Renting: Staying on Budget
Whether you are a first-time renter or an experienced tenant, finding the right place takes time and effort. The following tips can help you figure out how much you can afford to spend, and what is most important to you in choosing a place to call home.
- What you can afford to spend on rent depends on a number of factors, including your household income, your outstanding debts and how much you spend on other living expenses. CMHC’s Rental Search Worksheet can help you set a budget and draw up a list of your rental priorities.
- As a general rule, your monthly costs (including rent, electricity, heat, water and municipal services) should be less than 30% of your before-tax household income. You may also want to consider how much debt you’re comfortable having, and whether you want to put away any money to save for the future.
- Location is often the biggest factor in a rental search. Prime locations cost more, but they often offer other advantages, such as proximity to work, school, public transit, or family and friends. The best way to find out if the rent is fair is by looking at several homes or apartments in the same area, to see what the average rents are like.
- Find out if the rent includes utility costs, such as heat, electricity, water, cable television or Internet connection. Other expenses you may need to take into account
include laundry and parking costs, transportation costs, and home renters’ insurance.
- When you calculate how much you will be paying each month, make sure to take these extra expenses into account. For instance, an $800-a-month apartment that includes utilities, cable and parking could end up costing less than a $600-a-month apartment that does not include those utilities.
- In most parts of the country, landlords can ask for a rent deposit and a security deposit. But these rules vary from one province and territory to another, so be sure to check the Provincial and Territorial Fact Sheets for your area. Remember that you are entitled to the return of your deposit with interest after you move out.
- If a bad credit rating is keeping you from being able to find a place, you can try to improve your credit score by always paying your bills on time. To find out your credit score or check for any errors or inaccuracies, contact Canada’s two credit-reporting agencies: Equifax Canada and TransUnion Canada. If you find an error, contact the credit bureau immediately, and be prepared to provide statements or receipts as proof.
- If you are a first-time renter, have had credit problems in the past, or do not have a credit rating, you may need a letter from a parent or close friend stating that they will assume the risk if you fail to pay your rent.