Renting a home can seem like a straightforward process. However, things will change when you start filling out the application. You will be asked to provide pay stubs, credit scores, and references. The overall process will feel overwhelming. However, you need to keep in mind that landlords aren't trying to make your life difficult with such application processes. They are just trying to protect their investments. Read on to learn more about rental requirements in plain terms.
Key Screening Criteria for Apartment Applications
If landlords had free reign on creating their own application criteria, you’d probably get 50 different answers. Luckily, most landlords use the same criteria when screening tenants. Keep reading to learn about the 7 factors landlords consider when you apply.
Credit Score
Landlords view your credit score as a snapshot of your relationship with debt and your ability to pay bills. Most landlords want to see a score of 620 or higher. For high-end rentals, landlords may require a score of 700 or higher. Failing to meet the credit score minimum doesn't mean you'll automatically get denied. You may have to pay a higher deposit or provide a co-signer.
Rental History
Rental history is pretty self-explanatory, but it's important enough to merit its own bullet point. Did you pay rent on time during your last apartment? Landlords will call your former landlords to ask questions. If you have evictions on your record, expect to be denied at most rental properties.
Income Verification
Landlords don’t expect you to be rolling in money, but they do want enough income to comfortably afford rent. Provide recent pay stubs if employed by someone else. If you’re self-employed, expect to provide tax returns as proof of income. A large chunk of money in your bank account doesn’t offset a low-paying job.
Employment Verification
Do you have a stable job? Most landlords want to see that you’re gainfully employed full-time. However, that doesn’t mean that freelance workers, remote positions, and business owners don’t qualify. You may just be required to provide bank statements or contracts from clients.
Background Check
Did you get into any bar fights in college that you’d like to forget about? Landlords will run a background check that could potentially turn those up. While not all charges eliminate you as a prospective tenant, violent crimes and drug-related charges are usually deal-breakers. Many states have limits on how far back landlords can look into your history. Learn about your state’s tenant rights.
References
Good references can be the deciding factor in a close-call application. Provide personal references that can vouch for your character, as well as professional ones that demonstrate your responsibility. Your previous landlords and employers are always good choices.
As you can see, you will need to go through an extensive screening process for applicants. Getting the help of a property manager can be helpful here. Choosing skilled Arlington rental property managers can lead to higher tenant satisfaction rates.
What Is the 3X the Rent Rule?
The 3X the rent rule is a common guideline used by property managers to quickly qualify applicants. You've likely come across this criterion in listings. The 3X rent rule is a popular income guideline landlords follow. The rent multiplier rule simply states that your gross monthly income should equal 3X's that month's rent.
If rent is $1,500/month, your income should be at least $4,500/month before taxes. If rent is $2,000/month, you should be able to show $6,000/month.
Why do landlords care about this? It's an easy way to understand if you can afford the rent. If the rent takes up more than 1/3 of your monthly income, landlords fear you won't be able to make your payments. Having this guideline gives them some security.
Remember, this rule references gross income, NOT take-home pay. Gross income is before taxes, health insurance, and retirement contributions are removed from your paycheck. Always use your gross income when trying to see if you fall into this category.
Landlords will vary on this rule. You'll find some that will do 2.5Xs and some that will be more lenient (usually with private landlords or in smaller cities). Always read the listing in depth or ask the property manager before applying.
Many landlords will combine incomes if you have a roommate or co-applicant. This makes qualifying for that higher dollar unit much easier.
Tips for Meeting Income Requirements as a Renter
You might not fall into one of the neat categories above. Freelancers, gig economy workers, recent college grads, and people in-between jobs can also have trouble qualifying by income. If your finances seem precarious on paper, try these tips to beef up your rental application.
Include all sources of income
Freelancing, driving for Uber, or making money on the side? Great! Include that income on your application. Proof of income can include bank statements with regular deposits. List all income sources together.
Increase your security deposit
Offering to pay more upfront can alleviate a landlord's fears. Offer two or three months' worth of security deposit to show you mean business. This strategy is most effective with private landlords and small property management companies.
Find a co-signer
A co-signer can be the difference between getting that apartment or not. Someone with good credit and verifiable income signs that they'll take responsibility for the rent if you don't pay. Parents cosigning for their kids is a common example.
Repair your credit score ASAP
If you have the time, try to start renting with a clean credit report. The better your credit score, the better off you’ll be. You can negotiate leases with lower income if you have good credit. Focus on paying down debt, disputing mistakes on your credit report, and not opening any new credit lines.
Shop around for flexible landlords
Smaller landlords can be more flexible when it comes to tenant qualification. A private landlord cares more about your story than a property management company's software program. Try hitting up smaller apartment buildings and individual homeowners.
You shouldn’t have to wonder what landlords are looking for in your rental application. They want to make sure you can pay rent every month. How do you do that? Steady income, a solid financial history, and good rental history.
The rules listed above are your baseline. Learn where you can afford an apartment and where you'll struggle. If your employment situation is unique, don't panic. There are still ways to boost your rental application.
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