Definition
Monthly rent divided by gross monthly income. The classic guideline caps it at 30%, and most landlords screen applicants for income of at least 3x the rent, which is the same line from the other side.
Why it matters
Rent is the largest and least flexible expense in most budgets: the ratio you sign at lease time decides how much budget is even possible for the following year.
Example
Rent of $1,800 on $6,000 of gross income is a 30% ratio, right at the guideline. The same apartment split with a roommate drops each person's ratio near 15% and frees hundreds a month.
Put it into practice
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.