No, the 3X rent rule is not illegal in the United States. To be honest, there is actually no law specifically stating that this type of practice is illegal or prohibited in any way. But to be more clear about it, we’ll advise you to just keep on reading because there is more to it than you know.
What’s the 3X Rent Rule All About?
When you tried to rent a place, you must have heard the line at least once, “You need to make three times the rent.” This is what they call the 3X Rent Rule. It is a typical regulation that property owners employ to figure out whether you are financially capable of living in their property.
Just to give you a better idea of it, well, in case the rent amounts to $1,500 per month, they will require your income to be at least $4,500 a month, not taxed.
This rule is favored by landlords as it provides them with a fast way to figure out if you are able to make the rent payments without any financial strain. Moreover, it serves as a convenient tool for tenants to determine the price limits that are realistically within their financial capacity.
The snag, though, is that this rule isn’t a law. It’s merely a recommendation that landlords decide to follow. Some opt for 2.5 times, while others require 4 times the rent, based on their location or the rental market’s level of competition.
So, Is the 3X Rent Rule Actually Legal?
It is totally legal in the US, without a doubt. There is no legislation at the federal or state level that prohibits the use of such a method by landlords. Plain and simple!
Maybe you have seen some posts on the internet that say a law was passed in July 2024, making the practice illegal. But the thing really is: you should not be concerned about that because it is just a lie.
What About State Laws?
In the majority of states, the 3X rent rule is permitted to be utilized by landlords without any issues whatsoever.
Nevertheless, there are some exceptions. As an example, Colorado has a regulation that prohibits a landlord from demanding that the tenant’s income is more than two times the annual rent, which means a 2X rent limit.
The situation is quite different in states such as Virginia and Texas, where no limitations are imposed. Property owners are allowed to determine their own conditions provided that they are administered in a fair manner.
Even California does not prohibit the 3X rule; however, alterations to security deposit regulations in 2024 might have led to some misunderstanding on the internet.
Therefore, the 3X rent rule is still permissible in the majority of states unless your state happens to have a very rare type of income restriction.
When Can the 3X Rent Rule Cause Legal Issues?
The regulation on its own is not against the law; however, the manner in which it is utilized may bring about problems. Like?
Oh, see, in the case that a landlord behaves unfairly in the use of the regulation or is targeting a specific group of people, then that is the point where the situation becomes bad.
According to the U.S. Fair Housing regulations, landlords are not allowed to discriminate, that is, treat differently, renters on the basis of their race, religion, gender, family size, disability, or income source such as housing vouchers or benefits.
Thus, in case a person singles out certain renters for the application of the rule or declines tenants based on the type of income (for instance, child support or social security), then it is discrimination which is prohibited by law.
