Income Screening Limits: When Can You Reject a Rental Applicant?

Answer

Landlords often use income requirements to assess whether prospective tenants can reliably pay rent. While it’s common to require applicants to earn a certain multiple of monthly rent, you must balance financial screening with fair housing laws that protect against discrimination.

Most U.S. landlords set an income threshold—commonly 2.5–3 times the monthly rent—to qualify renters. For example, if rent is $1,200, applicants may need to show a gross monthly income of at least $3,000–$3,600. These objective criteria help ensure tenants won’t fall behind on payments or incur eviction filings.

However, you cannot use income screening to mask unlawful discrimination. Under the Fair Housing Act, you may not deny applicants based on:

• Race, color or national origin
• Religion
• Sex (including gender identity and sexual orientation)
• Familial status or disability

If you apply an income rule, use the same formula for every applicant. Avoid ad hoc exceptions that could appear to favor or disadvantage someone based on a protected characteristic. For tenants receiving housing vouchers (Section 8), you may verify payment standards and tenant contribution rather than raw income.

Key best practices:

• Publish your income requirement clearly in all listings.
• Use consistent documentation: pay stubs, tax returns, bank statements.
• Keep written records of approvals and denials, citing only objective criteria.
• Train staff on fair housing obligations. Refer to guidance at HUD’s Fair Housing page.

Setting a reasonable income threshold can protect your investment, but it’s advisable to consult a licensed attorney or property management professional to confirm compliance with federal, state and local laws. Buyers and landlords are recommended to verify local ordinances—some cities limit income-based screening or require additional considerations for voucher holders.