Rent 101: How to Calculate Rent Using the 40x Rent Rule

By: ROS Team

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The concept of affordable rent is subjective. Some landlords, particularly those in New York City, require that prospective tenants have an annual gross income of at least 40 times the rent. While this requirement can be helpful, it shouldn’t be the only way to determine apartment affordability.

The cost of renting an apartment may surprise you. Some buildings, for example, demand that you pay monthly rent for each pet you own in addition to your regular monthly rent amount. If you’re a New Yorker with a pet, this could increase your monthly rent by $35. There may be other extra expenses to account for, such as onsite gym use or parking fees.

Keep in mind that the 40x rent rule doesn’t factor in any of your other monthly expenses like student debt repayments, car or renters insurance, and health insurance. So, although you may qualify for an apartment because your income meets the 40 times the rent requirement, don’t forget to factor in your other financial commitments.

Does the 40x Rule Make Sense?

The main purpose of the 40x rent rule is for landlords to ensure prospective tenants make enough money to consistently pay rent. At first blush, the requirement may sound intimidating, but it’s actually not. For example, if your annual salary is $80,000, applying the 40x rule would mean you would need to be able to pay at least $2,000 a month to qualify for the apartment ($80,000/40 = $2,000).

Why Should You Earn at Least Three Times the Amount of Rent?

Experts recommend that renters have a monthly gross income of at least three times the total rent. The idea here is to help ensure the renter can comfortably and consistently meet their rental obligations.

Let’s take pretend you’re considering a three-bedroom apartment that rents for $1,200 a month. Considering your annual salary is $80,000, and applying the 40x rent rule, the math suggests you’d be on track to meet the rent requirements comfortably.

Make 3 Times the Rent
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Calculating Your Monthly Rent Payment

Experts suggest you shouldn’t pay more than 25% of your net income for rent or mortgage, and that’s after you’ve paid all of your other monthly bills. If you’re able to do this, it’s likely that you’ll be financially stable enough to consistently make your rent payments. With this in mind, your monthly budget suggests that your monthly spending should be similar to the following:

  • Not spending more than 11% of your monthly income on food;
  • Not spending more than 5% of their monthly salary on transportation-related expenses like fuel, parking, and car insurance; and
  • Limiting spending on other things like entertainment, clothes, and savings.

Five Ways to Get Around the 40X the Rent Rule

Even while budgeting with an income, NYC 40x rent rule can be tough to meet. But no worries–there are ways around it. Here are five strategies for still securing the apartment of your dreams if you don’t meet the 40x rent rule:

1. Increase Your Security Deposit Amount

According to Adam Frisch, managing partner of Lee & Associates Residential in New York City, those who don’t earn 40 times the rent for an apartment still have renting options. One of those options is offering to pay a larger security deposit during the application process.

Security Deposite

2. Maintain A High Credit Rating

Your credit score is a big indicator of your renting ability. Start your apartment search by making sure your credit report is in tip-top shape. One’s credit history gives landlords a glimpse into individuals’ payment habits, which will likely predict how they will pay their rent.

3. Get A Guarantor

Falling short of the 40x rent rule may mean finding a guarantor. Anyone can serve as your guarantor as long as their salary is at least 80 times the apartment’s monthly rent.

4. Partner with a Surety Company

A surety bonding company will guarantee and co-sign your lease for a one-time fee. Which is usually between 5% – 10% of your annual rent amount, or 1 – 1.5 months’ rent.

5. Consider Different Apartments

If all else fails, look elsewhere. There are lots of apartments in New York City, and with a little hard work and time, you’re bound to find one that you can comfortably afford.


The cost of renting an apartment will vary, as will the requirements for qualifying for a rental unit. If you’re ready to rent but have little or no credit history, be prepared to put down a larger security deposit. If your income does not meet the 40x rent rule, consider your other options like getting a guarantor or partnering with a surety company. Explore all your options and don’t let the 40 times the rent rule become a deterrent to finding your dream apartment in New York City.