“Prices are moving sideways,” Jonathan Miller, president of Miller Samuel, told Bloomberg. “Where there is growth or decline, it’s nominal.” Despite the drop in rents, Manhattan’s rental market is far from sluggish. In May, 7,085 new leases were signed, a substantial increase of nearly 41% from a year earlier. This uptick in activity also coincided … [Read more…]
The Federal Reserve’s interest rate decisions influence the rates you pay for variable-rate home equity lines of credit (HELOCs) and new home equity loans.
Fed officials announced on June 12 that they would hold interest rates at a 23-year high as policymakers wait for signs that inflation’s rise is slowing, moving closer to their desired 2 percent rate.
“We know that reducing policy restraint too soon or too much could result in a reversal of the progress we’ve seen on inflation,” says Jerome Powell, chairman of the Federal Reserve. “At the same time, reducing policy restraint too late or too little could unduly weaken economic activity and employment.”
This is the seventh straight meeting the Federal Open Market Committee (FOMC) kept its key benchmark federal funds rate in the 5.25 to 5.5 percent target range. Previously, the central bank had indicated plans to slash rates three times in 2024. Now, however, “the Fed is not in a hurry to start cutting interest rates as the progress toward 2 percent inflation has encountered some turbulence,” says Greg McBride, CFA, Bankrate’s chief financial analyst.
So what does that mean for home equity products? Let’s break down how the Fed’s monetary policy affects HELOCs and new home equity loans.
How does a Fed rate affect HELOCs?
When the Fed changes the federal funds rate, the interest rate banks charge each other for overnight loans to meet reserve requirements, it affects other benchmarks — such as the prime rate, the interest lenders charge their largest, most favored clients. The prime usually runs 3 percentage points higher than the fed funds rate. When the fed fund rate moves, the prime rate moves up or down in tandem. Many lenders directly tie the rates on HELOCs and home equity loans to the prime rate — often adding extra percentage points onto them — for the ultimate rate you, the borrower, pay.
Maintaining the status quo at this last Fed meeting suggests HELOCs should remain roughly the same, short-term. But they’ve had a bumpy ride: In November 2023, the average HELOC interest rate eclipsed 10 percent — the highest HELOC rate in over 20 years, according to Bankrate’s national survey of lenders. They dipped back down into the single digits with the new year, though. And, along with home equity loans, they’re forecast to retreat further in 2024.
Don’t expect any dramatic changes, though. “Interest rates took the elevator going up but are going to take the stairs coming down,” says Greg McBride, CFA, Bankrate’s chief financial analyst. “Many home equity lines that now carry double-digit interest rates are going to remain high and interest rates won’t fall fast enough to provide meaningful relief.”
What home equity borrowers should know about the Fed
Because HELOCs usually have variable interest rates, the cost of borrowing can rise or fall with the federal funds rate. If the fed funds rate goes up, your HELOC gets more expensive.
Home equity loans, on the other hand, come with fixed rates, so they aren’t as deeply impacted by fed funds rate movement. Once you close the equity loan, your rate won’t change. But of course the rate you get on a new loan reflects the fed funds rate activity and its impact on the prime rate.
If you want stability in your budget, know that with a HELOC, there’s no real way to predict whether rates will rise, fall or stay the same. Not only does your interest rate affect monthly costs; it can also greatly impact how much you pay for the line of credit overall.
Before you open a HELOC, understand the maximum interest rate, when the draw period ends and whether you’re responsible for interest payments only (or not) during this period.
If you already have a HELOC but don’t have a balance (in other words, haven’t drawn from it), rising rates won’t affect your wallet all that much. If you do owe, you’ll have a larger monthly payment to cover, usually within the next two billing cycles. This applies whether you’re in the draw or repayment phase.
If rates do rise, you might want to explore whether you can lock in a fixed rate on a portion of your HELOC balance. This isn’t an option with every lender, and there might be some limitations if it is.
Overall, though, “having a debt repayment plan is the best way to reduce the impact of high HELOC rates,” McBride advises.
Home equity loan or HELOC: Which is better?
There’s no single answer. Depending on the Fed’s policy, where interest rates are heading and the nature of your financial need, one may be more ideal than the other.
HELOCs benefit most from rate decreases. With the Fed looking to lower rates later in 2024, a HELOC may be more beneficial than a home equity loan because the rate could go down. Also, with a HELOC, you can draw funds as you need them, and you only have to pay interest on the funds you actually take out. So, if you don’t need the full sum on your line of credit upfront, you can take what you need now and wait until rates drop to withdraw more.
On the other hand, home equity loans on average have lower interest rates than HELOCs. As of June 12, interest rates on HELOCs average 9.18 percent, while 15-year home equity loans average 8.75 percent, according to Bankrate’s national survey of lenders.
If the Fed doesn’t move its fed funds rate significantly this year, fixed-rate home equity loans could maintain a lower rate than HELOCs. If you need a set large amount, a home equity loan will get you the funds with a predictable monthly payment. Plus, if rates fall by a large amount, you could always consider refinancing your HE loan, though you will likely need to pay closing costs.
“If you’re undertaking a home improvement project where costs will be incurred in stages, that is best suited to a home equity line of credit,” says McBride. “If you’re doing a debt consolidation where all the funds are disbursed at once, a fixed rate home equity loan may be the better choice.”
Is now a good time to get a home equity loan or HELOC?
