What is a Guarantor for an Apartment?

Finding the perfect apartment to rent or lease is an exciting feeling. But before you can start decorating the place, you’ll need to go through an application process. One of the main things a landlord or property manager looks for in a renter is if they have the finances to pay the rent or lease on time. In addition, if you’re a first-time renter with no rental history, have bad credit, or have limited job history, you may need a guarantor for apartment hunting. 

Here’s what you’ll find in this article:

• What is a guarantor for an apartment?
• When and why would you need a guarantor?
• What are the requirements for a guarantor?
• How do you find a guarantor?
• Resources for finding a guarantor

What is a guarantor for an apartment?

Sometimes called a co-signer, a guarantor is someone who legally takes responsibility for paying the rent in the case that something causes you to default on the payment. If you’re leasing an apartment, you’ll want a guarantor for the lease who is willing to take on the terms and timeframe of the lease agreement.

When using a guarantor, it’s important that all parties understand the terms of the rental or lease agreement before signing. For instance, if you decide to sublet your apartment and it’s okay to do that under the agreement, the guarantor is still responsible for payment even if they signed the agreement for you, not the new renter. Communication for all aspects of the rental or lease process is vital so that you, the landlord, and the guarantor feel comfortable with the agreement.

When and why would you need a guarantor?

Hopefully, you won’t need a guarantor for your apartment. If all of your paperwork is in order, you can show job stability, proof of income, and a good credit score, the landlord may find that you’re the ideal candidate for the apartment. However, if you have any of the following conditions, the landlord may want you to have a guarantor:

• Lack of rental history: Landlords like to see that you have rented before to see if you made payments on time and took care of the property. If you don’t have a rental history, consider a guarantor.
• Previous eviction: There are a number of reasons you as the renter could get evicted. Lack of payment, late payments, or violating the terms of the rental or lease agreement are often grounds for eviction.
• Bad credit: If the landlord looks at your credit history and sees a low score, this could raise a red flag for them. Generally, a low credit score means you didn’t make payments to your creditors on time, and landlords need verification that you can commit to paying rent on time.
• No credit history: A landlord can’t verify that you can make a payment on time if you don’t have a credit history.
• Insufficient income: Generally, you should have enough monthly or yearly income to cover rent, utilities, food, and insurance. Normally, you should loosely follow the 30 percent rule.

What are the requirements for a guarantor?

The guarantor for your apartment must be financially stable, have good credit, and is willing to take on the financial commitment to make the monthly payments for you. They should have a steady income that meets the earning requirements outlined in your lease. To demonstrate that they meet these requirements, a guarantor for an apartment may be asked to submit the following:

• Pay stubs
• Bank statements
• Social security number
• Tax returns

How do you find a guarantor?

Keep in mind that a guarantor is signing and taking financial responsibility for paying your rent if the situation arises where you can’t. This is a big responsibility and you want to make sure that whoever becomes your guarantor for an apartment understands the commitment. The first place to look for a guarantor is family or friends who don’t mind covering for you. It’s important not to jeopardize your relationship with the guarantor over a missed payment, so be sure that everyone understands their responsibility.

What should you do if you can’t find a guarantor?

There’s a possibility that you can’t find a suitable candidate to take on the role of your guarantor. Maybe the person you’re asking isn’t comfortable taking on the role or they don’t have the necessary qualifications the landlord is looking for. An option for finding a guarantor is to hire a company that provides guarantor service.

A guarantor service does come with a fee, and understandably so, as they are the ones who are taking on the financial responsibility if you can’t make your rent payment. It’s important to understand the guarantor fee structure before committing to them, especially if you’re a bit strapped for money. Here’s how it works:

• Guarantor fees are generally based on the applicants’ credit score, so if yours is low, expect to pay a higher percentage rate than if the score was higher. Typically, a renter using a guarantor will pay between 4% to 10% of the annual rental cost.

• For example, if your annual rent is $1,800 per month, that cost comes to $21,600 over a 12-month period. Let’s say you get a 5% rate for the service, then you need to come up with $1,108 and you pay that upfront before the guarantor signs the rental contract or lease.

If the associated fees are acceptable to you and using a guarantor service sign can get you your dream apartment, then hiring the service is a good choice for you.

What are your options if you can’t afford a guarantor service?

If you can’t find a suitable guarantor or aren’t comfortable using a service, you do have other options.

• Look for an apartment that better fits your budget.
• Talk with your landlord. If your credit score is low because of medical bills, and you have the finances to pay the monthly rent, the landlord may overlook the low score and rent you the apartment. Some landlords will accept extra move-in fees like a higher security deposit or several months of payment in advance.

If you find yourself in a situation where you really want a certain apartment and need helping to get it, a guarantor is a good option, whether it’s a paid service or a trusted person in your life.

Ready to find your perfect apartment and get the application process going? Search thousands of apartments for rent on Zumper and determine if a guarantor is right for you.