Whether you’ve had difficulty qualifying for an apartment in the past or you’re a first-time renter, adding a cosigner to your rental application can be the addition you need to score your new apartment. With competitive rental markets all over the country, those with poor credit, spotty income, or rental history issues have had an especially difficult time getting approved for an apartment. Even renters who meet the basic qualifications have found themselves struggling to compete with other renters that have stronger financial qualifications. In either scenario, adding a cosigner can strengthen your application and help you qualify for that dream apartment you’ve been eyeing.
What is a cosigner for an apartment?
A cosigner is a person who signs your apartment lease and shares responsibility for rental payments. The cosigner agrees to pay your rent if you can’t, and they have equal rights to your apartment, unlike a guarantor. A cosigner is treated exactly the same as a cotenant in many ways.
A cosigner can be a person who lives in the apartment, such as a roommate or partner, but they can also live elsewhere and simply step up financially if you fall short. A cosigner will need to meet a few general qualifications, including:
- A good credit score, usually a score of 720 or above
- A high income in proportion to the rental amount
Your landlord may have more specific requirements for a cosigner, especially if they won’t be living in the apartment. It’s a good idea to be upfront with your landlord or apartment complex about using a cosigner so they can provide you with the full details and documents you’ll need.
What’s the difference between a cosigner and a guarantor?
The terms “cosigner” and “guarantor” are often used interchangeably, but they have important differences that affect the financial responsibilities of you and the person helping you. A cosigner is equally responsible for rent for the duration of the lease. A guarantor’s responsibility doesn’t kick in until you miss or fall short on a payment. Your guarantor is one step removed from the rental agreement, whereas a cosigner holds equal rights and responsibilities as a tenant.
What does that mean for practical matters? That means your cosigner has equal renter rights to enter or access your apartment, like a roommate. A guarantor is not considered a tenant, so a guarantor does not have the right to enter the apartment anytime they like.
Apart from access, many of the same rules apply to both guarantors and cosigners. Both are held responsible for missing rent payments, and both will take hits to their credit score if they fail to pay. Guarantors and cosigners also have the right to sue you for unpaid rent and, in some places, other damages, such as damage to their credit.
Why would you need a cosigner for an apartment?
There are a few reasons that a renter might need a cosigner. First, the renter may have little or no rental history. First-time renters, such as college students, tend to have a hard time getting an apartment without a landlord’s reference. A cosigner can step in to act as a substitute for that reference.
Another reason you might need a cosigner is if you have no credit or poor credit. On average, the minimum credit score to rent an apartment is 630, however, this may not be for your ideal apartment. People with low credit scores often have lower scores because of their payment history. Failing to pay bills is exactly what landlords are afraid of, so they might require you to have a cosigner on your lease. If a low credit score is due to high credit card debt, that’s also a red flag because income earmarked for debt payments means less leftover for rent, utility costs, and unexpected expenses.
A past eviction or bankruptcy will also drag your score down and can cause a landlord to pass up on your application. Even if your score has recovered, the presence of either in your credit history can make it difficult to find a rental without an additional person securing your lease.
One more reason you might need a cosigner is when the rental amount is more than thirty percent of your monthly income. Adding a cosigner ensures your rent is paid even if you come up short.
You may be experiencing one or more of these issues, and that’s okay. You may find it helpful to make a plan to whip your finances into shape to make your next apartment search easier. Remember, there’s no problem too big to overcome with time, effort, and a little creativity.
How to get a cosigner for an apartment
A parent, guardian, or close family member or friend is the best place to start when you’re looking for a cosigner. This person should be trustworthy, just remember they technically have unlimited access to your home even if they choose not to live there. You also need to feel comfortable talking to them about your financial situation now and over the course of your lease. They also need to meet credit and income qualifications.
Before asking someone to act as your cosigner, be ready to answer questions about your financial situation and your plans. Common questions your prospective cosigner might ask you include:
- How much money do you have in savings?
- How do you plan to make your payment every month?
- Do you have a budget?
- What will you do if you can’t make your payment?
- How will you pay me back if I need to cover some or all of a rent payment for you?
If you don’t have someone in your network who can cosign for you, you may consider working with an institutional guarantor. An institutional guarantor is a company that acts as a rental guarantor for a fee, typically a little more or less than one month’s rent.
What credit score does a cosigner need?
According to the credit reporting agency Experian, a cosigner needs a credit score of 670 or higher. However, credit score requirements are often left up to the landlord, so your landlord could require your cosigner to have a higher credit score. On the other hand, if you work with a cosigner who barely makes the cut, you can lose out to another applicant who has a stronger application.
Does a cosigner have rights to the property?
