Renting a home is something that most of us will experience at some point in our lives. From college students looking to rent after moving out of their family home to those looking to relocate to a new location for a job, marriage, etc., there are many reasons why one may want to rent versus buy a home. Similar to buying, what you can afford to rent is also based on your income. While there are general guidelines recommended for renters, many landlords also have income requirements that need to be met before they agree to rent their property to you.  

How to Determine Your Rent Based on Income

Experts nationwide recommend that you spend less than 30% of your monthly gross income on rent. Say, you make $60,000 per year, based on this 30% rule, you should spend at most $1,500 per month on rent. Another method to determine your rent based on income is the 40x rule. Many landlords in NYC will require that you show proof of making more than 40x the monthly rent. To figure out what apartment you can qualify for, simply divide your annual gross income by 40. Utilizing the same example, if you make $60,000, you can spend up to $1,500 per month on rent. 

In recent years, growing demand for rental housing, a shortage of affordable housing plus lack of new constructions, and inflation have all contributed to increases in rental prices. Sadly, wage increases have not increased at nearly the same rate, leading more and more renters to spend more than 30% of their annual income on rent. However, this also means that many can no longer meet the 40x requirement unless they downsize or find roommates to share the burden of rent. However, these aren’t solutions for everybody, so what are some other ways that you can rent an apartment even without meeting the 40x income requirement that many landlords may have?

40x Rule Workarounds

There are some creative workarounds available to you if you aren’t immediately able to qualify for an apartment in New York City based on the 40x rule.

Find a Guarantor

One way of qualifying for an apartment’s strict income requirement is to find a guarantor. A guarantor is someone who a landlord can hold legally and fiscally responsible, should you default on your rent payment. Given that a guarantor may need to cover both their own housing costs and yours, they are usually required to make 80x the rent. Additionally, some stricter landlords may also require that the guarantor be physically located within the United States, or more specifically the Tri-state area. 

The average studio bedroom cost in NYC is $3,550, meaning that a guarantor will need to make at least $284,000 to qualify. If you’re having trouble finding an individual guarantor such as a friend or family member, then consider working with an institutional guarantor. Many companies such as Insurent, the Guarantors, etc. can sign off to be your guarantor for a fee. 

Improve Credit Score

The higher your credit score, the more reliable some landlords may find you. A great credit score essentially shows the landlord that you have a history of paying your bills on time. If you are just shy of making the 40x income requirement, a good credit score may be what pushes the landlord into accepting your rental application. 

Most landlords will ask for a minimum credit score of 650, though many will want 700 and above to start. If your credit score is lower than this, you’ll want to work on improving your credit score. Check out our guide on how to improve your credit score before you start your apartment search. 

Find a Landlord Who is Flexible

Try renting from a mom-and-pop or individual landlord rather than a major landlord with a management company. They may be more open to renting to you if you can find ways to establish that you are trustworthy and will take good care of their apartment while you live on their property as a renter. 

Prior to 2019, you could have offered to put down more security deposit. However, the Housing Stability and Tenant Protection Act of 2019 made it illegal for a landlord to accept more than one month’s worth of rent as a security deposit in New York City. Some other methods, therefore, include requesting letters of recommendation from previous landlords and/or employers so they can speak to your character and ensure your history as a good renter who made payments on time and took good care of the apartment. If you have enough savings in the bank, be sure to provide your bank statements as well to show the landlord that you’ll be able to cover monthly rent payments. Having a great credit score can also be to your advantage. 

Look to Rent During the Off-Peak Season

The rental market is usually at its peak from late spring to the end of summer. If possible, try to time your lease so that it starts or ends between October to March during the off-peak winter season. While you may have less housing inventory to choose from, there will also be less competition from other renters. Meaning, that more landlords will be willing to work with you even if you may not meet the traditional 40x rent based on income requirement. 

In Conclusion

Landlords in New York City often require renters to meet the 40x rent based on income requirements. However, using a combination of the tips above may allow you to secure an apartment even without meeting the requirements. Be sure to gather up any necessary documents such as your bank statements, proof of a good credit score, and letters of good recommendation well before the start of your apartment search. The more prepared you are, the more smoothly your rental experience can be. Best of luck with your apartment search!