Graham Stephan's 20% rent rule calculator
Graham Stephan puts rent below 20% of gross income, not the usual 30%. Test your rent against both ceilings and see the income each one demands.
Graham Stephan Reviewed Aug 16, 2026 Rule located in Graham’s Newsletter (grahamstephan.substack.com), 2023 Put your numbers through the rule
The source establishes the rule. The values below belong to you, and the output is JMM's deterministic calculation.
Every field recalculates immediately. Changed values can be copied into a shareable URL.
- Your rent as a share of gross
- 25.3%inside the 30% standard, outside Stephan’s 20%
- All-in housing share
- 28.7%rent plus the other housing costs you entered, which the rule as published does not count
- Over the tested ceiling by
- $400a month, which is roughly the investing the rule says your address is costing you
- Income your rent implies at 20%
- $114,000against $76,000 at the 30% standard
Both figures are stated on gross income, before tax, which is unusual for a household rule and makes them look milder than a take-home equivalent. The required-income band is the rule read backwards, the same arithmetic the source applies to three real listings.
At 20% of gross
- Rent ceiling
- $1,500
- Income your rent needs
- $114,000
At 30% of gross
- Rent ceiling
- $2,250
- Income your rent needs
- $76,000
At the 20.0% you tested
- Rent ceiling
- $1,500
- Income your rent needs
- $114,000
What the source says, and what the calculator adds
Source-supported ruleIn his own newsletter Stephan states the conventional benchmark as rent no more than 30% of pre-tax income, calls 30% the golden standard, and then gives his own tighter number: ideally keep rent below 20% of gross income. He works the rule backwards in the same post, converting three real listings into the income a renter would need. 
JMM calculationJMM makes the reversal Stephan performs by hand repeatable. It scores your actual rent against both his 20% figure and the 30% standard, reports the dollar overage rather than a pass or fail, adds an all-in housing share so renters insurance, parking and utilities are visible next to the headline number, and prints the income band your current rent implies. The band reproduces his own worked examples: $2,800 a month returns $112,000 to $168,000, against the $110,000 to $170,000 he published. What changes the answer
Twenty and thirty are ten points apart and half a salary apart
Read forwards the two ceilings look adjacent. Read backwards they are not: the same $2,800 rent needs $112,000 a year at 30% and $168,000 at 20%. Stephan’s stricter number is not a nudge, it demands half as much rent again in income, and that is the whole argument the post is making.
The rule works on gross, which is unusual and matters
Most household rules on this site run on take-home pay. Twenty percent of gross is roughly 26% to 28% of take-home for a typical US earner, so the rule is tighter than 30% of gross but not as brutal as 20% of net would be. Comparing it with a take-home rule without converting first will mislead you by several hundred dollars a month.
What the 20% is buying is savings capacity, not safety
The post’s argument for the lower number is that it leaves room to invest, not that 30% is unaffordable. That reframes the output: the gap between your rent and the 20% ceiling is roughly the monthly investing the rule is asking you to protect.
A savings target wearing a housing rule’s clothes, and it will grade most renters a failure.
Stephan is doing something more honest than the 30% rule he is arguing against: he is admitting that a housing benchmark is really a decision about what is left over. Twenty percent of gross leaves genuine room to invest, and if you can hit it you should, because housing is the one line item that compounds against you every month without ever showing up as a loss. But the number is set by someone whose income is unusual and whose post is written from Los Angeles, and it does not survive contact with a median salary in an expensive metro. On a $90,000 income the rule says $1,500 a month, which in most large US cities buys a roommate. The right way to use this page is as a ranking device, not a verdict: read the overage, treat it as the monthly investing the rule says your address is costing you, and then decide whether the address is worth it. That is a real trade-off. “You failed the rule” is not.
Not the calculator’s limits. The rule’s.
It assumes rent is a choice on a continuum, and in expensive metros it is not
Below a certain price, listings stop existing rather than getting worse. A renter in San Jose or Manhattan who follows the rule literally is not choosing a cheaper apartment, they are choosing roommates, a two-hour commute, or a different city. The rule prices none of those, and two of them cost real money the model never sees.
Gross income is the wrong denominator for a high earner or a high-tax state
Twenty percent of gross in California is a materially tighter constraint than 20% of gross in Texas, because the same headline salary lands very differently after tax. The rule is stated on the one number that ignores the difference, which quietly makes it stricter for exactly the renters facing the highest rents.
It is silent on the alternative it is implicitly recommending
The post’s own argument is that lower rent frees money to invest. That only works if the freed money is actually invested. A renter who hits 20% and spends the difference has satisfied the rule in full and gained nothing, which means the rule measures the wrong side of the equation.
It ignores what the rent is buying besides shelter
A more expensive address closer to work can raise income, cut commuting costs and change which jobs are reachable. The rule treats every dollar of rent as identical consumption, so it cannot tell an expensive mistake from an expensive investment.
What this model does not know
- The rule is stated on gross income, so it ignores every difference in tax, state, filing status and payroll deduction between two renters earning the same headline salary.
- The source sentence covers rent. Utilities, renters insurance, parking and pet rent are entered separately here and are not part of the 20% test as published.
- The reverse calculation assumes rent is the only housing cost, which is how Stephan’s own worked examples are built.
- Nothing here checks whether the rent you can afford exists in your market. The rule constrains you, it does not produce a listing.
- The post is from June 2023. Rents, incomes and the mortgage rates discussed elsewhere in it have moved since.
Before you use the result
Is the 20% figure on gross or take-home pay?
Gross. The cited sentence says “20% of your gross income”, and the 30% benchmark it is argued against is also stated on income before taxes. Do not compare it directly with the take-home-based rules elsewhere on this site without converting.
Why does the page also show 30%?
Because Stephan’s own post names 30% as the golden standard and positions his 20% as the tighter, preferable target. Showing only one of the two would misrepresent what the source actually says.
Where does the required-income range come from?
It is the rule read backwards: rent times twelve, divided by the share. Stephan performs this himself in the same section on three real listings, and the model reproduces his published figures.
Should utilities count inside the 20%?
Not as the source states it. The rule is about rent. This page reports an all-in housing share separately so you can see both, because a $1,500 rent with $400 of utilities is not the same commitment as a $1,500 rent that includes them.
The next question this page cannot answer
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Dave Ramsey, sourced rule 25% house rule calculator The owner-side version of the same ceiling, stated on take-home pay instead of gross and covering tax, insurance and HOA inside the percentage.
Open → - Guide Rent versus buy is not payment versus payment
The comparison a rent ceiling never makes. Passing at 20% still leaves the question of whether renting at that price beats owning over the same years.
Open → -
Calculator U.S. rent vs buy calculator Runs that comparison on your own rent, price and horizon, with the transaction costs the percentage rule cannot see.
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