If you’re a college student dreaming of leaving dorm life behind to find an apartment of your own, congratulations! It’s a big step, and you definitely won’t want to bite off more than you can chew. Meaning: Before you even start apartment hunting, figure out how much rent you can afford.
Let’s face it—unless Mom and Dad are footing your rental bill, this monthly payment falls on your shoulders, and can quickly eat into the money you may have earmarked for fun (or anything else).
In this latest installment of our College Student’s Guide to Living on Your Own, we’ll show you how to figure out the right rent for your college-level budget. Read on for what may be the most important math lesson you’ll ever learn to keep your financial head above water.
How much rent can a college student afford: How to crunch the numbers
Generally, to qualify for an apartment, you need income rolling in. Translation: A job may be in your future. But how big a job do you need to rent your own place?
One handy rule of thumb is to make sure your rent is no more than 30% of your net income. So if your monthly take-home pay amounts to $3,000, multiply that by 30% and you should spend no more than $900 a month on an apartment.
Another way to think about it is that many landlords will require that your annual gross salary (meaning before taxes are taken out) be at least 40 times your monthly rent. So let’s say you want to live in an apartment that costs $500 a month. Multiply that number by 40, and you’ll find that you need to be earning $20,000 a year from your job to qualify on your own.
Can I find a co-signer?
Don’t make enough money to qualify for an apartment? The good news is if you have a parent or other person who can co-sign the lease, their income can help. Still, before you ask Mom or Dad to co-sign, make sure you all understand the risks involved.
“If you can’t pay rent, for whatever reason, your co-signer is going to be liable for the money,” says Marin King, a New York attorney and real estate agent at Keller Williams NYC who specializes in rental properties.
Can I find a roommate?
If you can’t find someone to co-sign with you, finding a roommate who can split the rent and utilities can strengthen your rental application. But because both of your names will be on the lease, you’re assuming some risk. If your housemate can’t afford their portion of rent, you’re liable for it, warns Andy Boyle, author of “Adulthood for Beginners: All the Life Secrets Nobody Bothered to Tell You.”
That’s why it’s so important to find a roommate you can trust. A lot of colleges offer roommate-matching services for students looking for off-campus housing. (Check with your school’s housing office.) There are also websites like Room Surf and U-loop that help you find college roommates.
Will you need to pay a security deposit?
Moreover, most landlords charge renters a security deposit to cover any repairs or cleaning that may be required once the tenants move out. This chunk of money has to be forked over before you move in.
Every state allows landlords to charge a security deposit, but the amount varies. In some states, limits are as low as $100, while others are allowed to ask for several months’ rent. You can check this list of security deposit requirements by state to see how much yours will set you back.
Don’t forget other monthly expenses besides rent
Reality check: Rent is just one expense that you have to factor into your budget. You’ll also have to pay for utilities, water, internet and cable, maybe renters insurance, and non-apartment-related expenses such as food, transportation, entertainment, laundry, cellphone, and any car loan and car insurance payments. These costs can add up quickly.
But keep your eyes peeled for promotions. A lot of newer apartments include cable, gas, or water in the monthly rent—which can be a major way to save. Some leasing buildings even offer a free month of rent, gift cards, or free parking. To score these kinds of deals, though, you may have to sign at least a 12-month lease, meaning you’d have to look for someone to sublet your place in the summer if you’re away.
Not good with numbers? This rent calculator from Myfirstapartment.com is a nifty tool that uses an array of formulas to calculate your maximum affordable rent, including utilities and other expenses.
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