1. What is Rent to Income Ratio?

The Rent to Income Ratio is a financial metric that compares your monthly rent payment to your monthly income. In Ontario, Canada, landlords often use this ratio to assess a tenant's ability to afford rent payments.

2. How Does the Calculator Work?

The calculator uses the simple formula:

Where:

• Monthly Rent — Your total monthly rent payment in CAD
• Monthly Income — Your total monthly income before taxes in CAD

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

3. Importance of Rent to Income Ratio

Details: Many landlords in Ontario look for a ratio of 30% or less. A higher ratio may indicate financial stress or difficulty meeting rent obligations.

4. Using the Calculator

Tips: Enter your monthly rent and gross monthly income (before taxes) in Canadian dollars. Both values must be greater than zero.

5. Frequently Asked Questions (FAQ)

Q1: What is a good rent to income ratio in Ontario?
A: Generally, 30% or less is considered affordable. Some landlords may accept up to 40%, but this may indicate financial strain.

Q2: Does this include utilities?
A: Typically, the ratio is based on rent only. If utilities are included in your rent, use that total amount.

Q3: Should I use gross or net income?
A: Landlords usually consider gross income (before taxes) for this calculation.

Q4: What if I have roommates?
A: You can calculate the ratio using your portion of the rent and your individual income.

Q5: Are there exceptions to the 30% rule?
A: In expensive cities like Toronto, many renters exceed 30%. Landlords may consider other factors like credit score or savings.