The 30% Rule is Outdated: Why It’s Time to Raise the Housing Affordability Standard to 40%

Introduction

For decades, the 30% rule has served as the gold standard for determining housing affordability. According to this guideline, if a household spends no more than 30% of its income on rent, it’s considered affordable. This standard, used by the U.S. Department of Housing and Urban Development (HUD) and other organizations, has shaped housing policies, subsidy allocations, and affordability benchmarks nationwide.

However, as data from the National Low Income Housing Coalition (NLIHC) and HUD reveal, housing costs have surged while wages have stagnated, making the 30% rule an outdated benchmark. It’s time to reconsider this standard and explore raising it to 40%, a move that would better align with today’s economic realities. This shift could expand eligibility for affordable housing programs and support greater economic stability across communities.

Clarifying the 30% Rule as an Affordability Benchmark

The 30% rule, developed decades ago by HUD, defines affordable housing by ensuring that households have enough income left for other essentials. According to this standard, if a household spends no more than 30% of its income on rent, it can afford other costs like food, healthcare, and transportation.

However, research from HUD’s American Housing Survey and the NLIHC’s Out of Reach Report shows that rent costs today far outpace wage growth, with many renters spending well over 30% of their income on housing alone. In fact, NLIHC’s data reveals that, in some states, minimum-wage workers would need to work over 100 hours per week to afford a modest two-bedroom apartment.

The problem: When subsidies, eligibility criteria, and policy decisions are based on this outdated 30% standard, they exclude a significant portion of households that genuinely need assistance.

The chart above doesn’t account for household sizes and demographics; it’s based solely on income and Fair Market Rent (FMR). This visual demonstrates how raising the affordability standard can benefit everyone involved—tenants, landlords, investors, HUD, and more.The Broader Economic Impact

Advocating for Adjusting the Benchmark to 40%

Raising the affordability standard to 40% would better reflect the economic pressures that renters face. Here’s why this shift matters:

• Reflecting Current Rent Prices: Data from the Out of Reach Report highlights how minimum-wage and low-income workers often allocate more than 30% of their income to housing in high-cost areas. Increasing the benchmark to 40% would make policies more responsive to these realities, allowing housing assistance programs to better align with actual costs.
• Expanding Access to Assistance: According to HUD, many low-income families fall just outside the 30% threshold, disqualifying them from much-needed support. By shifting the benchmark to 40%, more families would qualify for assistance, reducing housing instability and alleviating the risk of homelessness.
• Supporting Broader Access to Quality Housing: This change could allow subsidy recipients to access better housing options. With the adjusted 40% benchmark, families on assistance may be able to secure housing in better-maintained or more suitable locations, without added rent burden.

Data Snapshot: Expanding Eligibility with a 40% Benchmark

Examples by State:

• California: NLIHC data shows that a minimum-wage worker in California would need to work 89 hours per week to afford a one-bedroom rental under the 30% rule. Raising the benchmark to 40% would enable more low-wage families to qualify for housing assistance, reducing strain on households.
• New York: In New York City, HUD’s Area Median Income (AMI) estimates show that even families earning 50% of the AMI struggle to meet the 30% threshold. Adjusting the standard to 40% would allow more working families to qualify for assistance, providing greater stability in a high-cost city.
• Florida: With the cost of living rapidly rising, raising the affordability threshold to 40% could help middle-income families access affordable housing, bridging the gap created by rising market rates.

The Broader Economic Impact

Concrete Impact Projections:

• Increased Eligibility: Raising the standard to 40% would expand housing access to thousands of households that currently fall just outside the 30% rule. Census data and research from the Bureau of Labor Statistics (BLS) show that wage stagnation has left many working families ineligible for assistance despite financial need.
• Community Investment: Expanded eligibility would increase funding flow through housing programs, enhancing property maintenance, community programs, and economic stability. According to HUD and studies by the Urban Institute, stable housing also reduces costs associated with emergency services and health outcomes, saving public resources in the long term.
• Reduced Dependency on Emergency Services: Stable housing lowers reliance on emergency services, shelters, and healthcare associated with housing insecurity. By adjusting the affordability standard, we’re helping families while simultaneously strengthening community resources, creating a ripple effect that benefits local economies.

Conclusion: Aligning Affordability Standards with Reality

Updating the affordability standard from 30% to 40% isn’t about overburdening tenants but about ensuring housing policies reflect the real costs families face today. By integrating findings from HUD, the U.S. Census Bureau , and NLIHC, we can ensure housing programs better meet the needs of American renters, while also supporting economic stability across communities.

This new standard provides a foundation for broader access to affordable housing programs, increases funding circulation, and creates more resilient communities—moving us closer to a fair and modern housing landscape.

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Once again, thank you for reading,

Lashondra Graves The Apartment Lady