Renting Apartments With Low Income [Or No Income at All]

If everyone had an annual salary of $80,000 and more, there would be no need for this article. However, we live in a different reality where an average full-time worker in the US earns only about $52,052 per year or $1,001 per week, as stated in the recent report by the US Department of Labor. 

Of course, the situation looks much different for many blue-collar or pink-collar workers, students, seniors, and some other groups. Given such an income and the ever-growing prices for long-term rent, it should come as no surprise that more than 50% of low and extremely low-income citizens spend more than half of their salary on housing. While this statistic is worrisome in its own right, turns out it’s merely half the problem. What is really alarming is that the vast majority of low-income Americans have a hard time qualifying for renting an apartment.

Put Yourself in the Landlord’s Shoes

At first glance, it might seem that below-the-average income should not be a burden on someone’s efforts to secure a place to live (assuming this person has enough money to cover rental expenses). After all, we all have the right to adequate housing. However, if you try to look at this question from a landlord’s perspective, you’ll surely see why proof of income is such a big concern for the majority of them.

In nearly all cases, landlords are somewhat dependent on the money they receive from renting out. It’s just another form of business, and they want to be sure they’ll get their paycheck consistently every month. So here is the logic most landlords follow — the higher a tenant’s income is, the more likely this person is to pay rent in full and on time. In light of this, it becomes rather evident why rental agreements usually revolve around the tenant’s proof of income and credit history.

What if Your Current Income Level Is Just Not Good Enough?

With a few exceptions, a landlord accepts a rental application if the prospective tenant’s gross salary is at least three times higher than the monthly rent. This principle is sometimes referred to as the ‘3x the monthly rent’ rule in the real estate world. If you don’t meet this condition, there are two approaches you can choose to follow:

• Search for apartments for rent without proof of income requirements. Some landlords might not require proof of income (although it doesn’t happen often). This might be the easiest solution out there, but it will limit your choices significantly.
• Make your rental application impossible to reject. If you don’t meet the minimum income requirement, make it up in something else. Create an application that will showcase your best qualities to a landlord and anticipate their possible objections.

The first approach is undeniably easier. However, as experience confirms times and times again, those who choose the second one are more likely to finish the race as champions. So waste no more time, and let’s find out how to get an apartment with a low income.

More like this: How Much Should You Spend on Rent?

Below you will find five tried-and-true ways to work around strict income requirements from potential landlords.

Take Advantage of Your Good Credit

Your current income is undoubtedly important, but equally important is how good you are at managing your finances. More often than not, landlords run a background check and take a good look at a prospective tenant’s credit rating. This is where your good credit history comes to the rescue. A good credit score is the best way to make your landlord see what a trustworthy and reliable person you actually are. And, it can sometimes make up for lack of income. However, the credit score and level of income are also connected — on average, people with lower income have lower credit scores. So, how to break out of this vicious circle?

You can check out a dedicated article with tips to improve your credit score relatively fast. But, here we will give you a few suggestions on how to maintain or increase your good credit score:

Make sure to pay bills on time

Payment history is the most significant credit score component, as it makes up to 35% of a FICO score. Usually, if the payment is more than 30 days late, it will be reported as delinquency, staying on your report for the next seven years. You should know that the more delinquencies you have, the worse hit your credit will take; similarly, the longer you don’t pay, the more it affects your score. 

That’s why we strongly recommend setting up auto payments for all bills you possibly can. And if there is no possibility to do it, set a reminder in your calendar. Obviously, it might be difficult to pay bills on time if you have to live on minimum wage. But, if you can choose only one thing to do, make sure it’s this one.

Pay attention to credit utilization

Credit utilization is another factor that has a significant influence on a FICO score. Generally speaking, it’s how much money you owe divided by the amount of money you have available on your credit card. You should aim to spend not more than 30% of your credit limit to avoid a negative impact on your credit score.

Get a credit card

If you are a young adult with a low income and no credit history, getting a credit card should be the number one thing on your list of priorities. This step will allow you to start working towards building a good credit history. However, a new credit card can also be helpful if you are trying to boost your credit score. You should never use this method as a quick fix, as it might result in more problems. But, if you choose a suitable credit card, pay bills on time, and don’t overspend, it is an option worth considering.

Find Yourself a Co-Signer

If you have no choice but opt for renting without income, finding a co-signer (aka lease guarantor) is a common practice. If you’ve ever had a co-signer for a car loan or a mortgage, then you’re likely to know how it works. When you rent an apartment, a co-signer provides more security for a landlord, as they guarantee to cover the rental payment for you. 