With the Fed’s current stance on taming inflation, rates could remain elevated until inflation falls within the Fed’s 2- percent benchmark.
“The decision about whether to take a home equity line of credit or a home equity loan depends more on the borrower’s need for the funds and purpose for borrowing than it does on the interest rate, especially now that interest rates have peaked and are poised to start pulling back,” says McBride. So, if you have a pressing need for funds, now may be the time to take action. If you wait, interest rates could fall, but when and by how much remains to be seen.
Bottom line on the Fed’s effect on HELOCs and HE loans
The Federal Reserve’s interest rate decisions affect borrowing costs for many types of financial products, including home equity loans and lines of credit (HELOCs). When the Fed lowers its key rate, it causes the rates that lenders ultimately set for HELOCs and new home equity loans also to drop, and vice versa.
At its meeting on June 12, the Fed decided to maintain its key rate for the seventh meeting in a row. But interest cuts could still be in the cards if inflation lessens enough. If you plan on taking out a home equity loan — or already have a HELOC — keep an eye on how their rates react following a Fed announcement.
FOND DU LAC (NBC 26) — A new business in Fond du Lac is looking to bring a do-it-yourself approach to home decor.
Board & Brush is opening this weekend, it allows visitors to make their own home decor.
Envision Greater Fond du Lac says 30 businesses have opened in the city in 2024.
Victoria Bernard said she’s always had a passion for woodworking.
“My grandpa used to be a big woodworker and from the time I was little on, like, I would just be right next to him,” Bernard said.
She moved to Fond du Lac a year ago and this week is bringing her passion to life with the new store “Board and Brush,” a franchise that lets visitors take raw wood, distress it, sand it, and then paint it into home decor.
She said she worked closely with Envision Greater Fond du Lac, the county’s chamber of commerce and economic development organization.
“Fond du lac has been super welcoming,” Bernard said.
Envision said this is one of 30 new businesses that have opened in Fond du Lac so far in 2024, and Envision said worked with more than 100 entrepreneurs.
Bernard said the community is close.
“There’s a lot of small businesses around here,” Bernard said. “I’ve met a lot of great people already.”
Looming changes to real estate commissions are already causing ripple effects in mortgage lending.
The National Association of Realtors will implement new rules this summer, following a $418 million settlement to end lawsuits challenging broker commissions. Four major real estate players also agreed to massive settlements in the past year, paving the way for a new landscape for homebuyers, home sellers and their representatives.
Housing finance stakeholders, who held their breath through the legal proceedings, are beginning to respond to the changes affecting borrowers. While the government has already amended one rule to protect certain consumers, other concerns regarding affordability and blurred lines between Realtors and loan officers remain.
Here’s the latest on what you need to know about real estate agent commissions.
Inside: Learn what 18 an hour is how much a year, month, and day. Plus tips to budget your money. Don’t miss the ways to increase your income.
You’re probably wondering if I made $18 a year, how much do I truly make? What will that add up to over the course of the year? Is $18 a living wage?
Is this wage something that I can actually live on? Or do I need to find ways that I can increase my hourly wage?
In this post, we’re going to detail exactly what $18 an hour is how much a year. Also, we are going to break it down to know how much is made per month, bi-weekly, per week, and daily.
That will help you immensely with how you spend your money. Because too many times the hard-earned cash is brought home, but there is no actual plan for how to spend that money.
By taking a step ahead and making a plan for the money, you are better able to decide how you want to live, make sure that you put your money goals first, and not just living paycheck to paycheck struggling to survive.
The ultimate goal with money success is to be wise with how you spend your money.
If that is something you want too, then keep reading. You are in the right place.
$18 an Hour is How Much a Year?
When we ran all of our numbers to figure out how much is $18 per hour is as annual salary, we used the average working day of 40 hours a week.
40 hours x 52 weeks x $18 = $37,440
$37,440 is the gross annual salary with a $18 per hour wage.
As of June 2023, the average hourly wage is $33.58 (source).
Let’s breakdown how that number is calculated
Typically, the average work week is 40 hours and you can work 52 weeks a year. Take 40 hours times 52 weeks and that equals 2,080 working hours. Then, multiply the hourly salary of $18 times 2,080 working hours and the result is $37,440.
That number is the gross income before taxes, insurance, 401K, or anything else is taken out. Net income is how much you deposit into your bank account.
So, $18 an hour is just above $35000 a year and just shy of $38000 a year.
Work Part Time?
But you may think, oh wait, I’m only working part time. So if you’re working part time, the assumption is working 20 hours a week at $18 an hour.
Only 20 hours per week. Then, take 20 hours times 52 weeks and that equals 1,040 working hours. Then, multiply the hourly salary of $18 times 1,040 working hours, and the result is $18,720.
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How Much is $18 Per Month?
On average, the monthly amount would average $3,120.
Annual Amount of $37,440 ÷ 12 months = $3,120 per month
Since some months have more days and fewer days like February, you can expect months with more days to have a bigger paycheck. Also, this can be heavily influenced by how often you are paid on and on which days you get paid.
Work Part Time?
Only 20 hours per week. Then, the monthly amount would average $1,560.
How Much is $18 per Hour Per Week
This is a great number to know! How much do I make each week? When I roll out of bed and do my job, what can I expect to make at the end of the week?
Once again, the assumption is 40 hours worked.
40 hours x $18 = $720 per week.
Work Part Time?
