1. What is Rent-to-Income Ratio?

The Rent-to-Income Ratio is a financial metric that compares a tenant's monthly rent payment to their monthly income. It helps landlords and tenants assess affordability of housing costs.

2. How Does the Calculator Work?

The calculator uses the Rent-to-Income Ratio formula:

Where:

• \( Rent \) — Monthly rent payment
• \( Income \) — Monthly gross income

Explanation: The ratio shows what percentage of income is spent on rent each month.

3. Importance of Rent-to-Income Ratio

Details: Most landlords prefer a ratio below 30%. Higher ratios may indicate financial stress or difficulty paying rent consistently.

4. Using the Calculator

Tips: Enter monthly rent and gross monthly income in any currency. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is a good rent-to-income ratio?
A: Generally, 30% or lower is considered affordable, though this varies by location and individual circumstances.

Q2: Should I use gross or net income?
A: Most landlords use gross income (before taxes), but some may consider net income for a more accurate picture.

Q3: How do landlords use this ratio?
A: Landlords use it to assess if tenants can afford the rent while meeting other financial obligations.

Q4: What if my ratio is too high?
A: Consider finding a more affordable place, getting a roommate, or increasing your income.

Q5: Does this ratio apply to mortgage payments?
A: A similar concept exists for mortgages (housing expense ratio), but the thresholds may differ.