Rent to Income: How Much Can I Afford For Rent?

How much rent can you afford? Your annual salary divided by 40.

Before you start searching for your next apartment, you should know how much rent you can afford, as well as the income you’ll need to get approved by a landlord.

Rent to Income

Landlords typically require that your annual income is at least 40 times the monthly rent. For example, if you and your roommate are looking at an apartment that costs $3,000 per month, the landlord would require a combined income of $3,000 × 40, which equals $120,000. To determine how much rent you (and your potential roommates) can afford, simply divide your combined annual incomes by 40.

This table breaks it down:

Combined Annual Income Maximum Monthly Rent
$50,000 $1,250
$60,000 $1,500
$70,000 $1,750
$80,000 $2,000
$90,000 $2,250
$100,000 $2,500
$110,000 $2,750
$120,000 $3,000
$130,000 $3,250
$140,000 $3,500
$150,000 $3,750

How Much Rent is Affordable?

You may have also heard that you should spend no more than 30 percent of your annual income on rent.  Spending 30 percent of your yearly income on rent is widely believed to be an affordable amount, leaving enough money for all your other expenses.

What’s the difference between 30 percent and 40 times the monthly rent? Absolutely nothing, they’re just two different ways of deriving the same number.  The 40x method is just easier to calculate.

For example, let’s take $120,000 of income and determine how much rent you can afford.

Step 1: 30 percent of $120,000 = $36,000

Step 2: $36,000 ÷ 12 months = $3,000 per month.

Too much math? There’s an easier calculation, Just divide $120,000 by 40.

So: $120,000 a year ÷ 40 = $3,000 per month.

Voila! Math magic!

But Let’s Be Real: How Much Rent Can I Really Afford in New York City?

The cost of renting in New York City is notoriously high — so can you really expect to put only 30 percent of your income towards rent?

According to a 2016 report from StreetEasy, the typical household in New York City actually spends more like 65 percent of its total income on rent. That’s terrifying! But although it’s common to break the 30 percent rule and spend the majority of your income on rent, it is ill-advised.

Before you bite off more than you can chew and ink a deal for an apartment you can’t afford, remember that there are practical ways of reducing your rent burden — like bunking up with multiple roommates or avoiding the broker’s fee.

Above all else, keep in mind the 40x trick. Use this a benchmark for what is truly affordable and what is exorbitant. Again, to determine how much rent you (and your potential roommates) can afford, simply divide your combined annual incomes by 40. Don’t have a calculator handy?  Use the following table to look up your maximum rent.

So, let’s break it down one more time.

Question: How much rent you and your roommates can afford?

Answer: Simply divide your combined annual incomes by 40.

Don’t have a calculator handy?  Use the following table to look up your maximum rent.