Setting income limits for rental leases


I'm looking to rent out some condos and a large 'plex and am looking to change some of the lease terms.

I've noticed some lessors setting income requirements of 3x-4x rent from their renters. Is there a limit as to what I can set an income requirement on a lease? Is there either State or Federal legislation that covers such limits?

Contract Lease

asked Oct 6 '12 at 05:52
146 points
  • Downvote without comment is sad =( – Mechaflash 10 years ago

2 Answers


I assume you are referring to the United States. There are a variety of laws and executive orders in the "fair housing" category (Wikipedia has a good list ) which mostly cover protected classes. Although low-income is not a protected class, there is a risk that if the net effect of your change was to exclude members of protected classes, you might be risking a lawsuit. For example if you had a condo complex that was 30% minorities, and you raised the income requirement and saw the minority number drop to 0%, a plaintiff might be able to argue that you were violating the Fair Housing Act.

Long before you reach any legal limit, though, you are going to reach a practical limit. In many markets you will find that if you set the income requirement much higher than usual, you simply won't have tenants. And there seems to be a lot of evidence that income requirements are not effective at getting credit worthy tenants. For example, young families often need more bedrooms and might only have one parent working while the other parent takes care of the kids; these families spend a high percentage of their income on housing, out of necessity, but are relatively good credit risks because they are motivated to maintain a stable residence.

I recommend reading Minimum Income Requirements Can Be Another
Form of Housing Discrimination (PDF)
before you proceed.

answered Oct 6 '12 at 06:16
Joel Spolsky
13,482 points
  • +1 That PDF was an interesting read. Beit the year 2000, but still relevant. The statement about how income isn't a good calculator of risk is so true, especially in the case of a new family. – Mechaflash 10 years ago


If you really want to have some ratios for housing cost ratios then perhaps you can use the ones followed by banks or for getting FHA mortgages. Those certainly are vetted insofar as legal issues.

Being a landlord is not without risk. Cover yourself with strong leases, background checks and thorough screening.

answered Oct 9 '12 at 00:28
Tim J
8,346 points
  • +1 I never thought to compare it to how banks figure mortgages/personal loans. That's not a bad idea to at least look at how they figure in everything to find out where a good middle-point would be. – Mechaflash 10 years ago

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