How the figure is worked out
Two rules of thumb, and the calculator keeps the lower of the two.
- The 30% rule. Rent should take no more than about 30% of your income before tax. Change the share if you know your own budget better: some people spend 25%, others 40% in an expensive town.
- Rent and debts within 36%. A lender's rule borrowed by some landlords: rent plus your monthly debt repayments should stay within 36% of your income. With no debts it is looser than the 30% rule; with a car loan it often becomes the one that counts.
What landlords check
Many owners ask to see an income of about three times the monthly rent. In the United States you will also meet the “40 times” rule: a yearly income of at least 40 times the monthly rent, which works out at the same 30%.
If your income falls short — a student, a new arrival, a retiree living on savings — owners often accept a guarantor, proof of savings or rent paid in advance instead. Ask: the rule is a habit, not a law.
Before tax or after tax?
Both rules use income before tax, because that is the figure on a pay stub or a tax return. If money is tight, run the numbers again with your take-home pay: it tells you what you can live on, not just what a landlord will accept.
The rent is not the whole cost
Utilities, internet and parking come on top unless the listing says they are included, and moving in costs more than one month's rent. The move-in cost calculator adds it all up. Sharing a place? The rent split calculator works out each person's part.