Rent-to-Income Ratio

The rent-to-income ratio compares a tenant's rent to their gross income, used to screen whether a household can reasonably afford a unit. A common standard caps rent at 30% of gross income, which is 3.3 times rent in monthly income. Many landlords screen on a flat 3 times rent instead, which is slightly looser and allows rent up to 33.3% of gross income.

Example

A unit renting for $1,500/month requires a tenant with at least $4,500/month, or $54,000/year, in gross income to meet a standard 3x rent-to-income screen.

Formula

Monthly Rent ÷ Monthly Gross Income = Rent-to-Income Ratio

Excel Formula:

• B2 = Monthly Rent
• B3 = Tenant Monthly Gross Income