The 40x rent rule is a guideline that states that a renter will need to make an annual salary equal to approximately 40 times the monthly rent on their NYC apartment. For example, if the rent for an apartment is $2,000 per month, you should have an annual salary of $80,000 according to the 40x rent rule.
The 40x rent rule is simply an income guideline that helps landlords qualify people as renters. The rule takes into account how much the entire household will be making, so it’s not about a single salary. So, for example, if you, your spouse, and your brother all want to rent a large apartment, all three of your incomes are going to count to the rule.
Landlords ask you to have 40 times the monthly rent as a salary because of the sheer price of living in New York City. They want to ensure you can pay your monthly rent, and since there is so much demand for rentals in NYC, landlords are able to ask for 40x the rent, which is more than the typical 3x rent rule used in most other parts of the country.
The 40x rent rule is the most common in NYC, but it’s not the law, and you don't always have to make 40x the rent in NYC as some landlords have different standards. This requirement for making 40x the rent is just the most common.
Of course, spiking rent prices and stagnant wages have changed some of the standards people have. The truth is that many major management companies are starting to rethink how they manage income requirements for their renters. Expecting people to earn twice the median salary for an apartment that’s not even the average apartment price isn’t feasible.
The average rent in Manhattan now tops $4,500. If you want to abide by the rent rule, you would need to make over $180,000 to afford an average apartment in New York. That’s not always feasible because the average person makes slightly over $50,000.
There are ways around the rent rule, but they can vary from landlord to landlord. These tips help:
- Make sure your credit is on point: A higher credit score can give you wiggle room, especially with more lax landlords.
- Consider getting more roommates: Sometimes, it makes sense to tack on one extra earner, since this can make a typical apartment far more affordable in a city like New York.
- Ask around for a more lenient landlord: Not all landlords and management companies follow the 40x rent rule—especially now that rent has become so unmanageable for people who have a typical salary. It’s best to seek out landlords that have more lenient income methods.
- Consider getting a guarantor for your apartment: An apartment guarantor will guarantee that you will be able to make rent, and in the old days, this meant enlisting the help of a rich uncle. Today, you can choose several different services to get a guarantor on your lease. It’s important to recognize that some landlords only accept one guarantor service or don’t accept any at all. Still, it’s worth a shot.
- Try to get income-based housing: Income-restricted housing is offered to people who have low to moderate income throughout New York City. It’s a highly successful program done through a lottery and caps out your maximum rent price to 30 percent of your income.
- Get a co-signer or surety bond for your move: Both co-signers and surety bonds are a good way to get the firm “I’m qualified” you need without having to go for a full guarantor source. A surety bond will cost between 1 to 1.5 your monthly rent, but it will get you approved. If you have someone willing to cosign an apartment, you’re in luck—it doesn’t cost a dime.
While New York City has a lot of perks to living there, the 40x rent rule remains one of the bigger pitfalls of choosing life in the big city. It can be difficult to find an apartment to rent when you have a typical income.
However, that doesn’t mean that it has to be impossible. With the right real estate knowledge and a little help from a professional (or two!), you might be able to snag a great apartment without having to take on three jobs. It’s all about strategy—and being willing to be persistent about what you need.