How to find a cosigner for an apartment

What Does a Guarantor Do?

It finally happened. You found your dream apartment with ample closet space and a gorgeous lake-front view. You submit your application and start day dreaming about home decor when you're hit with the bad news - you don't qualify. At this point, most apartment seekers tend to hang their heads and settle for their second choice but there is another way. While some landlords will inform you of the alternative strategy of finding an apartment guarantor, some landlords won't so it's important to know that it's an option. 

According to apartments.com, the guarantor cosigns a lease when a potential renter is unable to meet the requirements requested by a landlord. This is a frequently utilized tactic especially among students and first-time apartment renters. If you're in need of additional backing, a guarantor acts as extra insurance to reassure landlords that they will receive each month’s rent.

Reasons for an Apartment Guarantor

There are various reasons why a landlord will request a guarantor when applying for an apartment. The primary reasons are if your yearly income isn't 40 times the monthly rent, if you have bad credit or you have little to no rental history. If you've been rejected for an apartment, first find out if management allows guarantors before you launch into the search for a co-signer.

Requirements for an Apartment Co-Signer

In most cases, guarantors need to make between 80 to 100 times your monthly rent amount. This significant income requirement is due to the fact that the guarantor will be liable to cover your rent if you're unable to. When seeking the right person to become your guarantor, ensure they understand the terms of the guarantor agreement first.

How to Find an Apartment Guarantor 

The most likely candidate for an apartment guarantor is usually a parent or wealthy relative. If you're not sure how to approach someone about becoming your guarantor, nakedapartments.com offers a sample guarantor letter to present your potential co-signer.

If you're unable to find a personal guarantor, some states such as New York offers the option of finding an institutional guarantor. These guarantors work like an insurance policy where apartment seekers pay for a policy and is able to qualify for an apartment without finding their own guarantor to co-sign.

Required Co-Signer Documents

Similar to the documentation required when a renter signs a lease, an apartment guarantor is required to submit paperwork such as:

• Two pay stubs
• Two bank statements
• One or two tax returns
• A letter from their employer. 

While most apartment co-signers will be aware of these requirements when they co-sign, it's smart to give them advance notice of what to gather before signing on the dotted line. 

If you're stressed about not qualifying for the apartment of your dreams, you can still make it happen by finding an apartment guarantor. While it's important not to sign a lease for an apartment you can't afford, if a factor such as bad credit or no rental history is holding you back, an apartment guarantor is a viable way to still score your dream rental.

You've qualified for your dream apartment, now what? If you're looking for help with your upcoming move, check out SmartMove's Customized Moving Guide for personalized tips, tools & timelines.

At certain points in your life, especially if you’re just starting out, you may need a co-signer for a loan or other financial transaction. But what if you don’t know anyone who is willing or able to co-sign? Or what if you don’t want to strain your relationship with a friend or relative by asking them to do it? What are your alternatives?

Key Takeaways

• If you’re having difficulty obtaining a loan or renting an apartment on your own, getting a friend or relative to co-sign isn’t your only alternative.
• In the case of an apartment, see if you can sublet from, or room with, someone who already has a lease.
• You also may be able to hire a professional co-signer service to guarantee your rent.
• If you want to borrow money and conventional lenders have rejected you, then peer-to-peer lending might be an option.

When Could You Need a Co-Signer?

Suppose you want a car loan so you can drive to work. Public transportation where you live is poor; relying on it severely limits where you can work, compromises your safety, or takes up way too much of your free time. You’re convinced that you can make the loan payments, but you don’t have quite enough income to qualify.

Perhaps you have just graduated from college and are trying to get your first apartment. You’re no longer eligible for student housing, but you don’t yet have a job and can’t convince any landlord to take a chance on you despite your solid grade point average.

Or maybe you’re trying to get back on your feet after unemployment or health problems depleted your savings and led to you defaulting on loans, damaging your credit history and making it impossible to get a new loan or a place to live.

Four Alternatives to Having a Co-Signer

Fortunately, even if finding a co-signer would be difficult or impossible, you still have options. Here are four of them.

