1. What is Rent to Income Ratio?

The Rent to Income Ratio is a financial metric used to assess housing affordability by comparing monthly rent to monthly income. It helps determine what percentage of income is spent on rent.

2. How Does the Calculator Work?

The calculator uses the Rent to Income Ratio formula:

Where:

• Monthly Rent — The amount paid for housing each month
• Monthly Income — Total income before taxes each month

Explanation: The ratio shows what percentage of your income goes toward rent payments.

3. Importance of Rent to Income Ratio

Details: Landlords often use this ratio (typically looking for ≤30%) to evaluate tenant applications. It's also a personal finance tool to ensure housing costs remain affordable.

4. Using the Calculator

Tips: Enter your total monthly rent and gross monthly income (before taxes). Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is a good rent to income ratio?
A: Generally, 30% or less is considered affordable. Above 30% may indicate housing cost burden.

Q2: Should I use gross or net income for this calculation?
A: The standard calculation uses gross (pre-tax) income, as this is what most landlords consider.

Q3: Does this include utilities and other housing costs?
A: The basic ratio only includes rent. For a more comprehensive view, you might calculate a "housing expense ratio" that includes all housing costs.

Q4: How does this ratio affect rental applications?
A: Many landlords require applicants to have a ratio below 30-40% to ensure they can afford the rent.

Q5: What if my ratio is too high?
A: Consider finding cheaper housing, increasing income, or getting a roommate to share costs.