How this number is made
The thirty-percent rule says rent should stay under 30% of gross monthly income. It is a screen, not a budget. A city with cheap transit and a city that requires a car are not the same 30%. This page applies the ratio you choose and then shows what the listed debts do to the rest of the check.
- Use gross income, before tax, because that is how the rule is usually stated.
- List minimum debt payments: car, student loans, cards. Leave out groceries and utilities.
- If the leftover cannot cover tax withholding, food, and savings, lower the ratio. The rule does not know your tax.
Formula
Rent ceiling = gross monthly income × ratio. Remainder = gross − rent − listed debt payments.
Worked example
Gross of $6,200 and a 30% rule produces a $1,860 ceiling. With a $350 car payment, $3,990 of gross is still unassigned — and tax has not been taken out yet. Net pay is what has to fund the rest.
Questions
Should I use net income instead?
Landlords often screen on gross. Your household should also test the rent against take-home pay. If 30% of gross is half of net, the rule is too loose for that paycheck.
Does this approve me for an apartment?
No. Landlords use their own income multiples, credit, and rental history. Lenders use debt-to-income rules that are not this page.