How a Guarantor Can Help You Secure an Apartment: Everything You Need to Know 

Whether you’ve been renting for years or you’re a first-time renter, having a lease guarantor lined up can help you secure your next apartment rental, especially in a competitive rental market like New York City.

Not everyone needs a lease guarantor. If you have strong credit and can prove you have consistent income, most landlords and property managers will view you as a tenant they can rely on and will have difficulty turning you down for tenancy. On the other hand, if you don’t have great credit here’s what you need to know about how a guarantor can help you secure an apartment.

A modern apartment building with ceiling-to-floor windows

What is a guarantor for an apartment lease?

A rent guarantor is someone who agrees to take over the responsibility to pay the rent if you can’t pay. This individual agrees to all of the lease terms and timeframes by signing the lease agreement. Unlike a cosigner, a guarantor does not live with you in the apartment.

So, who could be a guarantor for renting if they don’t live in the apartment? A family member, friend, co-worker, employer, or trusted adult could be a guarantor. However, be sure whomever you ask to be your guarantor fully understands their responsibilities and the consequences if you fail to pay rent. If you default, not only can you be evicted and have your credit negatively affected, but your guarantor will suffer a hit to their credit as well.

What is the difference between a guarantor and a cosigner?

The terms guarantor and cosigner are often used interchangeably, but they do not mean the same thing. The main difference between an apartment guarantor and a cosigner is that a cosigner lives in the apartment with you and is identified on the lease as a tenant. Your cosigner is also responsible for paying the entire rent if you cannot pay and will be evicted with you if you both default. A guarantor does not live in the apartment.

Do I need a guarantor for an apartment?

Not everyone needs a guarantor for their rental application. In cities where the rental market is very competitive, like San Francisco and Los Angeles, landlords can insist on these higher requirements from their prospective tenants. You can also ask the landlord or property manager about their general qualification criteria to rent an apartment, like income requirements, before start applying so you know if you should start looking for a guarantor.

Here are six reasons why you may need a guarantor to secure an apartment.

  1. Poor rental history: A guarantor will help your cause if you have a gap in your rental history, such as if you moved back in with your parents for a period. Other factors that can result in a poor rental history are claims from your previous landlord about constantly paying rent late or having more guests over than the lease allowed.
  2. No rental history: Landlords view applicants with no rental history as possibly risky because the applicant cannot yet prove they can handle the responsibility of being a tenant. A guarantor helps address that risk.
  3. Low income or sporadic pay: The rule of thumb that indicates a tenant can afford rent is an income of at least 3x the rent amount. Landlords will be strict on this requirement and expect you to have a guarantor if your income is low. For example, if your rent is $2,000 a month, you’ll need to earn a gross income, before deductions, of $6,000 a month.
  4. Bad credit or no credit: Bad credit shows that at one point, you may have been careless with your finances, which indicates a risk to a landlord. A lack of credit can be just as challenging, since you most likely haven’t yet had to handle regular bill payments. You will need a guarantor to help you in either of these situations to reach the minimum credit score requirements to rent an apartment.
  5. You have an eviction on record: If you were removed from a property for any reason, financial or otherwise, it signals a potential headache to a future landlord. Landlords may ask for an explanation for the eviction and require you to get a guarantor.
  6. Unstable employment: Job-hopping is another red flag that concerns landlords. Having a history of unstable employment could mean you lack the responsibility to stay employed and lead them to question how responsible you’ll be about paying rent. Self-employment falls into this category, as your income could vary yearly. Landlords may ask about your employment history to understand more, but don’t be surprised if you need a guarantor.

A guarantor is someone who knows you well and a person with a demonstrated track record of financial responsibility. By signing on as your guarantor, they agree to take on your rent payments if you default. This assurance can give landlords enough peace of mind to risk having you as a tenant.

Prospective tenant looking for a guarantor for apartment

What are the apartment guarantor requirements?

A suitable guarantor needs to be financially stable and earn enough to cover your monthly rent on top of their expenses. Landlords may require a lease guarantor to earn 40x–90x the monthly rent in annual income to qualify. For example, if your rent is $2,500 a month, your guarantor would need to earn $100,000 – $225,000 a year depending on the lease agreement.

A guarantor will undergo the same tenant screening process as you, even though they will not live in the apartment. It is helpful if they are homeowners, as it shows they can qualify for a mortgage and are responsible enough to pay their own bills. They will also need a good credit history and excellent credit score, which according to (FICO), is 750 and above.

