What is the 3x rent rule?

The 3x rent rule is a screening guideline used by landlords and property managers: a tenant's gross income should be at least three times the rent. It is usually quoted monthly (monthly income of three times the monthly rent), which is the same as annual income of three times the annual rent. Earning 3x the rent means rent takes about a third of your gross income, a level generally treated as affordable.

How do I calculate 3x rent from a weekly rent?

Multiply the weekly rent by 52 to get the annual rent, then multiply by three. For a $650 a week rental, the annual rent is $33,800, so the 3x rule asks for a gross household income of about $101,400 a year. On a monthly view that is rent of about $2,817 against required gross income of about $8,450 a month.

Do New Zealand landlords use the 3x rent rule?

Not as a formal rule. NZ landlords and property managers assess affordability case by case, looking at income, references and credit history, and many use the similar guideline that rent should be no more than around 30 percent of gross income. The 3x rule is effectively the same test from the other direction, so passing it is a good sign your application stacks up on affordability.

3x Rent Calculator

This 3x rent calculator works out the gross income the 3x rent rule asks for at any weekly rent, and checks how your own income measures up. The rule is a screening guideline used by landlords and property managers: a tenant's gross income should be at least three times the rent, which keeps rent at roughly a third of income and leaves room for power, food, transport and everything else. Because NZ rents are quoted weekly while the rule is usually explained in monthly or annual terms, the calculator does the conversion for you: it multiplies the weekly rent by 52 for the annual rent, multiplies by the rule's factor for the required income, and divides your income by the annual rent to show your own multiple. The multiple is adjustable, so you can test a stricter 3.5x screen or a looser 2.5x one, and the result shows the monthly rent equivalent alongside. Renters use it before applying for a place to see whether their application clears the bar, flatmates use it with combined incomes for a joint tenancy, and landlords use it as a quick first filter. NZ landlords do not apply the rule formally, but affordability is always part of the assessment, so it remains a useful benchmark on both sides of the application.

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Weekly rent

Income multiple required

x rent

Your gross annual household income

$101,400

gross annual income needed at 3 times the rent

Annual rent$33,800

Monthly rent equivalent$2,817

Your income multiple3.25x

With a gross income of $110,000 you earn 3.25 times the annual rent, so you pass the 3x screen.

Use gross (before tax) income, combined across everyone named on the tenancy. The 3x rule is a guideline only; NZ landlords assess affordability alongside references and credit history.

How it works

The annual rent is the weekly rent multiplied by 52, and the required income is that annual rent multiplied by the income multiple, 3 by default. Your own multiple is your gross annual income divided by the annual rent, and you pass the screen when it meets or beats the required multiple. The monthly rent equivalent is the annual rent divided by 12, which is slightly more than weekly rent times four because a month averages about 4.33 weeks; quoting rent in the wrong period is the most common mistake when checking this rule. Everything uses gross income, before tax and deductions, because that is how the rule is applied by those who use it.

Worked example

Using the defaults: a $650 a week rental costs 650 × 52, which is $33,800 a year, or about $2,817 a month. The 3x rule asks for a gross annual income of 33,800 × 3, which is $101,400. A household earning $110,000 divides to 110,000 / 33,800, which is about 3.25 times the annual rent, so it clears the screen with a little headroom. If the same household were looking at an $800 a week place, the annual rent of $41,600 would require $124,800, and their multiple of about 2.64x would fall short.

Related calculators

Rent Affordability Calculator: the rent your income supports.
Flatting Costs Calculator: the full cost of a flat beyond rent.
Rent Bond and Move-in Cost Calculator: cash needed to move in.
Flatmate Rent Split Calculator: fair shares by room.
Tenancy Rent in Advance Limit Calculator: what a landlord can ask for upfront.

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