What You Need to Know About Guarantors in NYC
If you’re not eligible to rent an apartment on your own, you may need to furnish a guarantor. Think of a guarantor like a co-signer on a loan: if you fail to pay your loan, the bank comes after the co-signer for the payment. This is the same situation with having a guarantor on your apartment—they are financially responsible for rent if you are unable to pay.
Here are some things you should know about guarantors as they relate to NYC:
An institutional guarantor is a company or financial institution that will act as your guarantor—usually for some kind of fee. The fee might be one-time, or it may be an ongoing monthly payment. One of the most popular in the city is Insurant
Who should I ask to be my guarantor?
You can, in theory, ask anyone to be your guarantor. However, it’ll likely be awkward if you ask a cubemate or neighbor to be your guarantor. Remember, this person is going to be financially responsible for your rent if you don’t pay. They’ll need to provide financial documents, sign an agreement, and vouch for you. Most people tend to ask someone in their family to be their guarantor. Ideally, your guarantor should be in the area--but they don’t have to be. Just know that if they live out of the area or out of the state, the landlord will likely expect them to make upwards of 80x the monthly rent in their salary or income.
How should I explain to my guarantor what they’re responsible for?
You should be as upfront as possible. Your guarantor is going to be signing a document that legally binds them to pay your rent if you don’t. Be up front as to why you need a guarantor (No credit history, bad credit history, don’t make enough money, etc.,) and be ready to answer any financial questions they might have as well.
What if I have a roommate?
Most landlords only need or want one guarantor on the lease. They usually will not allow your guarantor to take on only your half of the rent as their responsibility. The guarantor on the lease is responsible for the entire rent of the apartment. So if your parent is your guarantor and your roommate stops paying their half of rent—you or your guarantor (in this case your parent) is going to be financially responsible.
A work-around for this may be to have a separate legal contract between the guarantor on the lease, and parents or family of the other people living in the apartment. If you have a lawyer in the family or know someone who can help draft a contract, this may help to alleviate any anxiety a guarantor might have about your roommate’s financial obligation. The contract basically says that although your parent is the sole guarantor on the lease, your roommate’s parents, family, etc., are still financially responsible.
What does the guarantor need to do?
Once you’re asked to furnish a guarantor, the landlord or building manager will tell you their process for having your guarantor apply. Generally speaking, your guarantor will have to go through the same application process that you did: pay an application fee, provide financial information and income requirements, go through a credit and a criminal check.
What if my guarantor is retired or self-employed?
If your guarantor is retired or self-employed, they’ll need a letter from an accountant or a lawyer, confirming their financial status and their source of income.
What if I can’t get a guarantor?
If there is no option for you to get a guarantor or institutional guarantor, you might want to consider finding a sublet or a roommate. Sublets are usually when someone who has an apartment won’t be staying there—usually for less than a year to a few months—and wants to find someone to stay in the apartment and pay rent. However, in some cases, landlords may require sublets to undergo income requirements and credit checks.
You may also consider finding a roommate or a room share—aka a room in an apartment. This way you can avoid having to have a guarantor or let your roommate furnish one instead.