Approval Requirements differ depending on the landlord/management company and/or on the building.
The following are general guidelines that apply in most instances:
● Renters need to show income of at least 40-50 times monthly rent.
● Rent should be 25% of renters' annual income. Ex: annual income = $100,000, rent $25,000 per year.
● Renters must show a secure and stable employment history.
● Renters needs to have good credit history. A major component of the approval process is based on the credit report.
● What makes a credit report bad?
● A couple old late payments are usually ok.
● High revolving balances are not good.
● Past due payments that are outstanding are bad.
● Delinquencies and collections are very bad.
● A public record (a day in court) is bad
● A Landlord-Tenant record is very bad.
If you think your credit report is bad, advise your broker so they can prepare you for the application process. Landlords/management companies have different ways of dealing with credit problems. Some landlords/management companies allow renters to increase security deposit while others require a guarantor. Some may simply reject the application. Your broker will advise you in order to save you time, money and frustration.
● Renters must show a good rental history.
● Rental, credit and employment information is generally referenced and submitted in form of a letter or sometimes by a phone call.
● Renters need to have a social security number. If you do not have a social security number or are not applying for one you must have a guarantor co-signing your lease. International clients will need a letter of employment until they receive a social security number
● Bank Statements: In most cases landlords/management companies require copies of a renters' 3 most recent bank statements from a checking, savings, stock account or any other financial institution.
● Renter should have backup detail sheets available upon request.
● Most rent application forms require listing bank account information.
● Letter of Employment: Renter should get a Letter of Employment on their company's letterhead, with the following:
● Position, Length of Employment, Annual Income
In majority of cases an offer or an acceptance letter for a new position is not sufficient to show employment.
● Letter of Landlord Reference: Letter of reference from a previous landlord is one of the most important reference letters a renter can submit to a landlord/management company who is processing their application.
● Pay Stubs: copies of renters' 3 most recent pay stubs are usually required.
● Students need to have a guarantor co-sign their lease.
● Tax Returns: Some landlords and some management companies require potential renters to include a copy of their most recent Federal Tax Return (1040).
● Renters should have their tax return available just in case it is required.
● Self-employed renters: if income comes from different sources, you will be required to submit tax returns and a letter from a CPA stating the nature of your business, as well as, projected future income.
● Business owners looking to rent are almost always required to submit a tax return.
If renters do not meet the above mentioned criteria there are usually two possible solutions:
● Renters can get a co-signer or guarantor to co-sign the lease for you.
● Some owners will allow tenants to prepay 6 months to 12 months rent up front.( check with your local State Law, some may require an escrow account)
● Guarantor or co-signer: A guarantor or co-signer is a person who guarantees the entire rent for the entire lease term and lease renewals should a renter default on their rent payments. A guarantor can be anyone who agrees to sign on behalf of a renter and who is willing qualified to act as a guarantor.
● Qualifications of a guarantor or co-signer: documents required from a guarantor are similar to applicant(s):
● Application Form: Same form as the applicant fills out.
● Credit Report: A guarantor's credit report must be in good standing.
● Federal Tax Returns: A guarantor is required to submit federal tax returns as proof of income.
● Guarantor must show annual income of 80-100 times monthly rent.
● A Guarantor is not required to be present at lease signing, however an individual landlord may request a meeting in person.
In some cases, landlords/management companies require a guarantor to reside in the tri- state area (New York, New Jersey or Connecticut).