1. What is Rent to Income Ratio?

The Rent to Income Ratio is a financial metric used by landlords and government agencies to assess housing affordability. According to Canadian government guidelines, it represents the percentage of a tenant's income that goes toward rent payments.

2. How Does the Calculator Work?

The calculator uses the standard formula:

Where:

• Monthly Rent — Total monthly rent payment in CAD
• Monthly Income — Total gross monthly income in CAD

Explanation: The ratio shows what portion of income is dedicated to housing costs, helping assess affordability.

3. Importance of Rent to Income Ratio

Details: In Canada, a ratio below 30% is generally considered affordable, while ratios above this threshold may indicate financial stress. Many landlords use this metric when screening tenants.

4. Using the Calculator

Tips: Enter monthly rent and income in Canadian dollars (CAD). Both values must be positive numbers. The calculator will compute the percentage of income going toward rent.

5. Frequently Asked Questions (FAQ)

Q1: What is a good rent to income ratio in Canada?
A: The Canadian government typically recommends spending no more than 30% of gross income on rent.

Q2: Do Canadian landlords use this ratio?
A: Yes, many landlords use this ratio (often with a 30% threshold) as part of tenant screening.

Q3: Should I use gross or net income?
A: The standard calculation uses gross (pre-tax) income, as this is what most landlords and government programs consider.

Q4: What if my ratio is too high?
A: Consider finding more affordable housing, increasing income, or looking for rent-geared-to-income programs if eligible.

Q5: Are there exceptions to the 30% rule?
A: In high-cost cities like Toronto or Vancouver, many renters exceed this ratio. Some programs may have different thresholds.