The rule in one line
Under the 40× rule, your yearly income before tax should be at least 40 times the monthly rent. A $2,000 apartment needs $80,000 a year; a $3,000 one needs $120,000.
Income needed per year = 40 × monthly rent
40× is a little stricter than 3×
Many listings use a monthly version instead: income of at least 3 times the rent each month. Turn 3× into a yearly figure and it's 36 times the rent (3 × 12), so 40× asks for about 11% more. Divide 40 by 12 and you get 3.33: the 40× rule is a 3.33× monthly rule.
| Monthly rent | 40× (per year) | 3× (per year) | 2.5× (per year) |
|---|---|---|---|
| $1,500 | $60,000 | $54,000 | $45,000 |
| $2,000 | $80,000 | $72,000 | $60,000 |
| $2,500 | $100,000 | $90,000 | $75,000 |
| $3,000 | $120,000 | $108,000 | $90,000 |
Another way to read it: at exactly 40×, rent takes 30% of your gross monthly income.
The details that decide whether you pass
Rent only, or rent plus fees?
Some homes apply the multiple to the rent alone. Others apply it to rent plus mandatory monthly fees, such as amenity, parking or trash. At 3×, $125 in monthly fees adds $375 a month to the income needed. A listing should tell you which it uses; PropFit shows it for every home.
How your pay is counted
Income rules are monthly or yearly, but paychecks aren't. Convert carefully:
- Weekly pay × 52 ÷ 12
- Every two weeks × 26 ÷ 12 (not × 2: that's twice a month)
- Twice a month × 24 ÷ 12
- Hourly: rate × hours a week × 52 ÷ 12
Someone paid $2,000 every two weeks earns about $4,333 a month, not $4,000. That difference can be the whole gap.
Whose income counts
Some homes add up the incomes of everyone on the lease; others look at each person separately. That's the home's call, so check before you assume.
Guarantors
When an owner accepts a guarantor, the guarantor is usually asked for a higher multiple. 80 times the monthly rent a year is a common figure in New York City. It's an alternative route, not an extra one: income at 40×, or a guarantor at 80×.
Short of the rule? It's about the home, not you
Missing an income rule at one apartment doesn't mean you can't rent. It means you can't rent that apartment, under that rule, at that rent. A home $200 a month cheaper, or one that uses 2.5× instead of 3×, may be well within reach.
That's what PropFit is for: it checks your income against each home's own rule, says whether you meet it, names the gap when you don't ("Gap: $517/month"), and points you to homes that fit better.
This article explains general rules of thumb and how PropFit works. It isn't financial or legal advice.