Why use this calculator
Renting decisions are usually made on the weekly advertised price and nothing else, which is how households end up in rental stress without ever deciding to. Two separate numbers actually matter: the ongoing rent you can sustain for a whole lease, and the lump sum you need on the day you sign.
This calculator produces both. It tests affordability three ways, against gross income, against take-home pay and against what is left after your other fixed commitments, because the three answers can differ by hundreds of dollars a month and the lowest of them is the one that governs. It then totals the bond, the advance rent and the incidental move-in costs that catch first-time renters out.
How to use it
- Enter your gross income exactly as it appears on your payslip or contract and then choose the matching pay period, so a fortnightly figure is not accidentally read as a monthly one; if you have variable income, use a conservative average of the last six months rather than your best month.
- Add up your other fixed monthly commitments from a recent bank statement, including loan and credit card repayments, insurance premiums, childcare and any subscriptions you would not cancel, but leave out food, fuel and discretionary spending because those flex.
- Set the bond to the number of weeks the agent is asking for, which appears on the tenancy application and is four weeks in most Australian states.
- If you are renting with someone else, run the calculator on your combined income.
What each result means
- Monthly take-home pay (estimate)
- Your income after Australian income tax and the Medicare levy, divided by twelve. Superannuation salary sacrifice and HELP repayments are not deducted.
- Affordable rent: 30% of gross
- The standard housing affordability benchmark, shown monthly and weekly. Paying above it is the usual definition of rental stress.
- Affordable rent: 30% of take-home
- The stricter test applied to money you actually receive. It is the figure to trust if the two disagree.
- Comfortable rent after other commitments
- Forty per cent of what is left once your fixed commitments are paid, which is the binding limit when you carry loans.
- Bond required (estimate)
- The security deposit the agent holds, calculated on your affordable weekly rent and lodged with the state tenancy authority.
- Two weeks rent in advance
- The rent most Australian agents require up front on the day you sign, separate from and on top of the bond.
- Total cash needed to move in
- Bond plus advance rent plus roughly $500 for connections, removalists and cleaning. This is the amount you must have saved.
- Rental stress threshold
- The monthly rent above which your household is counted as being in rental stress in Australian housing statistics.
The formula
Annual gross = Income x the periods in a year
Take-home = Annual gross - income tax - Medicare levy, using resident marginal rates of nil to $18,200, then 16%, 30%, 37% and 45%
Affordable rent = Monthly gross x 30%
Weekly rent = Monthly rent x 12 / 52
Move-in cash = Bond weeks x Weekly rent + 2 x Weekly rent + $500 of incidentals
How this number is used in practice
The 30% benchmark is a rule of thumb rather than a law, and it behaves differently at different income levels. On a low income, 30% of gross can still leave too little for food, transport and utilities, which is why housing researchers usually apply the stress test only to the lower 40% of the income distribution.
On a high income, spending 35% on rent may be perfectly comfortable because the absolute dollars left over are large. Use the benchmark as a starting point and then check the number that actually matters, which is what remains after rent, tax and fixed commitments.
Move-in cash is where budgets break. A four-week bond plus two weeks in advance is six weeks of rent handed over at once, so a $600-a-week property needs $3,600 before you have paid a removalist, connected electricity or bought a fridge. Bond in Australia is lodged with the state tenancy authority rather than kept by the agent, and is refunded at the end of the lease less any agreed deductions, but it is locked up for the whole tenancy and cannot be counted as savings you can reach.
Rules vary by jurisdiction and are worth checking before you commit. Most Australian states cap bond at four weeks of rent for ordinary residential tenancies, and several limit rent in advance to two weeks. In the United States the equivalent is usually first month, last month and a security deposit, with caps set state by state.
In Great Britain the Tenant Fees Act limits a deposit to five weeks of rent where the annual rent is below the statutory threshold. Always confirm the current rules with the tenancy authority in your own state or country.
Worked examples
$75,000 a year, $600 a month of other commitments, four-week bond
Take-home about $5,018 a month, affordable rent $1,875 a month or $433 a week, and $3,096 of move-in cash.
$50,000 a year with no other commitments
Affordable rent $1,250 a month or $288 a week. Tight in any Australian capital city.
$1,800 a fortnight with $400 a month of commitments
Annual gross $46,800, affordable rent $1,170 a month or $270 a week.
A couple on a combined $140,000 with $1,200 a month of loan repayments
Affordable rent $3,500 a month or $808 a week, with $5,346 needed to move in.
When people use it
- Checking whether an advertised weekly rent is within reach before you inspect
- Working out how much to have saved before you start applying for properties
- Deciding whether to rent alone or share once the bond and advance are counted
- Testing what a pay rise or a new job actually changes about your rental options
- Seeing how much room a car loan or credit card repayment takes out of your housing budget
Tips
- Trust the take-home test over the gross test. Rent comes out of the money that lands in your account, not the number on your contract.
