Rent and Income: Advice?

target 1/4, but in some places with high cost of living 1/3 might be more realistic. you could allow yourself to go higher than the just the first year measure if you anticipate being somewhere a few years and your income rising during that time.

Depends on how expensive the area is and how much money you make. 1/3 of your income is pretty standard for SF/Manhattan, for example, but obv. 1/3 of $3K is a lot different than 1/3 of $10K ya know.

A lot of places I've rented stipulated in the contract that your rent could cost no more than 40% of your income, so I guess that's the maximum to consider.

And really, anymore than that means not eating, paying bills---something gets severely compromised. In my sad experience.

From my experience, being fresh out of school with student loans looming in the near future, 1/3 of your salary makes for a pretty tight squeeze and sad lunches everyday (i.e. PB&J).

Are the 1/3 - 1/4 proportions before or after tax?

Proportions are generally based on your gross (pre-tax) income, because that's what can be legally verified by your employer.

Lots of places in my area state in the ads things like "verifiable income must be 3x rent". (We are prepping to move again soon so I have been obsessively reading Craigslist even moreso than ILX.)

when I was renting I usually shot for about a 1/4 of my net.
my mortgage is currently slightly less than a third of my gross.

nb real estate in my area is comparatively reasonable. also, I'm a penny-pinching bastard.

I'm still torn between the "live in the area you want in a cramped dank basement" and "live in the hinterland with enough space to swing both cats". 1/4 of your post-tax income really should be the goal, I think, with 1/3 being the absolute max. I keep making lists of what I can't live without (1 bedroom - minimum, full bath), what I want (gas stove, 1.5 bathrooms, clawfoot tub), what i can compromise on (sigh - gas stove, clawfoot tub), and what absolutely will not do (roommate scenarios, lofts/studios no matter how large due to our cat population, 3/4 bath). Nothing satisfactory has come of it yet.

Basement living will change your life and outlook. It will also possibly change your lungs due to mold.

It's a pin/pain in the ass finding cheap 2-bedrooms for me & my man...we pretty much need separate bedrooms due to X-TREME GENERAL INTROVERSION and it's hard to get one under $600. So we've lived in some wack-e outcroppings.

Also, everywhere I've lived that had k-adorable shit like clawfoot tubs and vintage radiators and crazy arched doorways ALSO had zero insulation (to the point where you could see your breath indoors on very cold days), wiring from the 1940s, and rotting sinking floors that caused the toilet to rotate 30 degrees left of where it normally is (is dtraight). Maybe this is due to the very very shit neighborhoods I've always lived in, YMMV of course.

Hmmm. That is all true, and I had forgotten - when Mr. Jaq and I first lived together, it was in part of a giant 1895 mansion that had gorgeous wood floors, high ceilings, and the original single paned extremely large mullioned windows. Vintage charm all over the place and shockingly huge gas bills. The roof leaked and the upstairs apartment's window ledges came crashing down at random intervals due to dry rot.

Hmm ok, good to know but kind of worrisome...I'm looking at a range of 22 (good) to 38% (not so good) for single rooms or one room apartments in a couple places I'd like to live. Hmm. Didn't know renters need to legally verify your rent, that's a little scary. Thanks for the advice.

Some do & some don't, depends on the rental co. Though I've discovered the ones that don't usually do shit-all for their tenants. What is balls is having to pay for your own background check before renting.

I just always said "I have student aid," and they were like "oh, okay" and got dollar signs in their eyes.

I recently moved to a one-bedroom in one of these completely soulless brand-new buildings, after years of living in apartments with hardwood floors, gas stoves, clawfoot tubs, etc. This new place is actually kind of a cool space, in its weird, too-new way -- it's like a faux-warehouse space, w. exposed ducts, high ceilings, a concrete floor, "the open, airy feel of loft living," etc -- and I no longer have to contend with wiring / plumbing / heat problems, plus it has a dishwasher. The rent is exactly 30% of my monthly income. I'm still not totally comfortable here but I am liking the amenities and teh price is right.

Ever since I got out of school I have been shuffling back and forth between 30% and 40%. I'm pretty sure that any sort of official advice person (like, say, the government trying to determine if you are below the poverty line or something) would say 30% max, and that seems to be the consensus on this thread. HOWEVER, let me stress that, depending on the local cost of living for miscellaneous sundries (food) you will probably not die if it goes higher than that.

Right now I am at the 40% mark and it is not exactly a bed of roses, but I'm surviving. I'm gradually accumulating credit card debt, but that's only due to various expenses relating to grad school - textbooks, $200 fees every three months, way too many color prints, and general "supplies," which add up fast. Take all that stuff out and I'd be sitting very comfortably.

DON'T immediately jump for places where all of the utilities are included. In general I think these are kind of a ripoff, as (depending on climate!) you only need the heat on for a third of the year but are going to pay a $100 premium every month year-round.

Agreed with everyone pointing out the downsides of living in pre-war stuff with "character." I miss the hell out of that kind of living, but I DON'T miss the absolutely insane gas bills and having sinus infections ALL THE TIME due to mold etc. The happy medium is corny buildings from the 70s, which avoid the really gross "new apartment" feel. If you can accept, or even relish, fake mansard roofs and brown carpet, you can find some places you'll be really happy to live even if they look soulless and tasteless in the exterior photo.

If you could find a good job in Mississippi and could stand to live here, you could get away with housing = 15%.

In SF I've lived with 50 % and it's weird but you deal because you have no choice.

How does it work if you buy a house? I have heard it's the same (1/3) but then you have to downsize since paying off a loan is higher than renting, no?

With purchasing, in the UK at least, the maximum total mortgage you can get is normally a multiplier of your gross income (or combined income if your are a couple). What that multiplier is depends on how much cash you have to put down as deposit, other circumstances etc. 3 used to be the norm, now 4 is very common and 5 is not unheard of.

stay in school, forever.

When I worked for a lender, the underwriters typically approved home loans for borrowers whose total debt service was arpound 40%. There are two debt ratios that are important, one being housing costs/income, called the top ratio, and the bottom one, the more important number, being housing costs + total debt/income. In perfect scenarios borrowers would have a top of 33 and a bottom of 38. Our company was an "alt-a" lender, meaning that we dealt with excellent borrowers who didn't generally want to/have the ability to show tax returns. As such, our underwriter made many exceptions for higher debt ratios. It's all about compensating factors. A poster said earlier something to effect of "30 percent of a 1000/mo income is quite different from 30 percent of a 10k/mo income", and that is right on the money. If you have tons of money in the bank, for example, or a really high credit score, high debt ratios won't be a problem. In short, there are only guidelines, not hard and fast rules. BTW, the total debt portion of the bottom ratio is calculated using the total of the minimum monthly payments of only the loans and revolving credit that show up on your credit report.