Finance category
Mortgage, loan, investing, tax, and money calculators.
Affordability Gap Calculator
When market rent exceeds 30% of local income, units become unaffordable. This calculator sizes the gap.
Affordability gap
$540
Affordable rent
$1,560
Actual rent/income
40.4%
How the math works
Gap = market rent − (income × affordability ratio). Positive = unaffordable at benchmark.
Pricing 5-10% above local affordability is manageable. Above 15% triggers collection losses and forces subsidy or move-down. Match rent to target tenant income to build stable occupancy.
How to Use
- Enter market rent.
- Enter tenant income.
- Enter affordability ratio (typically 30%).
- Read gap.
Frequently Asked Questions
30% standard?
HUD standard for housing affordability. Above 30% = rent-burdened. Above 50% = severely rent-burdened. Pricing above affordability risks collection loss and turnover.
Regional variance?
Coastal cities normalize 35-45%. Midwest: 20-30%. Align pricing to local income reality. Out-of-market pricing triggers collection losses.
Workforce housing?
Growing segment. Rent at 25-30% of area median income. Often LIHTC credits or state programs. Fills at lower risk than market-rate Class A.
When does a lender negotiate vs foreclose?
Lenders calculate their net recovery from foreclosure (asset value minus legal, time, and sale costs) and compare to any workout proposal. If your offer nets the lender more than foreclosure, and you present it with clear sources of capital, most lenders will engage. Bring a credible sponsor, documented sources, and a timeline — vague asks get declined. Build the relationship before distress, not after.
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