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The 40x Rule

If this isn’t your first time hunting for an apartment in NYC, you’ve no doubt already heard of the "40x Rule". This is a rule most landlords tend to use when looking at an applicant’s income eligibility, and estimates whether or not your annual gross income is at least 40 times your monthly rent or not.

While the 40x rule is widely used as a rule of thumb among landlords, it’s not a thorough examination of your expenses. Why? The 40x rule doesn’t include things like your lifestyle or any additional unforeseen costs and emergencies. Things like expenses for pets, clothing, food, and even utilities aren’t included (after all, your internet package or cable preferences won’t be the same as the next applicant’s, so there are always mitigating factors), so this is math you’ll have to do yourself.

One of the safest ways to determine your actual rent budget is by creating an estimated monthly budget based on your income and including factors like gas and commuting costs, food, and everything else a broad formula like this would leave out. Proper planning will not only make you more confident in your search, but can help you realize expenses that may have been forgotten previously or new ones that could appear in the future (such as a deferred student loan payment that is approaching or a new insurance policy taking effect soon).

Other important expenses to factor in:

  • Pet Costs (food/toys, vet appointments, pet sitters and additional pet fees for the building)
  • Daily Travel Commuting Expenses (train/subway costs or gas and tolls)
  • Insurance (health and dental insurance, auto insurance, renter’s insurance, etc.)

Weigh your rent and other costs with our rent calculator

Annual Gross Income

Your total income before taxes

Monthly Net Income


Monthly Debt Such as student loan, insurance, etc.

You can afford:

$0 /mo

Based on your income, a rental at this price should fit comfortably within your budget. You’ll have $0 left spend


Landlords might require you to submit a larger security deposit if you have a lower credit score, so your individual results will vary from location to location.

If you’re searching with a lower credit score, it would also be smart to prepare a guarantor in case you don’t meet the landlord’s income requirements. (This is a person that you designate to guarantee lease payments, even if they can’t be paid for some reason. Similar to a cosigner relationship, this person will be held responsible for making rent payments if you ever fail to do so.)

You may also be asked to provide a guarantor if any of these conditions apply to you:

  • if your annual income is short the required 40 the rent
  • Non-residents visiting the U.S. for schooling or work
  • If you lack employment history or rental history
  • Low credit score or lack of credit history

Many recent grads and young apartment hunters list their parents as cosigners or guarantors for their lease agreements. If you need a guarantor and this is not an option, consider using a paid guarantor service such as The garantors Insurant or rhino or partner if you have any. Services like this typically charge a one time fee around 50% of your monthly rent, but using a private equity or insurance firm can drastically expedite your process and guarantee you a better position to apply for a wider range of properties.