Is the traditional 30% rent rule based on gross or net/take home income?
When I have followed the 30% rule for rent, I have always based it on my net income. So, if my take home pay after taxes, health insurance, what I choose to put into a 401k, etc. is let's say $7,500, then my max rent or housing payment is $2,250.
I am apartment hunting right now and people I have asked or compared to are spending much more on rent. I asked and some of them are basing it off their gross income because that is technically the requirement to qualify. I guess I can understand that...most landlords do accept you if you make 2.5x-3.5x the rent with your gross income.
So, what do you do? Also, if you do not follow the 30% rule, what do you do instead?