What's the difference between a co-signer and a guarantor?

The terms are used interchangeably in NYC but there are some subtle differences.


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You may have heard the terms co-signer and guarantor being used in regards to your rental application, particularly if you don't meet the income requirements expected of tenants in NYC. Typically, landlords want to see a good credit rating and an income that’s 40 times the monthly rent in order to sign a lease on an apartment. If you don’t meet these standards, you may need someone else to step in if you get into financial trouble and can't pay the rent.

So who is that someone? The terms "co-signer" and "guarantor" are often used interchangeably to describe this person, but there are some subtle differences when it comes to their obligations and rights. 

A co-signer on a rental property usually refers to an individual who signs a lease on behalf of someone else, says Jeffery Geller, vice chairman of the institutional lease guarantor, Insurent (a Brick Underground sponsor). This individual might be a parent, good U.S. credit, and must have a minimum income of 75 or 80 times the monthly rent (in order to pay both your and their own housing expenses).

"A co-signer is immediately responsible for the rental," says Toby M. Cohen, a real estate attorney with the law firm Inglesino, Webster, Wyciskala & Taylor. A co-signer on a lease might theoretically have the right to live in the apartment, but that would depend on the terms outlined in the lease.

While a co-signer is responsible for the rent at the moment it is due, a guarantor only has to pay once the person on the agreement fails to do so. A guarantor won't have any right to live in the apartment "because you are only going to be liable for anything if the tenant stops paying," says Cohen. 

Geller says a guarantor often refers to an institutional lender who offers a service "enabling the renter to qualify for and obtain the apartment."

The agreement will usually specify the guarantor is only on the hook "once all legal remedies are extinguished," says Cohen but he stresses it's still important to read the definitions in the lease regardless of what they are called and what you think they mean.

Guarantors also come into play with student loans or mortgages. The lender doesn't reach out to the guarantor for monthly payment but will do so when and if the borrower defaults.​​​​​​

If you are weighing up the risks of one over the other, Cohen says a co-signer takes on more financial responsibility than a guarantor. "A co-signer is responsible for the obligations immediately whereas a guarantor is only responsible for them after some triggering event," he says.