What is a lease guarantor, and do you need one to rent in NYC?
If you (and your partner, if you have one) want to rent this $3,200 East Village one bedroom and you need a guarantor, they would have to earn at least $256,000.
New York City landlords have strict income requirements, which means they want renters who earn an annual salary of at least 40 to 50 times the monthly rent—and have good credit. For example, to qualify for an East Village one bedroom that rents for $3,200, you (and your partner or roommate, if you have one) would need to make at least $128,000 combined.
So what happens if you don't earn quite enough but you're otherwise a good fit? In that case you could turn to a guarantor to secure the apartment. A guarantor is typically a parent or other close relative who agrees to pay your rent in case you default. In addition, changes to New York State's rent laws mean the past practice of being able to prepay rent or to provide additional security to obtain an apartment is now no longer permitted, which is another reason to use a guarantor.
[Editor's note: A previous version of this post was published in June 2019. We are presenting it again with updated information for March 2022.]
Being a guarantor is commonplace but also a serious financial responsibility, so someone should not enter into this situation lightly—or do it for just anyone. Under most standard agreements, a guarantor is responsible for the entirety of an apartment's rent if the tenants stop paying, and the landlord is within their rights to take the guarantor to court—damaging their credit in the process—in order to get that money.
What does it take to be a guarantor in NYC?
First, most NYC landlords require guarantors to live in the tri-state area so they’re easier to track down should you default. And some landlords have stricter requirements and require a guarantor to live in New York.
Second, your guarantor faces strict income requirements. They must earn an annual income of at least 80 to 90 times your monthly rent and have solid credit. Why so high? The thinking is they need enough income to be able to cover their own housing costs as well as yours.
So for that East Village one bedroom for $3,200, they’ll need to earn at least $256,000. They’ll also have to provide the same documents you will for a standard application including bank statements and tax returns.
Once someone has signed on to be your guarantor, they’re pretty much responsible for any missed rent, and the landlord doesn’t have to tell them if you or your roommates stop paying rent. Yes, they're on the hook for your roommates’ portion of the rent too—unless you each have your own guarantors, in which case both would be jointly liable.
If your landlord allows multiple guarantors, it’d be wise to have a lawyer draw up a contract to determine the protocol if one or more roommates default on rent. To protect themselves even more, the guarantors should ask your landlord to notify them if anyone misses a rent payment.
They're also still on the hook when you renew your lease, even with a rent increase and it's your responsibility to inform that your rent has gone up.
An institutional guarantor is also allowed
If all this sounds a little daunting, you could look to institutional guarantors like Insurent Lease Guaranty (a Brick Underground sponsor). Insurent is currently accepted in over 775,000 rental units representing over 8,000 buildings for college and professional graduates entering the workforce who don’t meet landlords’ income requirements, and foreign executives relocating to the U.S. who have no U.S. credit history. It also covers relocating U.S. executives, those who are self-employed, and non-employed foreign and U.S. renters with significant cash liquid assets, as well as international and U.S. students and corporations.
Insurent charges about 70 to 85 percent of one month's rent if you have U.S. credit, and 90 to 110 percent of one month's rent if you're foreign with no U.S. credit. (To see if your prospective building or landlord accepts Insurent, click here.)
"We frequently get parents who are on the hook with roommates," says Charles Schoenau, Insurent's managing director. "It's definitely worth seeing if your kid can qualify. If they have roommates and they all work, it's likely they will."
—Earlier versions of this article contained reporting and writing by Virginia K. Smith and Nikki M. Mascali.
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