Ask Lucas

Ask Lucas 034: What’s the Best Way to Calculate Income for Joint Applicants?


Joanne from Seattle is asking how to calculate the income requirement when you are screening multiple joint applicants. Do you use gross or net income when comparing to the rent amount, and what deductions do you look for?

Landlordology and Ask Lucas are brought to you by Cozy.


Lucas: Ask Lucas, episode number 34.

Hello and welcome to Ask Lucas. I’m Lucas Hall and this is a bite sized Q & A show where I answer your questions about landlording and property management. If you have a question, just leave a recorded message on, and if it’s applicable to a larger audience, I’ll try to answer it in this show.

Today’s question is from Joanne from Seattle, who’s asking, “What’s the best way to calculate income for joint applicants?” Before I get there, let me tell you a little bit about Cozy. Ask Lucas and Landlordology are brought to you by Cozy which provides modern property management tools to landlords and property managers just like you and me. The best part is, it’s truly, completely, absolutely, free. You can screen tenants with full credit reports, and background checks, and collect rent online for free. I’ve used Cozy for years to self-manage my own properties, and it’s allowed me to manage my properties from anywhere, and I never actually have to worry about the rent coming in, or if I’m selecting quality tenants. Cozy just gives me the tools I need to succeed. Get peace of mind for yourself at That’s C-O-Z-Y-.-C-O.

Now, let’s hear from Joanne.

Joanne: Hi Lucas. My name is Joanne and I’m a landlord in Seattle. I have a question on screening for income when you have multiple applicants for one unit. Does their combined income need to meet the 2 1/2 to 3 times the rent, or does each individual need to meet that milestone? Thank you for your help.

Lucas: Hi Joanne. It’s really great to hear from you, and thank you for your question. I’d really love to tell you more about income requirements, so let’s get started.

To answer your immediate question, what you want to look at is the total household combined gross income of all of the adult occupants or applicants, which also can include cosigners. Basically, take their monthly income for everybody involved, add it all up, and then that needs to equal 2 1/2 to 3 times the monthly rent. Now, when you are looking it, you don’t want to judge it by 2 1/2 to 3 times, so pick one or the other. I recommend that range, and it should be different depending on where you live or what works best for you, but let’s just say it’s 3 times the rent.

You pick one number and that’s what you’re going to gauge all of your applicants by. When you have a group like roommates or a family where there’s multiple adults, you want to take all the applications, and you want to get the total household income for all of those people put together, and then see if it’s 3 times the monthly rent. That is how you do income requirements and how you gauge whether or not they have enough money to pay rent.

Now, it’s important that all of those adults are actually going to be on the lease and are all responsible under joint and several liability for the rent. What joint and several liability is it’s kind of like the three musketeers, all for one, and one for all. Each one of them has to pay the rent even if the other ones don’t. They can combine their funds and pay together, and that’s fine too, but they’re all responsible.

Now, I want to go back and say that it is important that you also consider some things like garnishments or child support. Income is just one side of the deal. You really also have to look at a credit report, and what that tells you is the type of debt they have and how much. When I’m looking at income, income is great, they may make $400,000 a year which is awesome, but if they have debts that are equal to $400,000 a year, then they’re not making any money. They don’t have any money left over for rent. You have to look at the debt and compare that to income and see, really, how much of their money is eaten up.

Again, it’s gross income that you’re looking at, so it’s the total before taxes get taken out, and medical insurance, and dental insurance, and all that stuff. If they do have any sort of judgements or garnishments, like child support, or tax withdrawals, or something like that, coming out of their paycheck, that’s probably not going to show up on a credit report. You want to subtract that out of the total gross, and then that bottom number’s what you use to gauge whether it’s 2 1/2 or 3 times the monthly rent.

You know, one other thing to mention is that if you are collecting online applications through Cozy, Cozy will actually figure out this calculation for you. It will take all of the people in that group, and it will combine their household, or combine their income to form a household income, and it will tell you what the percentage is of the rent, of it’s 2 1/2 times, or 3 times, or 20 times the rent. Good luck with your next applicants and your next screening. I hope you find some really quality tenants. Take care.

About Lucas Hall

Lucas is the Chief Landlordologist at Cozy. He has been a successful landlord for over 10 years, with dozens of happy tenants and a profitable income property portfolio.
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