Rent-to-Income Ratio Calculator
Tenant screening: does this applicant earn enough to afford the rent? Standard threshold is 30-33%.
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Sam's Take
The 33% rule is a starting point, not gospel. A tenant at 35% with 3 years of stable employment and 800 credit beats a tenant at 28% who's been at 4 jobs in 2 years. Use the ratio as a screen, not a decision. My personal hard floor: 28% with strong income proof, or 32% with exceptional everything else (credit, references, time at employer). Below that I move on, no matter how good the rest of the application looks.
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What rent-to-income is and why landlords use it
Rent-to-income ratio is a quick screening number: the tenant's gross monthly income divided by the monthly rent. If a tenant makes $6,000/month gross and the rent is $1,800, their rent-to-income is 30%. The ratio is a proxy for "can this tenant actually afford to live here without falling behind?"
The standard rule across most US markets is that rent shouldn't exceed 30-33% of gross monthly income. That's where most tenants can pay rent on time, every month, without their entire paycheck being eaten before they buy groceries or pay for a car repair. Section 8 caps a tenant's portion at 40% of adjusted gross. In expensive markets like Boston or NYC, some landlords stretch to 35%.
The three thresholds you'll see
- 3x rent rule. Annual income must be at least 3x the annual rent. Equivalent to a 33% threshold. This is the standard nationally and it's what most large property management companies require.
- 2.5x rent rule. Looser, sometimes used in high-cost markets where the 3x rule would screen out half the tenant pool. Equivalent to about 40%.
- 40% cap on Section 8 voucher tenants. Federal housing rules. The tenant pays no more than 40% of adjusted income; the voucher covers the rest.
What rent-to-income doesn't tell you
Rent-to-income is one screening criterion. It's a useful filter, not a complete picture. A tenant with a clean credit history at 35% rent-to-income is usually a better bet than someone at 28% with three evictions. Things you should also be looking at on every application:
- Credit score and credit history (especially recent late payments and collections)
- Employment verification — pay stubs or letter from employer
- Prior landlord references — call them, don't just take the form at face value
- Rental history — gaps, evictions, court records (where local law allows)
- Criminal background — only as permitted by your jurisdiction
One important note: many states and cities have fair housing rules that limit how rigid you can be on rent-to-income. You can't apply different ratios to different applicants. You can't reject solely on rent-to-income if other factors compensate. Some places (NYC, Seattle, parts of California) have "source of income" protections that mean you can't reject voucher tenants. Know your local rules before you screen — fair housing complaints are expensive.