Tenant/Landlord Rent to Income Ratio.
Many landlords depend on many factors when considering tenants such as:
- Credit History and Score.
- Background checks.
- Rent to Income Ratio.
- Debt to Income Ratio.
When it comes to the Rent to Income Ratio many landlords will use the 30% rule of allowing thirty percent of your gross income to go towards rent. So if you are making $40,000 a year then 30% of that will be your total rent which is $12,000 divided by 12 months is equal to $1,000.
A much easier way to do the math is multiply the monthly rent by 40 and that will give you the annual income required by the landlord. $1,000 monthly rent times by 40 = $40,000.
Depending on rental supply & demand landlords will change this ratio to fit their needs, sometimes lowering it or even sometime requiring higher income to rent ratios of 50 times or more.
Ultimately the rent to income ratio is just a guide to which all tenants/landlords need to discuss if they can properly afford the fees, debt to income ratio’s come into play, number family members and other expenses should be considered as well. For quick calculations on rent to income at 20%, 30% and 40% click here.
For more information on Buying, Selling or Renting in Lower Fairfield County, Connecticut contact DMK Real Estate.
Assisting Home Buyers & Sellers with step by step guidance in Fairfield County, Connecticut contact DMK Real Estate, Darien, Ct.