1. Become a Subtenant or Roommate

If you’re after an apartment, then you can try finding a situation where someone else already is fully obligated to pay the lease but is looking for help with the rent. You might be able to sublease from someone who is traveling or had to move unexpectedly and couldn’t get out of their rental agreement. You also might be able to rent a room from someone who will occupy the apartment with you but doesn’t need to add your name to the lease.

In these cases, since the landlord already has a signed agreement from someone who has passed a credit check, paid a security deposit, and promised to pay the rent for the full lease term, they may not check your credit or even care who occupies the place as long as they’re receiving rent checks on time each month from the original renter.

Ask the individual you want to sublet from or room with for a copy of the lease, to make sure you won’t be violating it. The person on the lease should get written permission from the landlord before you move in, and you should sign a sublease or roommate agreement with the tenant. Be aware of the possibility that if you’re paying the person on the lease rather than paying the landlord, they could conceivably take your money and not remit it to the landlord.

2. Use a Co-Signer Service

To secure an apartment, you could also hire a co-signer service. For a fee, they will guarantee to your landlord that they will pay your rent if you do not. You must apply for approval with a co-signer service, and there is often an application fee. If you’re approved, then the service will give you a co-signing certificate to submit with your rental application. It’s up to the landlord whether to accept your co-signer. 

If the landlord approves, then you’ll have to pay the co-signing service a fee, calculated as a percentage of your rent, even if they never have to pay your rent for you. If the service does have to pay any rent on your behalf, then you will be obligated to reimburse them.

One company that offers this service is Insurent. It charges a one-time, nonrefundable flat fee based on a percentage of your rent after your apartment application is approved.

Note that if you can’t find a landlord willing to accept a co-signer service’s guarantee, then you might be able to secure an apartment by paying a larger security deposit or prepaying the rent.

3. Try a Peer-to-Peer Lender

If you want to borrow money and conventional lenders have rejected you, then peer-to-peer lending might be an option. The two most prominent companies in this area are Prosper and Lending Club. Both companies will check your credit score when you apply, but they do not require borrowers to have perfect credit, and you can use the borrowed money for a variety of purposes. The worse your credit score, the higher your interest rate will be, and you might not get approved. However, it could be worth applying to find out.

Prosper has a “recommended minimum credit score” of 640. Lending Club does not list a minimum credit score requirement on its website, but other sources have reported that the minimum is 660.

Important

If you can’t get a loan or an apartment without a co-signer, then this might be a signal that it’s not a good time to borrow money or commit yourself to paying a lease.

4. Establish or Rebuild Your Credit History

Lenders require co-signers when a borrower has no credit or damaged credit. In either situation, you can create or re-establish a favorable credit profile by applying for a secured credit card that will report your activity to Equifax, Experian, and TransUnion, the three major credit bureaus. All you need to do is make one small purchase a month on the card and pay it off before the payment due date.

If your problem is that you have no credit, then within about six months of beginning to use your secured credit card, borrowing only a little, and paying it promptly, you’ll meet two of the most important criteria for having a strong credit score: a low credit utilization ratio, and a history of paying on time. At this point, you might qualify for a loan or an apartment without a co-signer, assuming you earn enough income.

If you’re repairing damaged credit, then you may have to wait longer, because negative items remain in your file for years. Lenders need to be convinced by your credit score that your new, positive repayment history isn’t just a short-term change.

Should You Wait to Borrow Instead?

If you can’t get a loan or an apartment without a co-signer, then this might be a signal that it’s not a good time to borrow money or obligate yourself to pay a lease. Lenders and landlords want someone else to guarantee payment because they aren’t sure that you’re good for the money. It’s possible that their concerns are justified.

Having your loan or apartment application rejected can be a blessing in disguise when you can’t really afford it. Instead of adding more stress to your situation by taking on another financial obligation—and dragging someone else into your problems by asking them to co-sign, potentially damaging an important relationship—look for alternatives that you can afford on your own. They might be less than ideal, but when your situation improves, you can reapply for another loan or apartment.

The Bottom Line

It’s frustrating for sure to not be able to live where you want or buy something that you think you need, and most of us have been in this situation at some point. But lenders and landlords make their decisions based on objective financial considerations, and you shouldn’t take their rejection personally.

If you can’t get or don’t want a co-signer, then remember that you have options. They just require some patience and outside-the-box thinking.

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