How much can we afford to pay in rent? (Chicago: apartment, to rent)

[peachy12]

Hello!

I apologize if this question has been asked before. I did a quick search but did not quite find what I was looking for, so I thought I'd ask.

My fiance and I are getting married in June. He is moving back to the Chicago area after living out of state for a year for his job. Therefore, he may not necessarily be coming home to a job in Chicago. That means I will be the only source of income for us for an indefinite amount of time.

That in mind, we'd like to find a place to rent that we know will be manageable on my income alone. I don't think it will take him TOO long to find a job and we both have a decent amount of savings just in case, but we would still feel comfortable renting a place that we can manage with my salary alone.

My current salary is $40K a year, but based on my raise last year, I'm expecting to receive a $3K-$4K raise in my yearly review in the next month.

How much can we afford given that salary in the city? Totally understand that different areas cost different amounts, but I'm just trying to figure out a realistic amount to spend on rent. We don't have student loans but we will probably be purchasing a car (my fiance is a teacher and could very well end up working in a suburb). Then of course there's food, utilities, credit cards, etc...so with all that in mind, what's a realistic rent budget?

Thanks!

[Alacran]

1000 a month average small place.

Give or take on location, and quality of the place itself.

[andrew61]

Generally the rule is that no more than 30 percent of your gross income should be spent on rent. Or, if you do the math the other way around, your gross annual income should be at least 40 times the monthly rent.

Therefore, if your gross annual income is $40K, it would mean spending a maximum of $1,000 a month on rent.

If you have high debt, of course, it might be prudent to spend somewhat less if you can.

Also be aware of what utilities are or are not included in rent, as that can vary from place to place and can make a big difference. When shopping for an apartment, make sure you're comparing apples to apples.

[peachy12]

Whoops, totally forgot to mention that that's currently $40K GROSS, so before taxes, health insurance, and all that jazz. Alacran, would you still say $1,000 is a fair estimate? If so, I'm happy to hear that, I thought it'd be less.

ETA: I was typing up my post when Andrew61 posted...So you think the 30% thing applies to Chicago? I have heard that rule as well, but wasn't sure if it would work here.

[andrew61]

Originally Posted by peachy12

So you think the 30% thing applies to Chicago? I have heard that rule as well, but wasn't sure if it would work here.

It's been my experience that most property management companies will look at your income and will qualify you using the 30 percent rule. Now, if you deal with individual landlords instead of agents, some of them might be more flexible.

[peachy12]

Thanks for the responses!!

[Aleking]

1000 is too much if you plan to actually enjoy the city, 800 would be much better.

[MannheimMadman]

A lot of management companies will need to see proof of employment and paycheck stubs. Heck, even my private landlord needed 3 months worth of past pay stubs from me and my wife. Remember, that 30% should include all utilities (which can be a whopper sometimes), just like Andrew said.

I like to use 30% of net pay, because gross doesn't really matter in the real world.

[cali3448893]

i agree 1000 if you dont want to enjoy the city 800 if you do.