How it is calculated
30% rule = gross monthly income × 30% 40× rule = gross annual income ÷ 40 28/36 rule = min(monthly income × 28%, monthly income × 36% − monthly debt payments) Move-in cost = first month + deposit + (last month) + broker fee + application fee
- 30% rule: HUD considers households that spend more than 30% of income on housing to be cost-burdened, so a common guideline is rent at or below 30% of gross monthly income.
- 40× rule: Many landlords and management companies, especially in New York, want annual income of at least 40 times the monthly rent. If you fall short, they may ask for a guarantor or a guarantor service.
- 28/36 rule: Borrowed from mortgage underwriting: housing costs up to 28% of income, and housing plus other debt payments up to 36%. The more debt you carry, the lower the cap.
Example: $72,000 a year
$400 a month in debt payments, $1,800 rent, a one-month deposit, a $50 application fee and no broker fee (the calculator’s defaults).
The lowest of the three, $1,680, is the conservative cap once debts are counted. An $1,800 rent meets the 30% and 40× rules exactly but is $120 above the 28/36 figure.
| Item | Amount |
|---|---|
| Gross monthly income | $6,000 |
| 30% rule | $1,800 |
| 40× rule ($72,000 ÷ 40) | $1,800 |
| 28/36 rule (min($1,680, $2,160 − $400)) | $1,680 |
| Move-in cost ($1,800 + $1,800 + $50) | $3,650 |
| With a broker fee of 15% of a year’s rent | $3,650 + $3,240 = $6,890 |
State and city rules: deposits, broker fees, application fees
- Deposit limits: They vary by state. New York caps deposits at one month’s rent under its 2019 tenant protection law; California has generally capped them at one month since July 2024 (two months for small landlords). Some states have no cap.
- NYC FARE Act: Since June 11, 2025, landlords’ agents in New York City, including listing agents, can’t charge their fee to tenants. Tenants pay only a broker they hire themselves, and landlords must disclose every fee a tenant has to pay in writing before the lease is signed.
- Application fees: New York limits background and credit check fees to the actual cost or $20, whichever is less. Other states have no cap or different rules.
- Deposit returns: Most states require landlords to return the deposit with an itemized list of deductions within a set time after move-out (14 days in New York, for example).
What isn’t included
- The 30%, 40× and 28/36 rules are rules of thumb, not law. The right rent for the same income depends on local costs, household size and savings goals.
- These rules use gross income, so the real burden is heavier in high-tax states and cities. Check against your take-home pay too.
- Utilities (power, gas, internet), renters insurance, parking, pet fees and moving costs are not included.
- Landlords also look at your credit score, proof of employment and rental history, not just income.
FAQ
Is the 40× rule based on gross income?
Yes — usually gross annual income from pay stubs or a W-2. When two people sign the lease, many landlords combine incomes.
How many months’ deposit is typical?
It depends on the state and the landlord, but one month is common. Places such as New York and California cap it by law, so check your state’s rules before signing.
Do I have to pay a broker fee in New York City?
Since the FARE Act took effect on June 11, 2025, tenants don’t pay the fee of the landlord’s broker. If you hire your own broker, you pay the fee you agree with them.
What if my income is below 40 times the rent?
You’ll often be asked for a guarantor, a guarantor service or a larger deposit. In states with deposit caps, extra deposits are limited.