Apartment hunting can be fun. You get to choose the location of your new home and the type of rental (i.e. studio, apartment or condo) that you're going to be living in. However, once you've found your ideal living space, you'll need to fill out the rental application and come prepared with a variety of documents required by the landlord to make it official, including proof of income.
So, how does a potential renter show proof of income and what types of documents qualify? This article will walk you through ways to show proof of income and help you secure the rental property you've been eyeing.
Proof of income is an important metric for landlords because it shows them that the potential renter has a steady income and will be able to make the monthly rent payments. Property owners will usually ask prospective tenants to provide at least two different documents that verify proof of income to protect themselves from fraud or scams.
These documents assure the landlord that you'll be able to pay rent, but they also benefit the renter. It's a great way for renters to check in with their budget and make sure they can actually afford the place they are trying to rent. It's also proof that renters have a steady income and they can use it to vouch for themselves and their credibility if a dispute ever arose about the ability to pay for rent.
Now that we've discussed why proof of income is important, let's dive into what type of documents will work to verify proof of income.
If you work a full-time or part-time job where you earn a regular paycheck, you'll have access to a pay stub. A pay stub shows how much you paid within a certain time period. It also shows how much money was deducted for insurance, taxes and investments.
Most likely, you receive a pay stub every pay period, but you can also ask your employer to provide past pay stubs as a way to verify proof of income. Keep in mind that landlords may contact your employer to check that the pay stub is accurate.
When you file your federal taxes each year, you'll get a tax return. This is a legal document that highlights everything you earned the previous year and provide an accurate snapshot of how much someone earned in a calendar year.
Prospective renters can use their tax returns as proof of income. This may be a good option for those who are contracted employees or freelancers because it'll show a year's worth of income.
You can use bank statements as proof of income because they show the landlord every deposit, withdrawal and transaction made by the tenant. However, bank statements don't always portray an accurate income.
For example, if the future renter is paid on commission, their income may fluctuate month-over-month and a bank statement would highlight these fluctuations in pay.
Renters may ask their current employer for a letter that verifies their income. This letter confirms that a renter has the means to pay for rent. If your landlord requires a reference, this may be a good opportunity to provide both proof of income and a reference at the same time.
If you live on and receive social security payments from the government, you can use these documents as proof of income. While this is a federal document that's credible proof of income, there's one caveat. Social security benefits are subject to Congress and could change.
Do you receive disability insurance from the government? If so, you can use this as documentation and proof of income.
Some career fields provide a pension after retirement. Pensions can be used as proof of income and can be requested here.
One type of court-ordered payments is alimony. If a potential renter receives alimony, which is a court-ordered payment, that renter can use that as proof of income when applying for a new apartment.
If you're currently unemployed and receive federal or state unemployment payments, you can use this as a proof of income. However, unemployment checks usually have a timestamp on them, meaning they'll usually be stopped after a certain amount of time. There are some scenarios where you can still rent an apartment with little or no income.
When you're gathering your proof of income documents, it's a good time for you to check in with your budget and make sure you can actually afford the apartment you're trying to lease.
According to a government study, renters should budget roughly 30 percent of their salary toward rent. While this method may work for some, the 30 percent ratio is not always realistic, especially if you live in a city like New York or San Francisco, where rent is extremely expensive.
As you gather your proof of income documents, review how much you're making, assess your other bills and financial responsibilities and ensure you'll be able to make your rental payments on time each month.
As you get ready to rent a new apartment, make sure you have all of the proper paperwork in place, such as proof of income, to make the application process easy and stress-free. By preparing your paperwork in advance, you'll seem organized and responsible, which is a good sign for landlords.