What is a Guarantor for a Rental Apartment?

Learn what a guarantor is and why you may need one when renting an apartment. Understand the requirements and what you can do if you don't have a guarantor.

You might have heard the word "guarantor" when a rental agent told you will need one or you might have seen the word on a rental application.

A guarantor guarantees your lease, by promising that if you fall behind on payments, they will also be responsible for the payments.

Sounds great, right?

Yes and no...

It is great because it can allow you to get your desired apartment even without the right credentials-meaning the right amount of income and/or credit score.

The situation can become sticky if you actually do miss the rent. Depending on who the guarantor is, you may leave them with a bad taste in their mouth.

What is a Guarantor?

  • A guarantor co-signs on your lease and guarantees your lease in the case that you do not qualify on your own for an apartment in New York City, whether that means your credit or your income is too low.
  • Landlords may require you to get a guarantor for other reasons other than credit or income. Some other reasons can be but are not limited to having too short of credit history, employment, irregular income, or too much credit activity or negative remarks.
  • A guarantor must have superior credentials which include an excellent credit score, and at least double the normally required income.
  • A guarantor must fill out an application, provide income documentation, have their credit pulled, and sign your lease.
  • If you don't have a guarantor, you can use a third-party guarantor service.

When Do You Need a Guarantor?

If you have either bad credit or no credit, it's a given that bringing in a guarantor will be required if you want to get the apartment.

Another situation you may be asked for one is if you do not annually make 40 times the monthly rent--meaning you do not make enough money.

At times, you may be asked for a guarantor if you are just shy of the qualification standards or even if you meet them, but something in your profile causes doubt.

This can be anything from an old collection on your credit report to changes in your income or income fluctuations from year to year.

Most people who find themselves in this situation are young people who have no credit or too short of a credit history, the self-employed, or foreign nationals with no credit.

If you receive your pay annually or quarterly, it can also affect your chances of getting an apartment in a straightforward manner.

If you have poor credit, this shouldn't be a sign to give up.

Using a guarantor can give you some time to build your credit back up.

For more details on how you can bolster your score back up, read up on our article on how to improve your score. It offers information on long-term growth as well as fast boosts.

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Can Anyone Be a Guarantor?

A guarantor can really be anybody willing to guarantee your lease.

That being said, because of the sensitive nature of the situation it might not be the right fit for a casual acquaintance, although it may be in cards if he/she trusts you.

Most guarantors end up being parents or an immediate family member, guardian-figure, or significant other for this reason.

Less often, they are friends, colleagues, a boss, or extended family.

Foreigners can either find a relative who lives in the States who meets the financial requirements or use a third-party service like The Guarantors or Insurent.

Usually, landlords will ask that your guarantor be in-state or local, but increasingly many landlords are accepting out-of-state ones.

What's not alright is an out-of-country guarantor with no finances or credit in the U.S.

If your abroad-living guarantor can show a good American credit history and proof of funds or income in the U.S., most likely, you should be okay.

However, your out-of-country guarantor may pose a problem at lease signing.

What Is a Guarantor Insurance Service?

As mentioned, there are third-party guarantor services available now in New York, that provide insurance for your lease.

Different companies have different qualification standards but usually make it easier to qualify for an apartment than a New York City landlord.

Read on to learn more about these guarantor services.

Who Qualifies to Be a Guarantor?

Typically, a guarantor must make 80 times the monthly rent annually and must have good or excellent credit.

This means that if your monthly rent is $2,000 a month, your guarantor must show they earn at least $160,000 a year.

The reason 80x is required instead of 40x is that they must prove they can cover your rent while still managing their finances.

This scenario assumes the guarantor's rent is the same as yours.

Sometimes it may be 70x or 90x. It all depends on the will of the landlord or management company.

What Credit Score Does My Guarantor Need?

You and your guarantor will have your credit checked and provide documentation proving your income.

In this sense, the guarantor is applying for the same apartment simultaneously.

The guarantor must have good or excellent credit, but more often than not, they will be required to have credit in the excellent range, which is anything from 750 and above.

Every landlord or management company is different so note the requirements on the application.

At this juncture, if you have good credit it may put a nervous guarantor at ease to know your credit score if they're afraid you'll miss a payment.

Most people who have good to excellent credit will not take chances of ruining their credit simply by not paying their bills.

That's why your guarantor knowing this about you will take some of the pressure off.

The latest FICO model (FICO 9), now factors in your rental payments. Depending on your fiscal habits, this may hurt you or help you.

This is great news for someone with limited credit but makes all their rental payments.

What Does a Guarantor Need to Provide?

  • A copy of a government-issued photo ID such as a driver's license or a passport
  • Copies of the two most recent tax returns
  • Copies of your most recent pay stubs
  • Copies of the two most recent monthly bank statements
  • A letter of employment stating your position, salary, and duration of employment

Both you and your guarantor will each be required to fill out an application and pay the application fee.

Depending on the brokerage, management company, or landlord, this fee is usually anywhere from $25 to $200.

This compulsory fee will usually be anywhere from $50 to $100 more for the guarantor--sometimes double. Rarely is this fee equal for both applicant and guarantor.

Depending on the individual landlord, you could be asked for reference letters from colleagues or friends or a letter from your current landlord.

What's more, is that you could be asked for just the most recent documents or the last two or three of any given documentation.