While a cosigner might not be considered a primary tenant, they can have equal rights to access the property. In many places a cosigner and a cotenant are treated the same, so always double-check your local laws. You can also make an agreement with your cosigner about property access and more, which is one more reason to work with someone you trust.
Can you hire a cosigner and how much does it cost?
Technically speaking, you can’t hire a cosigner service, but you can pay for guarantor services. Guarantor services are provided by an independent third party called a guarantor company also known as an institutional guarantor. You typically pay between 75 and 110 percent of one month’s rent for this service, upfront. Actual rates will vary depending on your local market.
What if you’re denied an apartment with a cosigner?
If your rental application is initially denied, you may still be able to make a deal. Try offering more money down as a security deposit or another offer that works for you and your landlord. Don’t be afraid to speak with the landlord to state your case and ask them how you can create a win-win situation.
If the landlord still decides to choose another renter, don’t be discouraged. Consider the reasons you needed a cosigner in the first place. Is it because you didn’t meet income requirements? You may want to try looking for a less expensive rental. If your income is high, but your credit score is low, try leveraging your income and offer a larger security deposit upfront.
Steps to cosigning for a rental
The good news is that adding a cosigner to your rental agreement is usually quite easy. The steps for adding a cosigner will differ depending on local laws and landlord preferences, so consider the following steps as a general guideline for adding a cosigner to your lease.
- Step 1: Ask the landlord or property manager if cosigners are allowed on leases. Some landlords may not want to work with cosigners, so it’s always best to ask.
- Step 2: Find a cosigner. Your cosigner should be a financially responsible person you trust and who trusts you. They should be someone you feel comfortable communicating with openly.
- Step 3: Have the cosigner submit an application, proof of income, credit check, and criminal background check (if applicable) with the landlord or property manager.
- Step 4: Sign the lease. If your landlord chooses to move forward with your application, be ready to sign. Your cosigner may be asked to sign the same lease agreement or a separate cosigner agreement depending on your landlord’s preference and local laws.
- Step 5: Submit payment to your landlord. Most leases start off with a security deposit, first month’s rent, last month’s rent, and a pet deposit if you’re planning to rent with petsapplicable.
- Step 6: Move in. You did the thing and now you get to move in. Don’t forget to have utilities changed into your name right away.
- Step 7: Pay your rent on time. If you run into any unforeseen problems, be sure to speak with your cosigner before rent is due. The key to a positive relationship with your cosigner is open lines of communication.
What are the requirements of a cosigner?
The exact requirements for a cosigner will depend on the laws in your area and the preferences of the landlord. So if you’re currently renting an apartment in San Diego, but you’re now planning to move to an apartment in Dallas, be sure to research the local requirements regarding cosigners.
However, most cosigners will need to meet income and credit requirements. So long as they do, they’ll need to fill out a rental application, submit proof of income, complete a credit or background check, and pay any applicable fees.
Does a cosigner need to be present for signing the apartment lease agreement?
A cosigner can be present for the lease signing or may provide a signature from somewhere else electronically. Most of the time, cosigners sign their paperwork via email. In some cases, cosigners may need to have one or more documents notarized.
Can a cosigner terminate a lease?
Generally, no. A cosigner cannot terminate a lease unless the lease has an early termination clause. You may be able to work out a deal with the landlord depending on the circumstances and your landlord. In either case, you should expect to either pay a termination fee or manage the monthly rent until the end of the lease term.
Does cosigning for an apartment affect your credit?
If you’re cosigning on an apartment, there’s a good chance your credit won’t be affected. Most landlords and property managers don’t report rental payments, even late ones, to credit bureaus. So long as you or the person you cosign for keeps up on rental payments, you shouldn’t have any issues. The biggest vulnerability to your credit score is if the tenant is evicted because you or the person you cosigned for stopped paying the rent.
Does cosigning a lease affect getting a mortgage?
If you’re an apartment cosigner, this could potentially affect your mortgage borrowing capabilities. Many lenders will count the rental payment amount as if it were a debt payment. In other words, the rental amount will count against your debt-to-income ratio (DTI).
A higher DTI means you could be approved for a smaller amount than you would if you didn’t cosign a lease or your lender could require you to put more money down. The interest rate you’re approved for can also be affected by cosigning on a lease, as people with a higher DTI tend to pay more in interest.
The bottom line
A cosigner can be an asset on your rental application if you’re having trouble getting an apartment on your own. Working with a cosigner is fairly common, so don’t be discouraged if you need one. But, don’t forget to weigh your alternatives, such as:
- Renting with a roommate
- Choosing a cheaper apartment
- Subletting from someone who already has a lease
If a cosigner is the right move for you, be sure to ask a financially responsible person you trust and feel comfortable sharing your financial situation with. A good cosigning experience starts with trust and thrives with open communication.
- Originally posted on Redfin