Only 20 hours per week. Then, the weekly amount would be $360.
Here are jobs that pay weekly.
How Much is $18 per Hour Bi-Weekly
For this calculation, take the average weekly pay of $720 and double it.
$720 per week x 2 = $1,440
Also, the other way to calculate this is:
40 hours x 2 weeks x $18 an hour = $1,440.
Work Part Time?
Only 20 hours per week. Then, the bi-weekly amount would be $720.
How Much is $18 Per Hour Per Day
This depends on how many hours you work in a day. For this example, we are going to use an eight-hour workday.
8 hours x $18 per hour = $144 per day.
If you work 10 hours a day for four days, then you would make $180 per day. (10 hours x $18 per hour)
Work Part Time?
Only 4 hours per day. Then, the daily amount would be $72.
$18 Per Hour is…
$18 per Hour – Full Time
Total Income
Yearly Salary(52 weeks)
$37,440
Yearly Salary (50 weeks)
$36,000
Monthly Salary (173 hours)
$3,120
Weekly Wage (40 Hours)
$720
Bi-Weekly Wage (80 Hours)
$1,440
Daily Wage (8 Hours)
$144
Net Estimated Monthly Income
$2,382
**These are assumptions based on simple scenarios.
Paid Time Off Earning 18 Dollars an Hour
Does your employer offer paid time off?
As an hourly employee, you may or may not get paid time off.
So, here are the scenarios for both cases.
For general purposes, we are going to assume you work 40 hours per week over the course of the year.
Case # 1 – With Paid Time Off
Most hourly employees get two weeks of paid time off which is equivalent to 2 weeks of paid time off.
In this case, you would make $37,440 per year.
This is the same as the example above for an annual salary making $18 per hour.
Case #2 – No Paid Time Off
Unfortunately, not all employers offer paid time off to their hourly employees. While that is unfortunate, it is best to plan for less income.
Life happens. There will be times you need to take time off for numerous reasons – sick time, handling an emergency, or even vacation.
So, let’s assume you take 2 weeks off without paid time off.
That means you would only work 50 weeks of the year instead of all 52 weeks. Take 40 hours times 50 weeks and that equals 2,000 working hours. Then, multiply the hourly salary of $18 times 2,000 working hours, and the result is $36000 per year.
40 hours x 50 weeks x $18 = $36000
You would average $144 per working day and nothing when you don’t work.
$18 an Hour is How Much a year After Taxes
Let’s be honest… Taxes can take up a big chunk of your paycheck. Thus, you need to know how taxes can affect your hourly wage.
Also, every single person’s tax situation is different.
On the basic level, let’s assume a 12% federal tax rate and a 4% state rate. Plus a percentage is taken out for Social Security and Medicare (FICA) of 7.65%.
Gross Annual Salary: $37,440
Federal Taxes of 12%: $4,493
State Taxes of 4%: $1,498
Social Security and Medicare of 7.65%: $2,864
$18 an Hour per Year after Taxes: $28,585
This would be your net annual salary after taxes.
To turn that back into an hourly wage, the assumption is working 2,080 hours.
$28,585 ÷ 2,080 hours = $13.74 per hour
After estimated taxes and FICA, you are netting $13.74 an hour. That is $4.26 an hour less than what you planned.
This is a very highlighted example and can vary greatly depending on your personal situation. Therefore, here is a great tool to help you figure out how much your net paycheck would be.
Plus budgeting on a $13 an hour wage is much different.
$18 an Hour Salary
Now, you get to figure out how much you make based on your hours worked or if you make a wage between $18.01-18.99.
This is super helpful if you make $18.15, $18.20, or $18.68.
You are probably wondering can I live on my own making 18 dollars an hour? How much rent can you afford on 18 an hour?
We have figured out how much is $18 an hour annually is $37,440.
Using our Cents Plan Formula, this is the best-case scenario on how to budget your $18 per hour paycheck.
When using these percentages, it is best to use net income because taxes must be paid.
In this example, above we calculated $18 an hour was $13.74 after taxes. That would average $2,382 per month.
According to the Cents Plan Formula, here is the high-level view of an $18 per hour budget:
Basic Expenses of 50% = $1,191
Save Money of 20% = $476
Give Money of 10% = $238
Fun Spending of 20% = $476
Debt of 0% = $0
Obviously, that is not doable for everyone when living above the poverty line. So, you have to be strategic in ways to decrease your basic expenses and debt. Then, it will allow you more money to save and fun spending.
To further break down an example budget of $18 per hour, then using the ideal household percentages is extremely helpful.
recommended budget percentages based on $18 per hour wage:
Category
Ideal Percentages
Sample Monthly Budget
Giving
10%
$156
Savings
15-25%
$468
Housing
20-30%
$842
Utilities
4-7%
$146
Groceries
5-12%
$250
Clothing
1-4%
$31
Transportation
4-10%
$125
Medical
5-12%
$156
Life Insurance
1%
$16
Education
1-4%
$31
Personal
2-7%
$58
Recreation / Entertainment
3-8%
$94
Debts
0% – Goal
$0
Government Tax (including Income Taxes, Social Security & Medicare)
15-25%
$738
Total Gross Income
$3,120
**In this budget, prioritization was given to basic expenses. Thus, some categories like giving and saving were less.
Can I Live off $18 Per Hour?
Even living above the minimum wage by $5-6 can be a very difficult situation.
