What is the recommended maximum percentage of pre-tax income to spend on rent or mortgage?

Spending up to 30% of pre-tax income on rent or mortgage is widely regarded as a standard guideline for housing affordability. This figure originates from housing studies and analysis of budget practices, suggesting that individuals should ideally direct no more than 30% of their gross income toward housing costs.

This benchmark is utilized to ensure that individuals or households have enough remaining income to cover other essential expenses such as utilities, food, transportation, healthcare, and savings. Spending beyond this percentage may strain one’s budget, making it challenging to maintain financial stability and meet other financial obligations.

While some financial advisors might suggest a lower percentage, the 30% rule remains a practical and commonly accepted figure for the general population in assessing housing costs relative to income.