3x Rent Rule: How to Calculate - Complete Guide (2024)

By: ROS Team

The 3x rent rule is a popular guideline used by many renters when considering how much they can afford to pay in rent each month.

According to this rule, a person’s monthly rent should not exceed three times their gross monthly income.

While this rule is not set in stone, and there are exceptions to it, it can be a helpful starting point for determining how much you can afford to pay in rent and whether or not a particular rental property is within your budget.

In this beginner’s guide, we’ll explain what the 3x rent rule is, how it’s calculated, and when it might be appropriate to use it.

What is the 3x Rent Rule?

The 3x rule states that a person’s monthly rent should not exceed three times their gross monthly income. The idea behind this rule is that a person should not spend more than a third of their income on housing costs, as this can leave them with too little money for other expenses and savings.

The 3x rent rule is not a hard and fast rule, and there are many factors that can affect a person’s ability to afford rent.

Some people may be able to afford more or less than three times their gross monthly income, depending on their income, debts, and other financial obligations. It is important for renters to carefully consider their own financial situation before committing to a rental property.

How to Calculate 3x Rent?

To calculate how much rent you can afford based on the 3x rent rule, follow these steps:

Determine your Gross Monthly Income: This is the amount of money you earn each month before taxes, and other deductions are taken out. Be sure to include any income from sources such as a job, investments, or government benefits.

Multiply your Gross Monthly Income by 3: The result of this calculation is the maximum amount of rent you can afford to pay according to 3 times the rent rule.

For example, if your gross monthly income is $3,000, you can afford to pay up to $9,000 in rent per month according to the 3x rent rule ($3,000 x 3 = $9,000).

What If I Don’t Make Three Times the Rent?

If you don’t make three times the rent, it doesn’t necessarily mean that you won’t be able to afford a particular rental property. The 3x rent rule is just a guideline, and there are many factors that can affect a person’s ability to afford rent.

That being said, if your income is less than three times the rent for a particular property, it may be more difficult to afford the rent.

In this case, you may need to consider other options, such as finding a less expensive rental property, getting a roommate to split the cost of rent, or negotiating a lower rent with the landlord.

It’s also a good idea to carefully review your budget to see where you can cut expenses and free up more money for rent.

This might involve things like reducing your spending on non-essential items, finding ways to save money on bills and everyday expenses, or increasing your income through a part-time job or freelance work.

Ultimately, the most important thing is to make sure that you can afford your rent and still have enough money left over for other expenses and savings.

Why do Apartments Ask for 3x Times the Rent?

It is common for landlords and property management companies to ask for proof of income when screening potential tenants. Some landlords may use 3 times the rent rule as a guideline to help determine if a prospective tenant will be able to afford the rent for their property.

The 3x rent rule is based on the idea that a person should not spend more than a third of their income on housing costs, as this can leave them with too little money for other expenses and savings.

By requiring that a tenant’s income is at least three times the rent, the landlord can have confidence that the tenant will be able to afford the rent and may be less likely to default on their lease.

Some landlords may be more flexible with their income requirements, while others may have stricter guidelines. It’s always a good idea to discuss your financial situation with the landlord or property management company before committing to a rental property.

The 3x Rent Rule: Tips for Sticking to a Budget While Renting

Here are some tips for sticking to a budget while renting and making the most of the 3x rent rule:

1- Determine Your Budget

Before you start looking for a rental property, it’s a good idea to figure out how much you can afford to pay in rent. Use 3 times the rent rule as a starting point, but also consider other factors such as your income, debts, and other financial obligations.

2- Look for Ways to Save Money

There are many ways you can cut expenses and save money while renting. For example, you might look for a rental property with lower utilities, opt for a smaller living space, or negotiate a lower rent with the landlord.

3- Set Financial Goals

Having specific financial goals can help you stay on track with your budget. For example, you might set a goal to save a certain amount of money each month, pay off debt or build an emergency fund.

4- Track Your Pending

It can be easy to overspend when you’re not paying attention to your expenses. Make a habit of tracking your spending, so you know exactly where your money is going and can make adjustments as needed.

5- Consider a Roommate

Sharing the cost of rent with a roommate can be a good way to save money while renting. Just be sure to carefully consider the pros and cons of having a roommate and have open and honest communication about finances and expectations.

6- Keep an Eye on Your Credit Score

Your credit score can affect your ability to rent a property and may even impact the amount of rent you pay. Be sure to pay your bills on time and work on improving your credit score if necessary.

When Might it be Appropriate to use the 3x Rent Rule?

The 3x rent rule is a guideline that can be helpful for renters who are trying to determine how much they can afford to pay in rent each month. It is often appropriate to use this rule when you are considering renting a new property and want to get an idea of how much rent you can afford based on your income.

The 3x rent rule can also be useful when you are trying to stick to a budget and want to make sure that your housing costs are not taking up too much of your income. By following this rule, you can ensure that you have enough money left over for other expenses and savings.

The Bottom Line

Even if there is no state requirement, landlords in New York often adhere to the 3x Rent Rule. As a result, look for accommodations that are in line with your gross income. However, you can try to persuade a landlord by demonstrating your good credit and guarantor.