So, you're thinking about renting an apartment, but the landlord asks you to use a guarantor, and you're thinking to yourself, wait, what is a guarantor?
Well, let us break it down for you:
What is a rental apartment Guarantor in NYC?:
It is more or less exactly what it sounds like- a person, or sometimes entity, that guarantees something. In this case, a lease. Basically, if a renter does not meet the terms of their lease, and they default on their rent for any reason, this allows the landlord to go after whoever guaranteed the apartment to recoup any lost rent.
Guarantors usually have to apply to the apartment the same way the renter applicant would, and they would also need to provide the same required documentation, if not more.
What are New York State and NYC Guarantor Requirements?:
In New York, it is a state requirement that an applicant must earn 40x the monthly rent. For example, if you are applying for a $3,000 apartment, you must show that you earn $120,000 annually.
Or, if you are applying with a roommate and trying to rent a $4,000 apartment, you will need to prove that you earn $160,000 annually. This can be you and your roommate's salary combined and does not have to be individual.
One more tidbit to keep in mind is that although this is not a state requirement, landlords generally look for a credit score of around 700 or above.
If you are using a guarantor, they must prove to make 80x the monthly rent and meet the same credit requirements. So if you are looking for a $3,000 apartment, your guarantor must prove they earn $240,000 ($3,000 x 80). You are also welcome to use more than one guarantor and they are welcome to prove their total income of $240,000 combined.
This is the same for the roommate scenario. If you and your roommate are looking for a $4,000 apartment and you each want to use a guarantor, your guarantors must prove a combined income of $320,000 ($4,000 x 80) and meet the same credit requirements.
When are Guarantors needed?:
Guarantors come into play when an applicant does not meet the income or credit requirements. Guarantors can also be used for prospective international residents who cannot provide the same documentation as an American, such as a U.S. bank account, social security number, credit history, etc...
Other instances where a Guarantor is required involve recent college grads where most do not yet have established credit.
The most common rental guarantor on an NYC rental lease is the parents of the renters. This is by no means a requirement, you can use a friend, a family member, and sometimes even a company. One small note to keep in mind is that some landlords require the guarantor to be in the tri-state area, close by in neighboring states such as NY, NJ, and CT so you should probably clarify this during your apartment search if you intend to use one.
Important facts to note:
It is very important to note that guarantors guarantee the entirety of the lease and not just an individual's share of the apartment. For example, if you have a roommate and are only using one guarantor, that person is responsible for the whole apartment, not just the share of one of the occupants.
One more important fact that should be noted is that you cannot combine an individual tenant and a guarantor to meet the income or credit requirements. Either you apply as an individual, OR you apply using a guarantor, but you cannot combine an applicant's income with a guarantor's income. This is the same if you have a roommate. Even if your roommate makes more money than you, you either have to apply using your income and your roommates, OR you find a guarantor (or multiple guarantors) to cover the lease in its entirety.
NYC Guarantor Companies:
If you don't know anyone that can qualify as your guarantor, don't fret! There are a couple of new companies that you can pay an upfront fee to, to be your guarantor. Again, keep in mind that not all landlords accept these companies so if you know in advance you're going to use this alternative route, it would be good to ask if they accept these companies prior to committing to viewing the apartment. Some third-party NYC Guarantor companies to use are:
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