How Our Calculator Works
Understanding the calculation process behind the 40x rent rule
The Core Formulas
Our calculator uses two simple but powerful formulas to help you understand NYC rental affordability:
Formula 1: Required Annual Income
Required Annual Income = Monthly Rent × 40
Use this when you know the rent and want to find the income needed
Formula 2: Maximum Affordable Rent
Maximum Affordable Rent = Annual Income ÷ 40
Use this when you know your income and want to find your rent limit
Why the 40x Rule Makes Sense
The 40x rule is designed to ensure that rent doesn't consume more than 30% of your monthly income. Here's the math:
- If your annual income is 40 times your monthly rent
- Your monthly income is roughly 3.33 times your monthly rent
- This means rent represents about 30% of your monthly income (1 ÷ 3.33 = 30%)
- This leaves 70% of your income for other expenses, savings, and emergencies
Worked Examples
Example 1: Finding Required Income
Scenario: You found an apartment for $3,500/month
Calculation: $3,500 × 40 = $140,000
Result: You need an annual income of at least $140,000 to qualify
Example 2: Finding Maximum Rent
Scenario: Your annual income is $100,000
Calculation: $100,000 ÷ 40 = $2,500
Result: Your maximum affordable rent is $2,500/month
Example 3: High-End Scenario
Scenario: Looking at a luxury apartment for $6,000/month
Calculation: $6,000 × 40 = $240,000
Result: You need an annual income of at least $240,000 to qualify
Important Considerations
- •Gross Income: The calculation uses your gross annual income (before taxes and deductions)
- •Landlord Variations: Some landlords may require 45x or accept 35x depending on other factors
- •Additional Costs: Remember to budget for broker fees, security deposits, and moving expenses
- •Credit Score: Meeting the income requirement doesn't guarantee approval - you also need good credit