Advertiser Disclosure

Many of the card offers that appear on this site are from companies from which Nova Credit receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). Nova Credit does not include all card companies or all card offers available in the marketplace.

What is a guarantor and why do I need one?

Share

In many cases a landlord may require a renter to provide additional information, or complete additional steps prior to approval. Often times, this means finding a guarantor.

What is a guarantor and why do I need one?

Nova Credit receives compensation from third-party advertisers, but this content is not provided by them. Any opinions, analyses, reviews or recommendations expressed in this article are those of the authors alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.

Qualifying for an apartment is a test in and of itself. In a landlord-driven market, where demand outweighs supply, many renters searching for their dream apartment have no doubt felt the pang of rejection. In most major cities, qualification standards are strict. Poor (or no) credit, little savings, or a questionable relationship with your previous landlord can hinder an apartment search. 

In many cases a landlord may require a renter to provide additional information, or complete additional steps prior to approval. Often times, this means finding a guarantor. We understand that navigating this can be stressful, so we’ve broken down everything you need to know about the process and highlight a few ways you can overcome hurdles to qualify for your dream apartment. 

What is a guarantor?

A guarantor is a responsible party (which is a parent in most instances) that signs on to the lease and agrees to “take on,” or assume, the obligations set forth under the lease, most notably the payment of rent. This guarantee allows the landlord to sleep easy at night knowing it has the protection of a credit-worthy third party without having to worry about renter insolvency. A guarantor is usually the additional piece needed to secure the apartment you desire. 

When does a renter need a guarantor?

There are many situations that a landlord may ask for a guarantor and depending on your location, financial situation, or credit history, this may vary. Listed below are some scenarios that may require an aspiring renter to find a guarantor: 

  • Non-U.S. resident or international student (i.e., no FICO score) - (some landlords may accept your international credit history. Learn more here)
  • Low credit score
  • Limited available funds or lack of consistent employment income
  • Unconventional source of income (i.e., non-liquid)
  • Perceived failure to meet the qualification requirements but the ability to fulfill rent obligations

<cta-realestate>

What are qualification standards?

Qualification standards are simply the minimum requirements a renter must meet, usually set by the landlord or property manager, to get approved in a certain building. These differ tremendously from city to city and even from landlord to landlord. Each situation is unique and based on vacancy rates as well as the chance of default, depending on the landlord’s requirements. 

Take New York for example. Most property managers require prospective renters to make 40x the rent in annual income. In the event a renter fails to meet that requirement, where are they to turn? The most common solution is to turn to a third-party guarantor. 

Guarantors in New York are usually required to provide documentation evidencing their liquidity (usually 80x the rent) and willingness to step into the shoes of the renter upon default. If these requirements are met, business as usual. However, there may be a number of reasons why someone may not agree to act as a third party guarantor (not enough liquid assets, not willing to take on that risk, not willing to sign a lengthy contract). This can significantly hinder the application process.

In addition to these looming obstacles, the recent changes in rent reform (if you haven’t heard about rent reform, our partner TheGuarantors break it down here) have stifled the residential real estate market and made life extremely difficult for property managers across the state. Where landlords used to have the ability to accept multiple months of rent as security, or even prepaid upfront, this option no longer remains. 

Don’t worry, you still have options!

Fintech companies such as Nova Credit partner TheGuarantors can act as a 3rd party guarantor. TheGuarantors use an in-depth underwriting process that examines each candidate and their unique risk profile. After completing the online application, the renter pays a small premium (which is usually less than one month’s rent) to secure a guarantee. 

Other requirements can include: providing income documentation that is 27x the rent, a credit score north of 630, providing cash collateral, and/or a relative that makes 45x the rent or 75x the rent in liquid assets (this person does not have to be a U.S. citizen or live in the states). If approved, the landlord can sleep easy knowing they have insurance protection in the event of renter default. And by purchasing the policy, a renter gains access to an apartment that would otherwise not be possible without a 3rd party guarantor.  

