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What is a lease guarantor, and do you need one to rent in NYC?

The landlord of this East Village one bedroom allows renters who lack sufficient earnings to use guarantors. 

Voro New York/StreetEasy

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New York City landlords have strict income requirements, which means that renters need to earn a yearly salary that’s at least 40 to 50 times the monthly rent of their apartment, and have good credit as well. To qualify for the $2,750 East Village one bedroom seen in the photo above, for example, you would need to make between $110,000-$137,500. 

If you don’t earn that type of salary, you’ll need a guarantor to secure the apartment. A guarantor is typically a parent or other relative who agrees to be legally responsible for your rent in case you default. 

It’s a fairly common practice, in fact there are currently more than 5,700 apartments listed on StreetEasy that accept guarantors, but agreeing to be a guarantor is a huge financial responsibility, and 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 well 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. 

Second, your guarantor—who likely has their own housing costs to cover—also faces strict income requirements, and also needs to have good U.S. credit and make at least 80 times your monthly rent annually. 

So using that East Village one bedroom for $2,750 as an example again, they’ll need to earn at least $220,000 (or have that in their bank, savings, or stock market accounts). They’ll also have to provide all the same documents you will for a standard application, such as 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 even have to tell them if you or your roommates stop paying rent. Yes, your guarantor is on the hook for your roommates’ portion of the rent, too, since most NYC landlords only allow one guarantor per lease. 

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 to prevent costly issues from arising.

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, FYI). Insurent currently guarantees more than 450,000 rental units in thousands of NYC 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. (Note: Insurent won’t back renters with bad credit.)

Insurent’s average fee for U.S. residents is 65-90 percent of one month’s rent, and 95-110 percent for foreigners without a U.S.-based credit history for one-year lease guarantees. Often, even first-time renters can qualify on their own, as Insurent only requires an annual income of 27.5 times the rent (or 50 times the annual rent in savings), and this can be the combined income or savings of several roommates. 

"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."