Is it doable? Absolutely.
You just have to be wiser (or frugal) with your money and how you spend the hard-earned cash you have been blessed with.
A lot of times when people are making under near the minimum wage mark or slightly above, they feel like they are in this constant cycle that they can never keep up. They are not good enough to make more money. You feel like they are constantly struggling to keep up with bills and expenses. And things just keep adding on top.
You need to do is change your money mindset.
This is what you say to yourself… Okay, this is my season of life right now. I have aspirations and goals to change how much I make, but for now, I am going to make sure that I am able to live on my 18 dollars per hour. No going into debt for me.
In the next section, we will dig into ways to increase your income, but for now, is it possible to live on $18 an hour?
Yes, you can do it, and as you can see it is possible with the sample budget of $18 per hour.
Living in a higher cost of living area would be more difficult. So, you may have to get a little creative. For example, you might have to have a roommate. Move to a lower cost of living area where rent is cheaper.
Also, you must evaluate your “fun spending” items. Many of those expenses are not mandatory and will break your budget. You can find plenty of free things to do without spending money.
5 Ways to Increase Your Hourly Wage
This right here is the most important section of this post.
You need to figure out ways to increase your hourly income because I’m going to tell you…you deserve more. You do a good job and your value is higher than what your employers pay you.
Even an increase of 50 cents to $18.50 will add up over the year. Even better $19 an hour!
1. Ask for a Raise
The first thing to do is ask for a raise. Walk right in and ask for a raise because you never know what the answer will be until you ask.
If you want the best tips on how specifically to ask for a raise and what the average wage is for somebody doing your job, then check out this book. In this book, the author gives you the exact way to increase your income. The purchase is worth it or go down to the library and check that book out.
2. Look for A New Job
Another way to increase your hourly wage is to look for a new job. Maybe a completely new industry.
It might be a total change for you, but many times, if you want to change your financial situation, then that starts with a career change. Maybe you’re stressed out at work. Making $18 an hour is too much for you and you’re not able to enjoy life, maybe changing jobs and finding another job may increase your pay, but it will also increase your quality of life.
3. Find a New Career
Because of student loans, too many employees feel like they are stuck in the career field they chose. They feel sucked into the job that they don’t like or have the potential they thought it would.
For many years, I was in the same situation until I decided to do a complete career change. I am glad I did. I have the flexibility that I needed in my life to do what I wanted when I needed to do it. Plus I am able to enjoy my entrepreneurial spirit.
4. Find Alternative Ways to Make Money
In today’s society, you need to find ways to make more money. Period.
There is no way to get around it. You need to find additional income outside a traditional nine to five position or typical 40 hour a week job. You will reach a point where you are maxed on what you can make in your current position or title. There may be some advancement to move forward, but in many cases, there just is not much room for growth.
So, you need to find a side hustle – another way to make money.
Do something that you enjoy, turn your hobby into a way to make money, turn something that you naturally do, and help others into a service business. In today’s society, the sky is the limit on how you can earn a freelancing income.
These are the best ways to make money online for beginners!
5. Earn Passive Income
The last way to increase your hourly wage is to start earning passive income.
This can be from a variety of ways including the stock market, real estate, online courses, book sales, etc. This is where the differentiation between struggling financially and being financially sound.
By earning money passively, you are able to do the things that you enjoy doing and not be loaded down, with having a job that you need to work, and a place that you have to go to. And you still make money doing nothing.
Here is an example:
You can start a brokerage account and start trading stocks for $50. You need to learn and take the one and only investing class I recommend. Learn how the market works, watch videos, and practice in a simulator before you start using your own money.
One gentleman started with $5,000 in his trading account and now has well over $36,000 in a year. Just from practice and being consistent, he has learned that passive income is the way for him to increase his income and also not be a slave to his job.
Tips to Live on $18 an Hour
In this last section, grasp these tips on how to live on $18 an hour. On our site, you can find lots of money saving tips to help stretch your income further.
Here are the most important tips to live on $18 an hour. Highlight these!
1. Spend Less Than You Make
First, you must learn to spend less than you make.
If not you will be caught in the debt cycle and that is not where you want to be. You will be consistently living paycheck to paycheck.
In order to break that dreadful cycle, it means your expenses must be less than your income.
And when I say income, it’s not the $18 an hour. As we talked about earlier in the post, there are taxes. The amount of taxes taken out of your paycheck is called your net income which is $18 an hour minus all the taxes, FICA, Social Security, and Medicare are taken out. That is your net income.
So, your net income has to be less than your gross income.
2. Living Below Your Means
You need to be happy. And living on less can actually make you happier. Studies prove that less is better.
Finding contentment in life is one thing that is a struggle for most.
We are driven to want the new shiny toy, the thing next door, the stuff your friend or family member got. Our society has trained you that you need these things as well.
Have you ever taken a step back and looked at what you really need?
Once you are able to find contentment with life, then you are going to be set for the long term with your finances.
Here is our story on owning less stuff. We have been happier since.
Learn how to live below your means.
3. Make Saving Money Fun
You need to make saving money fun. If you’re good, since you must keep your expenses low, you have to find ways to make your savings fun!
Start saving money with the 200 envelope challenge.
It could be participating in a no spend challenge for the month and not go to Target.
Start saving money to upgrade from your beater car.
Maybe changing your habits and not picking up takeout and planning meals.
