General Approval Requirements
Approval requirements usually differ depending on the landlord/management company and/or on the building. The following are general guidelines that apply in most instances:
1) Renters must 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.
- Bank Statements: In most cases landlords/management companies require copies of a renter's 3 most recent bank statements from a checking, savings, stock account or any other financial institution..
- Pay Stubs: copies of renters' 3 most recent pay stubs are usually required.
- 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.
2) Renters must show a secure and stable employment history.
- Letter of Employment: Renter should get a Letter of Employment on their company's letterhead, with the following:
- Length of employment
- Annual income.
Please be aware, in many cases an offer or acceptance letter for a new position is not sufficient to show employment.
3) Renters must have good credit history. A major component of the approval process is based on the credit report. If you think your credit report is bad, advise your North Star Real Estate Group broker so they can prepare you for the application process. Landlords/management companies have different ways of dealing with credit problems.
- 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
4) Renters must show a good rental history.
- 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.
5) If renters do not meet the above mentioned criteria, some landlords and management companies will require a guarantor while others choose to raise the security deposit amount. On some occassions, the application may just be rejected. Either way, North Star's staff will guide you in order to save you time, money and frustration. Some owners will allow tenants to prepay 6 months to 12 months rent up front and others will allow a co-signer or guarantor to co-sign the lease for you. 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. Some buildings will not accepts students and will require a guarantor co-sign for their lease as well.
- 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.
- In some cases, landlords/management companies require a guarantor to reside in the tri- state area (New York, New Jersey or Connecticut).