Do you know how much of your paycheck you should commit to rent or mortgage in order to leave room for ancillary expenses and savings? Everyone’s situation is different, but financial experts have estimated a number for this question — ideally, 25 percent (or less) of your gross paycheck should be committed to housing. What happens when your profession is notorious for modest paychecks, and the city you’re protecting is notorious for high housing costs? Here are five instances where the 25 percent rule isn’t realistic.
1. Los Angeles
- Starting salary: $60,552
- Top step firefighter: $83,812
- Median sales price of a home: $645,000
- Median rent: $3,600
A rookie would need to spend 71.34 percent of his or her gross income on rent. A top step firefighter would need to spend 51.54 percent of his or her gross income on rent in Los Angeles.
2. New York
- Starting salary: $39,370
- Top step firefighter: $76,488
- Median sales price of a home: $1,275,125
- Median rent: $4,500
A rookie firefighter would not be able to independently pay for rent in New York at this rate. A top step firefighter would need to spend 70.60 percent of his or her gross income on rent in The Big Apple.
3. Denver
- Starting salary: $49,078
- Top step firefighter: $75,506
- Median sales price of a home: $307,000
- Median rent: $2,125
A rookie would need to spend 51.96 percent of his or her gross income on rent. A top step firefighter would need to spend 33.77 percent of his or her gross income on rent in the Mile-High City.
4. Portland, Oregon
- Starting salary: $43,500
- Top step firefighter: $78,600
- Median sales price of a home: $335,000
- Median rent: $1,945
A rookie would need to spend 53.65 percent of his or her gross income on rent. A top step firefighter would need to spend 29.69 percent of his or her gross income on rent in Portland.
5. Austin
- Starting salary: $31,056
- Top step firefighter: $65,543
- Median sales price of a home: $757,126
- Median rent: $1,850
A rookie would need to spend 71.48 percent of his or her gross income on rent. A top step firefighter would need to spend 33.87 percent of his or her gross income on rent in Austin.
Notes on the methodology:
- The median rent considers apartments sized from a studio to a four-bedroom unit.
- To find out more about your personal situation and what a realistic mortgage or rent payment would be, we recommend looking at NerdWallet’s “How much house can I afford” calculator and Zillow’s rent affordability calculator.
