Renting an apartment often involves meeting a long list of landlord criteria, which can sometimes be challenging to fulfill. This is where a guarantor can help. If you’re wondering how guarantors work in the apartment leasing process and whether using one is right for you, follow along!
What is a guarantor?
A guarantor is an individual who co-signs an apartment lease to support an application. By doing so, the guarantor agrees to take on the financial responsibility for the prospective tenant’s rent and any additional fees if they are suddenly unable to make the payments. This provides landlords with added security, knowing that rent will be covered even if the tenant faces financial difficulties.
Guarantors are often parents, relatives, or close friends with stable financial backgrounds. Their involvement can significantly enhance a prospect’s chances of being approved for a lease, especially if they have limited credit history, insufficient income, or specific circumstances that might otherwise make it difficult to qualify independently.
Why would you need a guarantor?
Landlords typically have many requirements for qualifying potential tenants. This vetting process can be challenging for first-time renters without a rental history, those with limited or poor credit, or students without income.
Why you might consider using a guarantor when renting an apartment:
- Minimal or no rental history
- Poor credit or no credit history
- Prior evictions
- Bankruptcy
- Inconsistent income (freelance or commission)
- Income does not meet the minimum threshold (ex: gross monthly income must be 3x base rent)
- You’re a student with minimal or no income
Using a guarantor can strengthen your rental application by providing landlords with added assurance of financial responsibility. This extra layer of security can make a significant difference in getting your application approved, especially in competitive rental markets.
How does one qualify to be a guarantor?
Every landlord and market has different requirements for a guarantor. Some markets may demand a higher minimum income threshold. For example, it’s common for landlords to require a guarantor to have a gross monthly income of 5x the base rent. However, in highly competitive markets like New York City, guarantors may need to earn 80x the base rent annually. Knowing these requirements upfront is crucial.
Common requirements of guarantors:
- Income threshold
- Over 21 years of age
- Banking information independent of lessee
- Great credit history (usually 750 or above)
Common documentation required:
- Recent paystubs
- Tax returns
- Bank statements
- Social security number
- Government-issued ID
If you’re considering using a guarantor, understanding the landlord’s requirements for income, credit score, and documentation is paramount. This knowledge will help facilitate a smooth process in finding the right guarantor and securing the apartment you want.
Is the guarantor on the lease?
Yes, a guarantor signs the lease and becomes legally responsible for ensuring that the terms of the lease are upheld, particularly regarding financial obligations. However, unlike the tenant, the guarantor typically does not have tenancy or occupancy rights. This means that while they are financially obligated to cover the rent if the tenant cannot, they do not have the right to live in or use the leased property. The guarantor’s role is primarily to provide financial assurance to the landlord, rather than to occupy the rental unit themselves.
The guarantor will typically sign some version of a Lease Contract Guaranty Addendum, which outlines the lease terms and gathers the guarantor’s personal information, including work details and credit score. This addendum requires the guarantor’s signature and often needs to be notarized before being sent to the landlord.
How do I find a guarantor?
While anyone who meets the landlord’s criteria can potentially act as a guarantor, they are often family members or trusted friends of the tenant. These individuals are relied upon in case of sudden financial setbacks. It’s important to remember that landlords will investigate a guarantor’s personal information, so it’s important to set clear expectations with the potential guarantor beforehand.
If you don’t have a family member or close acquaintance who can serve as a guarantor, there are third-party guarantor services that will take on this responsibility. Typically, third-party guarantor companies charge a one-time fee or an annual fee for their services. This fee can vary depending on factors such as the rental amount, the tenant’s risk level, and the specific policies of the guarantor company. Therefore, it’s essential to carefully review the fee structure and terms of service before agreeing to use a third-party guarantor company!
Are there any alternatives?
Yes! If using a guarantor isn’t feasible at the moment, there are some alternative options you can explore to qualify for an apartment without one:
- Find a roommate: Teaming up with someone can help you if your income and credit score do not qualify you alone.
- Negotiate with the landlord: This can be a delicate process, but with some preparation, you may be able to secure a better deal.
- Rental Assistance: Eligible low-income earners could qualify for rental assistance from local community organizations or government agencies, such as the Department of Housing and Urban Development’s Section 8 Housing Program.
A guarantor guarantees
In summary, while a guarantor can indeed aid in securing an apartment, the selection of the right individual for this responsibility outweighs their financial capability. It’s essential to approach someone whom you trust implicitly, and reciprocally, someone who has faith in you. By having a strong and trustworthy relationship with your guarantor, you not only enhance your chances of securing the apartment, but also establish a foundation of reliability and support throughout your tenancy.