Whatever it is challenge yourself.
Find new ways of saving money and have fun with it.
Even better, get your family and kids involved in the challenge to save money. Tell them the reason why you are saving money and this is what you are doing.
Here are things to do with no money. Free activities without costing you a dime. That is an amazing resource for you and you will never be bored.
And you will learn a lot of things in life you can do for free. Personally, some of the best ones are getting outside and enjoying some fresh air.
4. Make More Money
If you want if you do not settle for less, then find ways to make more money. If you want more out of life, then increase your income.
You need to be an advocate for yourself.
Find ways to make more money.
It could be a side hustle, a second job, asking for a raise, going to school to change careers, or picking up extra hours.
Whatever path you take, that’s fine. Just find ways to make more money. Period.
5. No State Taxes
Paying taxes is one option to increase what you take home in each paycheck.
These are the states that don’t pay state income taxes on wages:
Alaska
Florida
Nevada
New Hampshire
South Dakota
Tennessee
Texas
Washington
Wyoming
It is very interesting if you take into account the amount of state taxes paid compared to a state with income taxes.
Also, if you live in one of the higher taxed states, then you may want to reconsider moving to a lower cost of living area. The higher taxes income tax states include California, Hawaii, New Jersey, Oregon, Minnesota, the District of Columbia, New York, Vermont, Iowa, and Wisconsin. These states tax income somewhere between 7.65% – 13.3%.
6. Stick to a Budget
You need to learn how to start a budget. We have tons of budgeting resources for you.
While creating a budget is great, you need to learn how to use one.
You do not have to budget down to every last penny.
You need to make sure your expenses are less than your income and that you are creating sinking funds for those irregular expenses.
Budget Help:
7. Pay Off Debt Quickly
The amount that you pay interest on debt is absolutely absurd.
Unfortunately, that is how many of these companies make their money is from the interest you pay on debt.
If you are paying 5% to even 20-21% or higher, you need to find ways to lower that debt quickly.
Here’s a debt calculator to help you. Figure out your debt free date.
Make that paying off debt fast is your target and main focus. I can tell you from personal experience, that it was not until we paid off our debt that we finally rounded the corner financially. Once our debt was paid off, we could finally be able to save money. Set money aside in separate bank accounts and pay for cash for things.
It took us working hard to pay off debt. We needed persistence and patience while we had setbacks in our debt free journey.
Jobs that Pay $18 an Hour
You can find jobs that pay $18 per hour. Polish up that resume, cover letter, and interview skills.
Job Search Hint: Always send a written follow-up thank you note for your interview. That will help you get noticed and remembered.
First, look at the cities that require a minimum wage in their cities. That is the best place to start to find jobs that are going to pay higher than the federal minimum wage rate. Many of the cities are moving towards this model so, target and look for jobs in those areas.
Possible Ideas:
Administrative assistant
Customer service representatives
Cashiers
Retail jobs
Stockers
Housecleaning specialist
Delivery drivers
Warehouse workers
Companies that pay more than $18 per hour:
Target
In-N-Out Burger
Whole Foods
McDonald’s
Macy’s
Advance Auto Parts
Whataburger
Most local grocery chains
Many hotels
Charter Communications
Wells Fargo
Bank of America
JP Morgan
Plus there are more companies in HCOL areas only.
Here are great ideas on how to make 500 dollars fast.
$18 Per Hour Annual Salary
In this post, we detailed 18 an hour is how much a year. Plus all of the variables that can impact your net income. This is something that you can live off.
How much is 18 dollars an hour annually…
$37,440
This is above $37000 per year. In this post, we highlighted ways to increase your income as well as tips for living off your wage.
Use the sample budget as a starting point with your expenses.
You will have to be savvy and wise with your hard-earned income. But, with a plan, anything is possible!
Learn exactly how much do I make per year…
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
Income verification documents, which are typically requested when you’re applying to rent a home or apartment, are documents that prove you have a job and are earning an income.
A landlord requests these documents to ensure that you’re earning enough to cover your rent payments each month. The income verification paperwork requested may vary from landlord to landlord, and the documents may also differ, depending on your specific career situation. The landlord is simply doing their due diligence to make sure you can afford the rental.
Table of Contents
Key Points
• Income verification documents are required by landlords to confirm a potential tenant’s ability to pay rent.
• Common documents include pay stubs, tax returns or W2 forms, and bank statements.
• For self-employed individuals, 1099 forms or personal tax returns may be necessary.
• Additional proof like a letter from an employer can also be used to verify income.
• These documents help ensure that the rent does not exceed a reasonable portion of the tenant’s income.
How to Show Proof of Income to Rent an Apartment
There are a number of ways that prospective renters can show proof of income to a prospective landlord or property management company. The types of documents you need to produce will likely depend on the specific request from the landlord.
Generally, there are a few standard income verification documents that landlords and property managers are looking for:
• Pay stubs
• Tax returns or W2 forms
• Bank statements
• A letter from your employer
Typically, a landlord will request two forms of income verification. Often, your pay stubs and tax forms will suffice as proof of income. But in some cases, you may need to submit several months’ worth of bank statements. You might even need to ask your employer to write you a letter to assure the landlord that you have a job and do have income.
How to Show Proof of Income if You’re Self-Employed
If you’re self-employed, the process can be more complicated. You may need to submit 1099 tax forms or your personal tax returns showing regular and steady income going back a couple of years. Depending on the nature of your self-employment, you may have business tax returns, such as a Schedule C if you own and run a small business, that you can use to verify your income.
