go to rent?

The standard benchmark in the US is at most 30% of your gross (before-tax) income for rent plus utilities; above that, HUD calls a household cost-burdened, above 50% severely cost-burdened. Treat 30% as a ceiling, not a target, and check it against your take-home pay: after rent, utilities and your other regular spending, there should still be money left to save. On $4,500 a month before tax, 30% is $1,350 including utilities.

Updated 28 September 2026 · By the Stillpenny team

Where the 30% comes from

The US Department of Housing and Urban Development (HUD) considers households cost-burdened when they spend more than 30% of their income on rent, mortgage payments and other housing costs, and severely cost-burdened above 50% (US Census Bureau, 2024). It is a measure for housing policy, not a personal budgeting rule, and it is based on gross income. That has two consequences:

• Count utilities. The benchmark is about housing costs, not the rent line alone. Electricity, gas, water and heating count toward the 30%.
• Your take-home pay decides whether it works. Two people with the same gross income can have very different take-home pay after taxes, health insurance and retirement contributions, and very different other fixed costs.

You are in large company if you are above it: in 2023, 49.7% of the 42.5 million US renter households for which it is measured spent more than 30% of their income on housing, and the median renter spent 31% (US Census Bureau, American Community Survey 2023).

Worked example: Sam compares three apartments

Sam earns $54,000 a year, $4,500 a month before tax, and takes home $3,560 a month after tax and deductions (an assumed figure; yours depends on your state and benefits). Utilities run about $150 a month. Sam's other regular spending is $1,560 a month: groceries $450, car and gas $300, phone $60, insurance $150, minimum debt payments $200 and $400 for clothes, eating out and fun.

"Left to save" is take-home pay minus rent, utilities and the $1,560 of other spending: for the $1,200 apartment, $3,560 − $1,350 − $1,560 = $650.

What the table tells Sam:

• $1,200 meets the benchmark and leaves real room. $650 a month is enough to build an emergency fund and save for goals.
• $1,500 is possible, but tight. It is over 30%, still leaves $350 a month, and any rent increase comes straight out of savings.
• $1,800 only works if something else changes. $50 a month of slack means one car repair turns into credit card debt. Sam would need to cut the $400 of flexible spending, find a roommate or earn more.

Calculate your rent limit

How to use the number

1. Start with the 30% ceiling. 30% of gross income minus utilities is the highest rent the benchmark allows.
2. Run the take-home check. Take-home pay minus your other spending minus the savings you want to keep is what your budget can actually give to rent and utilities.
3. Use the lower of the two. If the take-home check is lower, your other costs or your savings goal are the constraint, and the 30% rule would mislead you.
4. Add move-in costs separately. Deposit, first month, moving and furniture come on top and belong in savings, not in the monthly limit.

Common mistakes

• Leaving out utilities. A $1,300 apartment with $250 of heating in winter costs more than a $1,450 apartment with heat included.
• Using the salary in the offer letter as take-home pay. The 30% benchmark uses gross income, your budget does not. Check your actual pay stub.
• Counting on a raise. Sign for what your income is now; rent is hard to lower later.
• Ignoring what the location saves. A pricier apartment near work can be cheaper overall if it replaces a car or a long commute. Put transport into "other spending" and compare the totals.

Follow-up questions

What income do I need for a given rent? Divide rent plus utilities by 0.30. For $1,500 rent and $150 utilities: $1,650 ÷ 0.30 = $5,500 a month, or $66,000 a year, before tax.

Is 30% realistic in an expensive city? Often not, which is why the take-home check matters more. If you go above 30%, decide in advance which spending you will cut to keep saving something.

Does the rule apply to couples? Use the combined gross income for the benchmark. How to split the rent fairly between two incomes is a separate question; we answer it in how couples can split expenses with different incomes.

What about homeowners? The same HUD benchmark applies to mortgage payments, property tax, insurance and utilities together.

Sources: US Census Bureau, "Nearly Half of Renter Households Are Cost-Burdened", 12 September 2024 (HUD definition, American Community Survey 2023). Sam's figures are illustrative.