How to qualify for an apartment in NYC
To qualify for an apartment in New York City is not the easiest thing in the world. But since tens of thousands of people from all walks of life get accepted to NYC apartments every year, it can’t be too hard, right? I know this first hand because many of them find apartments on my website frele, the free and honest rental marketplace.
NOTE: To search for NYC apartments, go to frele.com (free service). Or, click for more rental tips.
While there are others, the two main metrics landlords care about to qualify tenants for an apartment are income and credit.
Income and Credit Requirements to Qualify for an Apartment
The most important metric landlords use to qualify a renter for an apartment is to confirm that they are making 40X the monthly rent. Some landlords use 45X the monthly rent, and some others use 50X the monthly rent. Most use the 40X the monthly rent formula.
As an example, if the apartment you are interested in costs $3000 per month, the landlord would suggest you qualify for an apartment if you make $120,000 as an annual salary (40 X $3000). By the way, another way to look at this is that a landlord doesn’t want your monthly rent to be more than 30% of your gross income. (30% of $120,000 = $36,000, or $3000 per month). However, in NYC almost everyone uses the “40X the rent” formula to qualify for an apartment. It is a much simpler way to think about it and easy to calculate.
Even if you make 40 times the monthly rent in annual income, most landlords would still want you to have good credit to qualify for an apartment. “Good credit” can be somewhat subjective. There is not one score that equals “good credit” in a landlord’s eyes. While having a score above 700 is a good start, it does not guarantee you will have “good credit”. A landlord will also look at the details of your credit score, such as how many late payments you have and how long you have been acquiring credit.
What If You Don’t Qualify for an Apartment on Income OR Credit?
Even if you don’t pass the income or credit requirements, you can still get qualify for an apartment depending on the landlord. There are three other common ways:
a. The landlord could accept a guarantor
b. The landlord could allow you to pay extra months of security
c. The landlord could allow extra months of rent up front.
Some may require or accept a combination of these three. Let’s look at each one.
Landlord Could Accept Guarantor To Qualify For an Apartment
Many landlords accept a “guarantor” in order to qualify for an apartment A “guarantor” is usually a family member (parent, uncle, brother/sister) who would essentially guaranty the rent payments for the apartment. If a landlord has issues with someone’s income and/or credit they may accept a guarantor.
To be accepted as a guarantor by the landlord, the guarantor should generally be making 80X the monthly rent and have good credit. If we use the example above regarding a $3000 apartment, making 80X the monthly rent would mean that your guarantor would have to be making an annual salary of $240,000 (80 x $3000). The reason why the landlord would require the guarantor to qualify with double the salary required by a renter is because the landlord knows that these people often have additional housing expenses of their own.
Landlord Could Accept Extra Security to Qualify for an Apartment
If you do not have adequate income and/or credit nor a guarantor, some landlords may ask for extra months of security in order for you to qualify for an apartment. There are even some landlords who would require extra security instead of a guarantor, or perhaps in addition to a guarantor.
“Security” is monies that are usually kept in a separate landlord’s escrow account and are only drawn upon by the landlord if need be. You should get all or most of your security deposit back within 30-60 days of vacating your apartment at the end of the lease if all goes well. (Note that if you have a pet, regardless of how qualified you are, many landlords also ask for additional security in case there are any “pet damages”, often just $500-$1000).
The worse your situation is in terms of income and/or credit, the more months of security the landlord may require in order for you to qualify for an apartment. I have seen an landlord ask for as many as 6 months of security to qualify. And in some cases, renters have paid it because they did not quality for an apartment on any other metrics.
Note that while this may seem ridiculous, the laws in NYC really favor tenants. So, even if a landlord has a tenant in clear violation of the lease, it could still take 4 to 6 months to get a tenant out of an apartment through legal means. Therefore, a landlord is looking to have his or her rent paid under the worst of circumstances.
Landlord Could Accept Rent Up Front to Qualify For an Apartment.
While some landlords do ask for extra rent up front as a way to compensate for under qualified candidates, the savviest of landlords usually do NOT ask for extra rent up front to qualify for an apartment. The reason is because once that money is used up – generally a few months into the lease – the landlord has no leverage over the situation. That is, they may have a potentially unqualified tenant living in one of their apartments with no recourse. If you don’t pay your rent and the landlord does not have a guarantor they can go after nor any extra security money they can dip into, the landlord will surely lose money.
If a landlord is going to allow you to qualify for an apartment by paying rent up front, they would usually just ask for the entire year up front. Still, the landlord may run into a similar situation in month 11 or 12 with no recourse if you just stop paying rent at that time.
NOTE: Some landlords would even allow a fourth alternative to qualify for an apartment: To put someone else, usually a parent, on the lease itself as a “leaseholder”. This person would not have to necessarily meet the 80X the rent requirement. It is unclear if the landlord is even allowed to do this since this person has no intention of living in the apartment. However, I am mentioning it because I have seen in done a few times over my 14 years in the business. If you are really stuck and can’t comply with any of the other ways to qualify for an apartment, it is at least worth asking the landlord if they would allow rent up front. From the landlord’s perspective, leaseholder has a lot more responsibility then just a guarantor. This is why some landlords allowed this in the past.
Qualifying for an apartment in NYC is not easy, but doable. Hopefully by understanding all of the various ways you can qualify will help you get through the process.
For more NYC rental tips, please go to frele.com/learn.
This article was written by:
Phil Horigan, NYC Real Estate Veteran
Founder, Frēlē, the free and honest NYC rental marketplace
Producer, Phil’s NYC Rental Tips [YouTube Channel]
Blogger: flowfreely.com
Instagram: @philiphorigan
Phil has been a licensed NYC real estate agent since 2004 working for some of the top real estate brokerage firms in the industry. He founded Leasebreak.com in 2013, and Frēlē in 2017. Frēlē and Leasebreak are free and transparent rental marketplaces to search for or post apartments for rent in NYC
Go to frele.com to search for NYC apartments (free service).