To screen a guarantor, a landlord will ask for the following information:

  • Bank statements: The landlord will want to see copies of savings and checking accounts statement.
  • Pay stubs: The last two pay stubs from all employers (if they have more than one job)
  • Social security number: The social security number is required to run a credit check and background check.
  • Tax returns: The past two years of tax returns may be requested if they’re self-employed or work cash jobs.

Tenant approved for an apartment is moving into their new home

How to find a guarantor

When looking for someone to be your guarantor, you’ll realize it’s a big ask. You’re looking for someone who can demonstrate responsibility and has enough income to cover your rent in an emergency without jeopardizing their own situation. After all, that person will be on the hook to pay your rent if you can’t. Here are a couple of good places to start:

Family members: Family will usually step in to help financially if they can. However, you may need to convince them of your trustworthiness and ability to pay them back if they end up making rent payments on your behalf.

Close friends: Friends can make suitable guarantors if they are financially stable and responsible for their own expenses. Again they may want reassurances of repayment if you default.

Here are four tips on how to get a guarantor for an apartment

Your personal financial situation can be a sensitive topic. However, it’s best to come right out and explain why you need a guarantor and see if the person you’re approaching would be willing to help. Don’t be surprised if they have as many questions about you as you do for them.

  1. Seek someone who is financially stable and doesn’t have their own money worries. Extra rent on your behalf can be a considerable expense. Ask them if they have money saved to cover emergencies. While you hope they will never have to pay, it’s good to know they could.
  2. Ask someone with whom you have a strong relationship and who trusts you.
  3. Your guarantor must be willing to sign the lease agreement and go through the screening process.
  4. You’ll want to know if they pay their bills on time. It’s essential to know they are responsible before you ask them to be a guarantor.

Alternatives if you cannot find a guarantor

Not everyone wants to be legally responsible for someone else’s hardship or financial obligations. If you have a difficult time finding a guarantor, there are alternatives.

Consider contacting a guarantor service: A guarantor service is a company that will act as your guarantor. However, they won’t do it out of kindness. There will be fees involved. If you must resort to a guarantor service, fully understand their fee structure. Most guarantor services base their fees on the applicant’s credit score. Applicants with no or poor credit will pay a higher percentage rate than someone with a better credit score. The typical fee for most guarantor services is 4%–10% of the annual rent amount. For example, if your rent is $1,500 a month for a year lease and the fee is 10%, you’ll have to pay the guarantor service $1,800 when you sign your lease.

Consider roommates: You may have set your heart on living independently, however, that may not be feasible. Finding a roommate or two to split the financial obligations may be easier than finding a guarantor.

Roommates co-living together as an alternative to a guarantor

You may be eligible for rental assistance: Community organizations, churches, and government agencies may assist with rent or offer a rental plan such as Section 8 housing. Section 8 provides subsidies to low-income renters. You will need a landlord willing to work with Section 8 requirements. Other community organizations like the Salvation Army and United Way may also be able to help.

Find a cheaper place: If you don’t have a potential guarantor and cannot afford to use a guarantor service, you can seek a more affordable apartment. Look for other apartments within your budget by using the 30% rule to set your ceiling for the amount of rent you can pay. This rule states that your housing expenses should be no more than 30% of your gross income. If you can find a less expensive apartment, you could eliminate the need for a guarantor.

Negotiate: Try negotiating with your prospective landlord to bypass the need for a guarantor. Some landlords will accept an additional security deposit that would cover a month’s rent if you found yourself unable to pay. You could also:

  • Offer to pay extra move-in fees, which would be non-refundable if you default on your rent. Your state might regulate the amount a landlord can charge, so check your local landlord/tenant law before offering to pay a move-in fee. Your landlord won’t want to do anything that could result in a fine.
  • Offer extra rent payments in advance. Many states regulate how much a landlord can accept in advance and local landlord/tenant law should clearly state the limits. If you can afford to do so, paying in advance can put you and your landlord in a good place moving forward.

When searching for an apartment, the last thing you want to worry about is finding a guarantor. With a guarantor lined up in case you need one, you’ll be well-prepared when applying for an apartment. If your credit is lacking or low, or you expect questions about a past eviction, your rental history, or your employment record, having a trustworthy guarantor on your side before you apply will go a long way to show the landlord you are responsible enough to be a good tenant.

Original Post – Redfin