Rent To Income Ratio Calculators
What Your Rent to Income Ratio Should Be
As you can clearly guess by reading the title, rent to income ratio is how much a person is making their monthly income based on what he is paying for the rent of his place. The foremost advantage of this ratio is that both the renters and the house owners get the idea about how much you the renters tend to pay and how the tenants can manage their finances. Therefore, it is essential to know what your rent to income ratio should be.
30% rule:
It is the most useful and more searched method that we implement globally. The 30% rule says that your rent solely should not exceed 30% of your overall monthly income. In this 30% of your income, utilities and other expenses do not include, and this part of your income is fixed, particularly for your rent every month. It gives you a clear picture of what you should be spending on. Cut out your extra expenses and those luxuries that are far from your basic survival needs. It is usually a great tool for the budgeting of your individual or family expenses over savings.
The most common rule for budgeting after cutting this 30% income is 50/30/20. In this proportion, we divide our total gross earning into three parts. According to that, 50% of it we use for our necessities, including food, housing, and other basic use expenses. 30% for our outing and other entertainment stuff, and the remaining 20% goes to our savings.
Now, if you are spending already too much on your rent to have an extravagant and lavish house, you will end up having either no money for your entertainment or will have to sacrifice your savings.
Rent To Income Ratio Calculators
We give you two options to calculate it:
- The first one to calculate a percentage based on gross monthly income and the rent amount.
- The second one to calculate target amounts for both the rent and gross monthly income.
A percentage based on gross monthly income and the rent amount
Rent To Income Ratio
Rent To Income Ratio
Target amounts for both the rent and gross monthly income
The rent and gross monthly income
Total Summary
Frequently Asked Questions
The best range for income ratio recommendation is 30%-40%
To calculate a rent to income ratio, you will need the monthly gross income of the tenant and the rent they will be paying, as well as a percentage threshold. A general guideline is around 30% of gross income. You will then divide the rent by the gross income to get the percentage.