Are you searching for an apartment but worried about approval? Many renters need assistance securing a lease due to a lack of credit history or insufficient income. This is where the role of a guarantor comes into play. In this article, we’ll explain what a guarantor is, who can be one, the requirements, and why you might need one. Let’s get started!
Key Takeaway
- A guarantor is a person who agrees to pay another person’s debt if they can’t. This is often done to help someone get credit for a loan, mortgage, or tenancy agreement. For example, a landlord might ask for a guarantor if a prospective tenant doesn’t have a solid rental history or the landlord wants to verify their reliability.
What is a Guarantor for an Apartment?
As one of the most trusted property management companies in Washington DC, Bay Property Management Group has the local expertise to help landlords and tenants understand the responsibility of guarantors. A guarantor signs the lease with the tenant and agrees to pay the rent if the tenant can’t. While they do not reside in the property, they still become part of the lease agreement. If the tenant doesn’t pay, the guarantor must cover the costs, including rent, late fees, and other charges.
Why Would you Need a Rent Guarantor?
You might need a rent guarantor if either your credit score is low, you have a limited rental history, or your income doesn’t meet the landlord’s requirements. A guarantor makes sure that rent will be paid even if you can’t make the payments. This increases your chances of being approved for an apartment, especially if you are a student, a first-time renter, or let’s say someone with a variable income.
Guarantor vs. Co-Signer: What are the Differences?
This is where we hear the most common confusion from tenants. While both guarantor and co-signer roles involve helping you secure a lease, they have their own unique and distinct responsibilities
Here’s a breakdown of the key differences between a guarantor and a co-signer:
| Aspect | Guarantor | Co-Signer |
| Primary Role | Backs up the tenant’s ability to pay rent | Shares the responsibility of paying rent |
| Financial Obligation | Only steps in if the tenant fails to pay rent | Jointly responsible for paying rent from the start |
| Lease Agreement | Not an occupant, just a financial backer | Usually an occupant and part of the lease |
| Responsibility | Pays only if the tenant defaults on payments | Pays rent alongside the tenant |
| Credit Check | Required to pass a credit check to qualify | Required to pass a credit check and qualify jointly |
Who Can Act as Your Guarantor?
A guarantor is typically someone with a strong financial background and excellent credit history who is willing to take on the responsibility of your lease.
Some of the common choices for a guarantor include parents, family members, close friends, or even employers. The key is that they must be financially stable and make sufficient income to meet their own obligations and your rent if you are unable to do so.
What are the Requirements for a Guarantor?
Most landlords and property management companies have two main categories of requirements for guarantors: financial and documentation requirements.
Financial Requirements
- Income: Guarantors need to have a much higher income than what is needed for the tenant to qualify. This is usually about 80-100 times the monthly rent. For example, if the rent is $1,500 a month, the guarantor might need to earn at least $120,000 a year.
- Credit Score: As we mentioned above, a good credit history is crucial for guarantors. Landlords often look for a credit score of 700 or higher.
Documentation Requirements
- Proof of Identity: This can be your passport, driver’s license, or another government-issued ID.
- Proof of Income: This can be either your pay stubs, tax returns, or bank statements that can be used to verify your income.
- Social Security Number: This may be needed for credit and background checks.
Note: Guarantor requirements can vary depending on the landlord and location where you’re going to rent a property. Make sure to always check with the landlord or property management company for their guarantor requirements.
How to Find a Guarantor
We’ve heard from renters that sometimes, finding a guarantor can be challenging. However, if you’re just starting for example, and don’t have yet that stable income and awesome credit history your landlord might consider, you definitely need one.
Here are helpful tips on how you can find a guarantor:
- You can ask a close family member or friend: Obviously, your family members or close friends are often the best first option. They know you well and before even considering asking other people, try asking them first.
- You need to know your guarantor requirements: You can try to scroll a bit above and you’ll see the typical requirements your guarantor must meet. Also, note that other landlords or property management companies might have other additional requirements based on their own preferences.
- Now, make a list of qualified potential guarantors: Now that you know the requirements for your potential guarantor, you can already make a list of individuals who meet the requirements to be your potential guarantors.
- You can research or try third-party services: If you can’t rely on personal connections you might have, you might consider using third-party guarantor services. These are the companies that specialize in assisting renters like you to secure leases.
- Meet with your potential guarantor: Once you have chosen your potential guarantor, you can now schedule a meeting to discuss the responsibilities involved and ensure they are comfortable with the commitment.
Assisting Landlords with Guarantor Requirements
I don’t know if it’s just me, but dealing with guarantor requirements for multiple properties can be a hassle. These are critical agreements to secure a steady rental income for your business and it requires additional screening time to approve the applicant. For independent landlords, these added administrative tasks can add up quickly.
Bay Property Management Group are experts in all things rental management such as tenant screening, lease creation, rent collection, maintenance, and property inspections. We also ensure compliance with local laws and regulations, provide financial reporting, and manage tenant relationships.
Let us handle the rental complexities for you so you can focus on having more time for the things you enjoy! Contact us today to learn more about our property management services throughout Baltimore, Philadelphia, Northern Virginia, and Washington, DC.
