How to Calculate Salary & Rent

Written by bill brown
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How to Calculate Salary & Rent
Rent-to-income is a gauge of the relative cost of your housing. (house image by Anton Chernenko from Fotolia.com)

Your salary and rent payment are two of the three components you can use to determine your rent-to-income ratio. Most rent-to-income calculations include utilities that are paid by the renter, because they can have a big impact on the total monthly outlay for your housing at times. The rent-to-income ratio is expressed as a percentage. There are no hard and fast rules regarding the ideal rent-to-income ratio, as housing costs and salaries vary widely throughout the country. Landlords may use the ratio as well as a way to judge whether they feel a prospective tenant can afford the apartment.

Skill level:
Easy

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Instructions

  1. 1

    Add up the gross pay of your total salary for one month. If your pay varies from month to month, add several months or more and divide the total by the number of months to get an average.

  2. 2

    Add the total rent of the apartment or house to the utility totals that the tenant will pay. In some buildings with boilers and building-wide heating systems, the tenant will only pay the electricity bill, and will not be charged for heat and hot water. In other units, the tenant will pay for everything.

  3. 3

    Divide the total from Step 2 by the total from Step 1 to get your rent-to-income ratio. For example, if your total gross income for the month is £1,560, and your rent and utility total is £455, your rent to income ratio is .292 or 29.2 per cent.

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