You can also use bank statements from your business bank account to show a landlord that you have income. The documents required will likely be similar to those you need when applying for self-employed personal loans. Ask the landlord what will work best for them so you will know exactly what documents you should present.
How to Show Proof of Income for Side Hustles
You may have a side hustle — perhaps you make and sell crafts online, for instance — and that’s similar to owning a small business. And you should be reporting the income you make from your side hustle to the IRS on your tax return. By presenting your tax return to a landlord, you can prove that you’re making side hustle income.
If you’re working for a ridesharing app or food delivery service, the company should be sending you a tax statement with your annual earnings so that you can report them on your tax return. You can always show a copy of that tax statement to a prospective landlord.
Why Proof of Income is Important
Proving your income is important when you rent an apartment — or apply for credit, for that matter — because it shows that you have money coming in every month, and are able to fulfill your financial obligations. In other words, it shows the property owner that you can make your rent payments.
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Understanding Rent-to-Income Ratio
Along with proving your income, you need to make sure that your rent is not eating up too much of your paycheck. That’s where the “rent-to-income ratio” comes into play. It calculates the percentage of your total income that you’re spending on rent.
The general rule of thumb is that you shouldn’t spend more than 30% of your gross monthly income on housing costs. Depending on where you live, those costs may be a higher or lower percentage of your income, but try to aim for around 30%. An online money tracker can help you keep tabs on your spending.
To figure out your rent-to-income ratio, divide your total annual earnings by 12, which gives you your monthly earnings, and multiply that number by 0.3 (or 30%). The result is how much you can afford to spend on rent per month.
Annual earnings ÷ 12 x 0.3 = How much you can afford to pay for rent
For example, let’s say you earn $50,000 a year. Divide that number by 12 and multiply it by 0.3 and you get $1,250. That’s what you should aim to spend on rent each month. Depending on where you live, you may need to spend more, but that figure gives you a ballpark of where you should be in order to have enough money to pay for your other expenses and hopefully, contribute to your savings as well.
How to Best Prepare to Pay Rent
When you are approved by a landlord to rent an apartment, you’ll need to plan and prepare to pay your rent on time and in full every month.
That means having your finances in order. First, you should have a checking account set up. Typically, you’ll pay your landlord by check or through an online portal and either way, you’ll need a bank account in order to do this. You may be surprised to learn that more than 6% of U.S. households (or more than 14 million people) don’t have a bank account. Fortunately, it’s easy to open a bank account if you don’t have one.
Next, make sure that you’re properly budgeting for your rental expenses. You want to make sure that you have enough money in your account to cover the rent when your landlord cashes your check. A budget planner app can help.
There are other expenses that can go along with renting an apartment or home that you may need to pay. Here are a few you should be aware of:
• Utility bills
• Renters insurance
• Parking, maintenance, and fees for amenities such as a gym or pool
Finally, know the terms of your lease. It’s common for rent to go up once a lease expires, which you may discover when you go to re-sign or renegotiate the rent. Unfortunately, renting is not like a fixed-rate mortgage when you have a monthly rate locked in. So don’t be surprised if the costs of staying in your apartment go up after your lease expires.
The Takeaway
Income verification documents offer proof to a landlord or property management company that you have enough money coming in every month to pay the cost of an apartment or home rental. Typically, pay stubs, tax returns, and bank statements are the only forms of documentation you need. However, if you are a small business owner, you may be required to produce additional documents. The good news: Once you are approved to rent, you can start the process of moving in.
Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.
SoFi helps you stay on top of your finances.
FAQ
Can you rent an apartment with no income?
It is possible to rent an apartment with no income, though it likely will be quite difficult. In this instance, having a high credit score can help, because it shows you have a track record of paying your expenses. A healthy savings account can also be useful to prove you have money in the bank.
Can proof of income for an apartment be faked?
It is possible to fake proof of income for an apartment by using online tools to create fake pay stubs and other documents. This constitutes fraud and is illegal, but it does happen.
Is proof of income different for a student?
Yes, it can be, yes. If a student has no income because they are studying full-time, they may need to get a co-signer like a parent or guarantor in order to secure a lease.
Photo credit: iStock/Anna Kim
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Maryland, the “Old Line State,” is a place where the charm of the South meets the bustle of the North. The state is famous for its picturesque beach towns, as the birthplace of the national anthem, and, of course, for its mouthwatering blue crabs. But what else is Maryland known for? Whether you’re considering renting a home in Baltimore, looking to settle into a charming apartment in Annapolis, or just planning a visit, you’ll soon find that the Maryland has much more to offer than meets the eye. In this article, we’ll uncover the hidden gems and iconic features that make Maryland a state that’s truly one of a kind and why so many are proud to call it home. Let’s jump in.
1. Chesapeake Bay
People famously know Maryland for the Chesapeake Bay, the largest estuary in the United States. This iconic body of water supports a thriving ecosystem and is crucial for the state’s seafood industry, especially blue crabs and oysters. The bay also offers a plethora of recreational activities like boating, fishing, and kayaking, making it a top destination for outdoor enthusiasts.
2. Blue crabs
One of Maryland’s most renowned culinary delights is its blue crabs. The state is celebrated for its crab cakes and annual crab feasts, drawing food lovers from across the country. Maryland’s blue crabs are typically seasoned with Old Bay, a unique spice mix that has become synonymous with the state’s cuisine.