- Save six weeks of rent before you start looking, because bond plus two weeks in advance is usually due on the day you sign.
- Bond in Australia is lodged with the state tenancy authority, not held by the agent, and is refunded at the end of the lease less agreed deductions.
- Add utilities to the comparison. Electricity, gas, water and internet commonly run $200 to $400 a month on top of rent.
- Sharing is the single biggest lever available. Splitting a $900-a-week house two ways beats renting a $500-a-week unit alone.
- Rent rarely stays still across a long tenancy, so leave headroom for an increase at renewal rather than committing to your absolute maximum.
- Agents commonly want to see that rent is under about 30% of your income, so a figure inside this benchmark also strengthens your application.
What it assumes, and where it stops being accurate
- Australian resident income tax rates and the Medicare levy are applied. Non-residents, working holiday makers and people with private health cover exemptions differ.
- HELP and HECS repayments, salary sacrifice, child support and the Medicare levy surcharge are not deducted, so real take-home pay may be lower.
- Employer superannuation is treated as separate from your income, which is how Australian salary packages are normally quoted.
- Bond is assumed to be lodged in cash. Bond loans and bond replacement products change the cash needed but not the liability.
- Incidental move-in costs are assumed to be about $500, covering connections, cleaning and a small removal. A full interstate move is far more.
- Income is assumed steady for the whole lease. Casual and contract income should be averaged conservatively before entering.
Terms used on this page
- Bond
- A security deposit lodged with the state tenancy authority, refundable at the end of the lease less agreed deductions.
- Rental stress
- Spending more than 30% of gross household income on rent. Above 50% is severe rental stress.
- Rent in advance
- Rent paid before the period it covers, commonly two weeks at the start of an Australian tenancy.
- Gross income
- Pay before income tax and other deductions, the basis for the standard affordability benchmark.
- Medicare levy
- A 2% levy on Australian taxable income, reduced or removed for low incomes, collected alongside income tax.
Questions people ask
- What is the 30% rule for rent?
- It is the long-standing benchmark that housing should take no more than 30% of gross household income. Above that level a household is described as being in housing or rental stress, because too little is left for food, transport, utilities, savings and emergencies. It is a guideline used in statistics and lending, not a legal limit on what an agent can charge.
- Should I use gross or take-home income?
- Official statistics use gross income, which is why the headline benchmark here is calculated that way. For your own budget, use take-home pay, because that is what the rent is actually paid from. On a $75,000 salary the two tests differ by roughly $370 a month, and the take-home figure is the one you can genuinely sustain.
- How much bond do I need in Australia?
- Four weeks of rent is the usual maximum for a standard residential tenancy in most states, and several states cap it at that level by law. It is lodged with the state tenancy authority rather than held by the agent, and is refunded at the end of the lease minus any deductions you agree to or a tribunal orders. Always confirm the current cap with your own state authority.
- What is rental stress?
- A household is in rental stress when rent takes more than 30% of gross income, and in severe rental stress above 50%. The measure is usually applied to lower-income households, because a high earner paying 35% still has substantial income remaining. It is the standard yardstick in Australian housing research and in government reporting on affordability.
- Why is the move-in figure so much larger than one month of rent?
- Because bond and advance rent are charged together. A four-week bond plus two weeks in advance is six weeks of rent handed over on the day you sign, and connections, cleaning and removal costs land in the same week. On a $600-a-week property that is roughly $4,100 before you have bought anything for the house.
- Does this work if I am renting with other people?
- Yes, if you enter the combined income of everyone named on the lease and their combined fixed commitments. The results then describe the whole property rather than your share. Remember that co-tenants are usually jointly and severally liable, meaning each of you can be pursued for the entire rent if someone else stops paying.
Use this with
Rent Affordability Calculator answers one part of the question. These pick up where it stops: Rent Split Calculator, Weekly to Calendar-Month Rent Calculator (AU), Rent vs. Buy Calculator, Moving Cost Estimator and Salary After Tax Calculator.
Where these figures come from
Figures and rules on this page follow Australian law and ATO guidance.
- Australian Taxation Office: Individual income tax rates. Resident marginal rates and thresholds used for the take-home estimate
- ASIC Moneysmart: Budgeting. Independent Australian guidance on household budgets and housing costs
- Australian Bureau of Statistics. Household income, rent and housing cost statistics
Rent Affordability Calculator produces an estimate for general information. It is not financial, tax, medical, legal or engineering advice. read the full disclaimer. Spotted a wrong number? Report it and it gets fixed. The form picks up this calculator and the inputs you used.