It is likely that if you’re renting, you’re paying too much of your income on monthly expenses for housing. It has been a rule for a long time that households shouldn’t pay greater than 28% earnings for their mortgage or rent payment. This allows households to put aside cash for the future while easily covering other expenses. According to the latest data by ApartmentList.com, 49.5 million renters in the United States were cost-burdened in 2017 meaning that they paid more than 30 percent of their monthly income on rent. This represents more than half of households of renters in the United States and is an increase of 3.1 million since 2007.

If a family is burdened by the monthly cost of housing it is not likely to save funds to fund the future. This is an important factor for renters who have dreams to own their very own home in the near future. However, there is some hope for those who make at least a 3percent down amount! The amount of money needed to be earned in the US to purchase a house is much lower than renting, which is 17.1 percent!

The graph below shows the amount of income required to purchase and rent between 1985 and 2000 to the beginning of the year. As you will see, the cost of renting is now higher than previous levels as the cost of buying decreased over the same time.

Bottom Line

If you’re one of the many renters spending a large portion of their income per month on rent, think about saving money by sharing a room with a friend or changing to a lower cost apartment, or making the move with your relatives. These are all great ways to save up for the down payment, in order to get your housing costs to be a benefit to you!

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