3. Old Bay seasoning
Speaking of Old Bay, this seasoning is a staple in Maryland kitchens and beyond, giving a distinctive flavor to seafood dishes. Baltimore created this blend of spices, and it has been a favorite for over 75 years. It’s not just for seafood; locals sprinkle it on everything from popcorn to French fries.
4. Historic Fort McHenry
Fort McHenry, located in Baltimore, is a historic site where Francis Scott Key penned the Star-Spangled Banner during the War of 1812. The fort’s star-shaped design and the dramatic story of its defense against British forces make it a fascinating visit for history buffs and tourists alike.
5. Connection to Edgar Allan Poe
Maryland is also the final resting place of Edgar Allan Poe, the famous poet and author. Poe’s legacy is deeply intertwined with Baltimore, where visitors can explore his gravesite and the Edgar Allan Poe House and Museum. The city celebrates his life and works with annual events like the International Edgar Allan Poe Festival.
Fun facts Maryland is known for
First American Railroad: Maryland established the first American railroad, the Baltimore and Ohio Railroad (B&O), in 1827, playing a crucial role in the country’s transportation history.
Annapolis Naval Academy: The United States Naval Academy in Annapolis, established in 1845, is one of the most prestigious military academies in the world.
Jousting: Maryland recognizes jousting as the official state sport, a tradition dating back to medieval times, celebrated with various tournaments throughout the state.
6. Assateague Island
Assateague Island is a unique barrier island famous for its wild horses. These feral horses roam freely across the island’s beaches and marshes, providing a stunning natural spectacle. The island also offers opportunities for camping, bird watching, and exploring its pristine coastal environment.
7. Johns Hopkins University
Johns Hopkins University in Baltimore is a world-renowned institution known for its contributions to education and medical research. The university’s hospital consistently ranks among the best in the nation, attracting top-tier professionals and students. Researchers and doctors at Johns Hopkins have achieved medical breakthroughs with a global impact, particularly in public health and surgery.
8. Ocean City boardwalk
Ocean City’s boardwalk is a must-visit attraction, stretching three miles along the Atlantic coast. This bustling promenade is lined with shops, eateries, and amusement rides, offering fun for all patrons. Ocean City also hosts numerous events, including the annual White Marlin Open, the world’s largest billfish tournament.
9. Hometown of Cal Ripken Jr.
Baseball fans know Maryland as the home of Cal Ripken Jr., one of the greatest players in Major League Baseball history. Ripken, who played for the Baltimore Orioles, is celebrated for his record-breaking consecutive games played streak. Camden Yards, the Orioles’ ballpark, is a pilgrimage site for baseball enthusiasts.
10. The National Aquarium
The National Aquarium in Baltimore is one of the country’s top aquariums, attracting over a million visitors annually. It features a wide array of marine life, from sharks and dolphins to exotic tropical fish. The aquarium offers exhibits that are both educational and visually stunning, making it a favorite for people of all ages.
11. Antietam National Battlefield
Antietam National Battlefield in Sharpsburg is the site of the bloodiest single-day battle in American history during the Civil War. The well-preserved battlefield and its visitor center provide a poignant and educational experience, commemorating the lives lost and the significance of the battle.
12. Black-Eyed Susan flower
The Black-Eyed Susan is Maryland’s state flower, symbolizing the state’s natural beauty. This vibrant yellow flower can be seen in gardens and fields across Maryland, and it plays a significant role in the state’s cultural heritage. The flower is also prominently featured at the annual Preakness Stakes, the second jewel of the Triple Crown in horse racing.
Jenna is a Midwest native who enjoys writing about home improvement projects and local insights. When she’s not working, you can find her cooking, crocheting, or backpacking with her fiancé.
Ultimately an Uneventful Week Despite Micro-Volatility
By:
Matthew Graham
Fri, Jun 21 2024, 4:41 PM
Ultimately an Uneventful Week Despite Micro-Volatility
This morning featured an overnight rally driven by weakness in European PMI data and a logical sell-off following much stronger PMI data in the U.S. Specifically, S&P Global’s Services PMI rose to the highest level in more than 2 years. This is some of the earliest available data for the month of June and the burden of refutation is on incoming data that is week’s away (for instance, next week’s headline report, PCE, is still for the month of May). Today’s selling never got out of hand, however, and that meant the week as a whole was wholly uneventful in the bigger picture.
S&P Services PMI
55.1 v s 53.7 f’cast, 54.8 prev
S&P Manufacturing PMI
51.7 vs 51.0 f’cast, 51.3 prev
Existing Home Sales
4.11m vs 4.10m f’cast, 4.14m prev
Leading Economic Indicators
-0.5 vs -0.3 f’cast, -0.6 prev
09:36 AM
Moderate overnight gains, following Europe. 10yr down 4bps at 4.22. MBS up 3 ticks (.09).
10:43 AM
Weaker after PMI data with 10yr now up 1.2bps. MBS down 2 ticks (.06).
12:45 PM
Sideways to slightly stronger after AM sell-off. MBS unchanged. 10yr down 0.3bps at 4.258
04:37 PM
Low volatility afternoon. MBS up 1 tick (.03). 10yr down 0.4bps at 4.256
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Last week, 30-year mortgage rates averaged around 6.58%, according to Zillow data. Mortgage rates ticked down a bit following the release of May’s Consumer Price Index data, which showed that inflation cooled off last month.