This approach is especially popular among student renters and recent college grads who either have a low monthly income or haven’t had much time to build good credit. However, you can turn to this alternative later in life as well if you believe this is the most favorable option for you. A perfect lease guarantor would be someone with an above-average steady income and a good credit score. 

This person will not receive much benefit from becoming a co-signer except helping you, and they will be responsible for your unpaid rent. So, it should be someone who knows you well and is willing to support you, ideally, a family member or a friend.

Search for a Property for Rent by Owner

As you probably know, many buildings and rental apartments are owned by property management companies. While renting out a place managed by a company has its pros and cons, we recommend you avoid those if you can’t provide proof of income. Instead, go for apartments and houses for rent by owner. 

Usually, they are listed just like the other properties; for example, you can find them among other apartments for rent on Rentberry. Skimming through descriptions or contact details, you will most definitely notice those rented out by private landlords. It might be easier to present your current situation and negotiate if you deal with the property owner. After all, nothing beats direct and honest communication.

Consider Offering a Higher Security Deposit

If you cannot provide proof of income for some reason, a smart approach would be to make a custom offer to a landlord. One of the ways to make your application attractive to a potential landlord is to offer a slightly higher security deposit.

The main reason landlords and property managers try to stay away from tenants with low income is the concern that they will lose money on this rental property. Either the tenant won’t be able to pay rent in full every now and then, or they might flee owing for the last few months. If you offer a higher security deposit towards the apartment, the landlord might feel more comfortable as they will be protected from any unwanted surprises. 

Also, if you need to enforce your rental application only for a couple of months (for example, before you find a new job), paying more in security deposit might be your saving grace.

Note: Remember to check your state laws before agreeing on a larger amount with the landlord. Many states, such as Pennsylvania, limit the amount of security deposit that landlords can charge.

Show Any Other Sources of Income

You don’t have a steady income to show to your potential landlord? Think if there are other documents you can provide to demonstrate you have some money deposited into your bank account regularly. Tenants can show their unemployment or disability insurance, alimony, pension statement, or 1099 form. If the landlord requires you to show pay stubs or bank statements, get creative and analyze if there is another way to prove you can pay rent on time. 

Take Advantage of Networking

An efficient but commonly overlooked approach to getting a rental if you don’t meet income requirements is to find a landlord among the people you know. They say anyone is only six handshakes away from the president. If this holds true, you’d need even fewer connections to find a landlord among your friends or your friends’ friends. Take advantage of this fact, and you won’t be on the losing side. If it’s not your friend but a friend of your friend who rents out, ask the first one to vouch for you. Personal recommendations work wonders — they really do.

More like this: Together Is Cheaper: How to Save Money While Renting with a Friend

But, similarly to finding a co-signer, you have to remember that you will be dealing with people who put their trust in you. So, ensure you do everything in your power to pay rent in full and on time not to affect your relationship.

Search for Already Occupied Rental Units

Another way to get around showing your proof of income to the landlord is to search for renters looking for a roommate. In this case, you’re moving in mid-lease and would most likely make a deal directly with a current resident of a rental.  More often than not, tenants in search of roommates are looking for a person with whom they will get along, not for someone with a certain annual income. Also, as they would usually not treat renting out a room as a business, it might be easier to come to an agreement without one particular document.   

Finally, another apparent reason you should look into renting a room is to save money. Generally, renting a room is cheaper than finding an apartment (even a studio), and you can live in a better property or more convenient location paying just as much.

Note: Make sure to ask your prospective roommates if subletting is permitted by their lease.

Get a Statement From Your Bank

Some renters can easily afford rent but cannot provide the potential landlord with certain documents that serve as proof of income, such as pay stubs or an employer letter. If you are a freelancer, self-employed, or currently in between jobs, you can provide a bank statement as proof of funds in your bank account instead. Also, it can be the best alternative if you have large amounts of savings and can provide a bank statement as proof.

Turn to Rental Assitance Programs

If you have problems meeting minimal rent requirements, you might consider seeking governmental assistance. For example, you can take a closer look at HUD’s Public Housing Program or the Housing Choice Voucher Program (Section 8). Both of these programs support people with disabilities, low-income families, and the elderly. Note that you have to be eligible and meet annual gross income requirements to apply.

Ready to Rent Your Next Home?

Qualifying for rent with a low income is just as hard as renting with a low credit score. However, armed with all the information from this piece, you have much higher chances to secure a place to live. So make the most out of the advice you’ve just gotten, and may a lack of income never stand between you and a perfect rental.