Residual income method
The residual income method is a housing affordability measurement which calculates how much is left over for housing (such as rent, mortgage or other housing costs) after paying for a standard budget of household goods and services relevant to different household types and sizes. The advantages of the residual income method (over the 30:40 rule) are that it incorporates local housing costs and income levels; covers households earning in a wider range of income levels; and can include private rental market tenants, home owners and those renting in affordable housing programs.