Do you think you’ll need a guarantor?

Once you apply to your desired apartment, your leasing agent will let you know if you need a guarantor.  Laws are changing and companies like TheGuarantors can help bridge the gap between renters and landlords.

Code (ID Name): <call-to-action>

New to the U.S. and looking for a credit card?

Explore credit cards that accept international credit history.

Code: <call-to-action-a>

DID YOU KNOW?

You can use your international credit history to apply for a U.S. credit card

Credit history used to stop at the border—until now. Your existing international credit history could help you get credit in the United States.

Code: <cta-amex>

New! You can use your international credit history from Australia, Canada, India, Mexico and the UK to apply for an American Express ® Personal Card in the U.S.

Code: <cta-mpower>

Use your international credit history to apply for a loan to fund your studies in the U.S. with MPOWER Financing.

Code: <cta-realestate>

Use your international credit history as part of your rental application

Code: <cta-arrive>

New to the U.S.? Subscribe to our newsletter, Arrive, for newcomer news and guides to decoding life in the U.S.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

Code: <cta-boundless>

Applying for citizenship or a marriage-based green card

File online and save thousands in fees through Boundless

Learn More

Article Snippets

Code: <cta-articles>

Code: <cta-facts>

Code: <cta-uscis-time>

Processing Time:

When can you see updates to your USCIS case status?

Enter your details to check your USCIS case status and receive notifications from Nova Credit.

Thank you! Your submission has been received! Please check your email for next steps.
Oops! Something went wrong while submitting the form.

Code: <cta-uscis-status>

Check your USCIS case status update

Enter your details to check your USCIS case status and receive notifications from Nova Credit.

Thank you! Your submission has been received! Please check your email for next steps.
Oops! Something went wrong while submitting the form.

Code: <cta-h1b-status>

Check your H-1B case status update

Enter your details to check your H-1B case status and receive notifications from Nova Credit.

Thank you! Your submission has been received! Please check your email for next steps.
Oops! Something went wrong while submitting the form.

Code: <cta-h1b-times>

Check your H-1B case processing time

Enter your details to check your H-1B processing time and receive notifications from Nova Credit.

Thank you! Your submission has been received! Please check your email for next steps.
Oops! Something went wrong while submitting the form.

Code: <cta-build-credit>

Build your U.S. credit history

Where are you from?

Depending on where you are from, you might have different opportunities to build your credit history in the U.S. For example, selected banks accept credit history from selected international countries, meaning you might not even have to build credit in the U.S. to get approved for a credit card.

Select your country to receive your personal credit builder guide in your inbox.

Thank you! We sent you an email with a guide and instructions on how to get started. Check your inbox!
Oops! Something went wrong while submitting the form.

Code: <cta-how-to-build>

How should you build credit in the U.S.?

There are multiple ways to build credit, each with their own hurdles. Enter your details to see what’s the best for you.

Thank you! We sent you an email with a guide and instructions on how to get started. Check your inbox!
Oops! Something went wrong while submitting the form.

Code: <cta-no-ssn>

No SSN? Find out which card is best for you

Thank you! We sent you an email with a guide and instructions on how to get started. Check your inbox!
Oops! Something went wrong while submitting the form.

Code: <cta-free-consultation>

Free Consultation

The Alcorn Immigration Law team knows immigration yields innovation. We help you obtain a visa, green card or citizenship so you, your employees, and your family can live and work in the U.S.

For a free consultation to explore the best immigration options given your circumstances and goals, contact us and mention Nova Credit.

Thank you! We sent you an email with a guide and instructions on how to get started. Check your inbox!
Oops! Something went wrong while submitting the form.

Code: <cta-j1-fica-refund>

Check if your eligable for a Tax refund

Thank you! We sent you an email with a guide and instructions on how to get started. Check your inbox!
Oops! Something went wrong while submitting the form.

Code: <cta-j1-fica-refund>