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most applications i've seen say 3x rent. If a ll required 40x, they likely wouldn't have any renters, because anyone with that much income would be able to buy.
It is probably just a rule of thumb that they use. If you don't meet those criteria, they will definitely scrutinize your credit (if they pull it) to see if you have a lot of outstanding (or delinquent) debt to see if you can actually afford to pay them.
Rentals often require a minimum income of 40 times the rent. Does anyone know where this number 40 comes from? Why 40?
Normally when someone is comparing two streams of money, they compare it on the same timescale. For example in my apt complex you must earn at least 3X the rent (over the same time period).
Rent: $15,600/yr, income >= $46,800/yr
Rent: $1300/mo, income >= $4200/mo
As for yearly income being 40X monthly rent, I don't see where they get that number. I've seen 3X rent often around here, but I know in San Francisco they don't seem to require it, as there are plenty of people who pay 1/2 their income for rent.
Normally when someone is comparing two streams of money, they compare it on the same timescale. For example in my apt complex you must earn at least 3X the rent (over the same time period).
Rent: $15,600/yr, income >= $46,800/yr
Rent: $1300/mo, income >= $4200/mo
As for yearly income being 40X monthly rent, I don't see where they get that number. I've seen 3X rent often around here, but I know in San Francisco they don't seem to require it, as there are plenty of people who pay 1/2 their income for rent.
Sounds like here (Santa Barbara). If I had to bring home 3X my monthly income in order to rent a place, I would have a nice little spot under the tree at my local park.
Rentals often require a minimum income of 40 times the rent. Does anyone know where this number 40 comes from? Why 40?
Quote:
Originally Posted by cardinal2007
Normally when someone is comparing two streams of money, they compare it on the same timescale. For example in my apt complex you must earn at least 3X the rent (over the same time period).
This (the 40x rent) is the way it's almost always stated in NYC. My guess the reason they use monthly rent & yearly salary is because a lot of people here need to use their (in many cases substantial) annual bonus to meet the guideline, especially in the higher end luxury buildings. I think it's just for ease of not having to do as much math (adding regular salary together + bonus & then figuring out an adjusted monthly income).
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