Rent-to-Income Ratio

The Rent-to-Income Ratio is a financial measure that helps determine how manageable housing costs are for individuals or families. It calculates the percentage of a person’s or household’s monthly income that goes towards rent. Typically, a ratio below 30% is considered affordable, meaning the rent is not overly burdensome compared to income. This ratio is important for budgeting and assessing overall financial health, as spending too much on rent can limit funds available for other essentials like groceries, utilities, and savings. Understanding this ratio can help people make informed housing decisions.