Does the Guarantor Need to Be Put on the Lease?

Yes. Because your guarantor is vouching for you, they will be on the lease, albeit a special rider to lease stating their involvement.

What you may not have known is that your guarantor is required to sign the same lease.

Normally, you won't receive the keys to your new apartment without this signature along with the security deposit and agreed-upon rent money.

By the guarantor signing the lease, they will officially be held accountable for the outcome of your payments or lack thereof.

This can become an issue when your guarantor is out-of-state or living abroad.

Some landlords or management companies may allow an electronic signing for the guarantor.

However, more often a physical signature is asked for.

This complicates the situation where the lease or a separate rider may have to be express mailed and the guarantor's signature notarized and returned.

Hopefully, your abroad-dwelling guarantor is planning a visit near you sometime soon.

Signing the lease is the ultimate moment of truth often for guarantors.

Even parents have been known to walk out on lease signings if they don't like the apartment, the roommates, or don't feel that their child will be responsible enough.

This catastrophic turn of events can even be sparked by personal conflict.

Therefore, it's important that you have assured your guarantor and made them feel comfortable with the idea of guaranteeing your lease.

What Happens to the Guarantor If I Miss the Rent?

If you do miss rent payments, not only may your guarantor be asked to remit those payments, but their credit score may take a devastating hit depending on how in behind you are.

Be assured that you will be hearing from a disgruntled guarantor if his or her credit takes a dive because of your financial mismanagement.

What If My Guarantor Can't Pay My Rent?

Credit will be affected depending on the actions your landlord decides to take again you. Most landlords will likely bill you with late fees.

If at a certain point he or she feels they will not see their money, they may sue you, take other legal action such as an eviction, both, or utilize a collections company.

Should this happen, your guarantor will be named in any legal suits and collections.

Either way, both of you will see the results on your credit history. Not only will both credit scores go down, but creditors can see the late payments and collections.

If you do miss rent payments, not only may your guarantor be asked to remit those payments, but their credit score may take a devastating hit depending on how behind you are.

You will most likely be hearing from a disgruntled guarantor if their credit takes a dive because of your financial mismanagement.

The good news is this situation might give you more time than a credit card company to remit payments, which will report late payments after the first 30 days.

Can You Use More Than One Guarantor?

One of the many atypical situations involving multiple guarantors are when it concerns roommates.

This happens quite frequently when all the roommates applying are all just out of school and haven't had enough time to secure employment or establish credit.

Sometimes they have started a job but haven't worked for long enough. Or other times, someone simply doesn't make enough to cover their room or has poor credit.

Technically, one guarantor must be able to cover the entire rent of the apartment.

However, as apartment shares have become increasingly popular, many landlords have started taking multiple guarantors to cover just their respective applicant's rent.

To find out more about the details of sharing an apartment in New York City, you can read our complete guide on room shares.

Another circumstance that might involve multiple guarantors is if you have a guarantor who doesn't quite meet the requirements either credit or income-wise.

Using more than one guarantor in this instance is uncommon, but if you can build a good rapport with an individual landlord, they may make an exception for you.

This works better in a situation when you are already leasing from them and thus already know the landlord.

Perhaps your roommate doesn't want to renew or you've broken up with your significant other and you need to hold a lease on your own.

The landlord may require you to get a guarantor if you don't meet the guidelines on your own.

If your guarantor's profile is a little weak, you can ask if you can include a second guarantor. Again, this is not as common, but it may work.

It, of course, helps if you've always paid your rent on time and are in generally good standing with your landlord.

What If You Don't Have a Guarantor?

Understandably, some people run into this situation. Maybe your family members all have bad credit or none of your friends make enough money.

Foreign nationals like international students or those who have just immigrated here for work often run into this situation as they tend to have no credit or income.

In the case of those who have moved here for work, many of their employers who have already sponsored their move may be willing to guarantee their housing as well.

If you find yourself without a guarantor and you've found the apartment of your dreams, hopefully, you have healthy savings.

In the past, you could offer the landlord a few months extra upfront or an extra security deposit if you don't exactly meet the income requirement.

However, in 2019 New York passed laws that prohibit landlords from asking for extra months upfront.

Landlords are restricted to asking for up to one month for the security deposit and for the first month's rent.

Find out how about these professional guarantor services that you may qualify for, even if you have no credit.

To explore more options for those with no credit, bad credit, no job, or low income, read up on our articles that give you more insight.

The Takeaway

As you may have noticed, being a guarantor can be a big commitment, so it's best if your guarantor is someone close to you or someone who trusts you.

It not only involves a lot of paperwork, but a hefty fee (hopefully you are willing to foot that bill), their credit taking a hard pull, and taking the time to sign the lease.

A guarantor may never be willing to help you out again if you let them down by not paying the rent.

This is because people take their credit very seriously and they won't want to jeopardize any financial stability with someone who doesn't pay their bills.

However, done right, using a guarantor can really help you out of a difficult situation and can give you an opportunity to build up your credit so you can go out on your own.

Ruth Shin
About the author

Ruth Shin is the Founder and CEO of PropertyNest. She shares in-depth insights on real estate, personal finance, and home improvement drawing from her experience as a licensed real estate agent, editing personal finance publications, and managing many home renovation projects. Ruth graduated with a BA from Hunter College in Writing, History, and Special Honors.