Mortgage rates are expected to fall further later this year, but how much they’ll go down depends on how inflation trends in the coming months. If inflation is slow to come down, rates might not improve significantly.
If you’re planning to buy a home soon, you can lessen the impact of high rates by shopping around and getting quotes from multiple mortgage lenders. This will help you find the lowest rate available, saving you money in the long term.
Today’s mortgage rates
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Average rate today
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Today’s refinance rates
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Mortgage Calculator
Use our free mortgage calculator to see how today’s interest rates will affect your monthly payments:
Mortgage Calculator
$1,161 Your estimated monthly payment
Total paid$418,177
Principal paid$275,520
Interest paid$42,657
Paying a 25% higher down payment would save you $8,916.08 on interest charges
Lowering the interest rate by 1% would save you $51,562.03
Paying an additional $500 each month would reduce the loan length by 146 months
By clicking on “More details,” you’ll also see how much you’ll pay over the entire length of your mortgage, including how much goes toward the principal vs. interest.
Mortgage Rate Projection for 2024
Mortgage rates started ticking up from historic lows in the second half of 2021 and increased dramatically in 2022 and throughout most of 2023.
Many forecasts expect rates to fall this year now that inflation has been coming down. In the last 12 months, the Consumer Price Index rose by 3.3%. This is a significant slowdown compared when it peaked at 9.1% in 2022, but we’ll likely need to see more slowing before rates can drop substantially.
For homeowners looking to leverage their home’s value to cover a big purchase — such as a home renovation — a home equity line of credit (HELOC) may be a good option while we wait for mortgage rates to ease. Check out some of our best HELOC lenders to start your search for the right loan for you.
A HELOC is a line of credit that lets you borrow against the equity in your home. It works similarly to a credit card in that you borrow what you need rather than getting the full amount you’re borrowing in a lump sum. It also lets you tap into the money you have in your home without replacing your entire mortgage, like you’d do with a cash-out refinance.
Current HELOC rates are relatively low compared to other loan options, including credit cards and personal loans.
When Will House Prices Come Down?
We aren’t likely to see home prices drop this year. In fact, they’ll probably rise.
Fannie Mae researchers expect prices to increase 4.8% in 2024 and 1.5% in 2025, while the Mortgage Bankers Association expects a 4.3% increase in 2024 and a 3.3% increase in 2024.
Sky high mortgage rates have pushed many hopeful buyers out of the market, slowing homebuying demand and putting downward pressure on home prices. But rates have since eased, removing some of that pressure. The current supply of homes is also historically low, which will likely push prices up.
What Happens to House Prices in a Recession?
House prices usually drop during a recession, but not always. When it does happen, it’s generally because fewer people can afford to purchase homes, and the low demand forces sellers to lower their prices.
How Much Mortgage Can I Afford?
A mortgage calculator like the one above can help you determine how much house you can afford. Play around with different home prices and down payment amounts to see how much your monthly payment could be, and think about how that fits in with your overall budget.
Typically, experts recommend spending no more than 28% of your gross monthly income on housing expenses. This means your entire monthly mortgage payment, including taxes and insurance, shouldn’t exceed 28% of your pre-tax monthly income.
The lower your rate, the more you’ll be able to borrow, so shop around and get preapproved with multiple mortgage lenders to see who can offer you the best rate. But remember not to borrow more than what your budget can comfortably handle.
The U.S. Department of Housing and Urban Development (HUD) on Friday announced a new round of disaster relief in the state of Hawaii that is targeted for the island of Kauai following severe storms, flooding and landslides that took place there in April.
On June 17, President Joe Biden issued an executive order approving a disaster declaration in the state. He directed “federal assistance to supplement state and local recovery efforts in the areas affected by severe storms, flooding, and landslides” that occurred from April 11-14.
“Federal funding is available to state and eligible local governments and certain private nonprofit organizations on a cost-sharing basis for emergency work and the repair or replacement of facilities damaged by the severe storms, flooding, and landslides in Kauai County,” Biden said in the order. “Federal funding is also available on a cost-sharing basis for hazard mitigation measures statewide.”
HUD is immediately implementing federal disaster assistance for Kauai County’s housing programs, including a “90-day moratorium on foreclosures of mortgages insured by the Federal Housing Administration (FHA) as well as foreclosures of mortgages to Native American borrowers guaranteed under the Section 184 Indian Home Loan Guarantee program.”
Alongside this relief, a 90-day extension is automatically granted to borrowers of the FHA’s Home Equity Conversion Mortgage (HECM) program, otherwise known as the federal reverse mortgage program, effective as of the disaster declaration date.
HUD recommends for anyone impacted by these disasters to immediately contact their loan servicer for assistance, and for both conventional and nonagency mortgage holders to see whether they qualify for assistance.
HUD has had a focus on providing disaster relief in Hawaii ever since wildfires struck the island of Maui in the summer of 2023. The fires devastated the town of Lahaina, destroying much of it and killing a confirmed 101 people as of February 2024, a figure revised slightly downward since the days following the fires. Two people remain listed as missing and two-thirds of the victims were 60 or older, according to reporting by The Associated Press.
Last month, FHA extended the foreclosure moratorium on the island of Maui to Aug. 4, 2024 as reconstruction and recovery efforts continue.