Before you begin your search to lease a property (home, apartment, duplex, townhome, or condominium) keep in mind the qualifying process. There is not a fixed standard guideline that all landlords and rental companies use to determine qualification. Some will require that proof of identification be submitted with a rental application, such as a government photo identification (driver license) and allow it to be photocopied. Some of the other common factors used for qualifying are:
- Rental History – Landlord will be checking past and current rental history for late payment, non-payment, evictions, drug use, poor housekeeping, unruly/destructive or violent behavior by applicant or applicant’s guests.
- Credit -- Know your credit rating. Your payment history contributes 35% to the FICO Score calculation; also keep in mind that late payments, evictions, and the amount of debt will show on the credit report. Any outstanding debt should not be more than 30% of your gross income. A free credit report can be ordered from each of the three reporting agencies once a year (Equifax, Experian, and TransUnion). Even though the free credit report does not include the credit score, it does contain the data used to calculate the credit score. The score can be purchased from the credit-reporting agencies and scoring companies.
- Income -- The most common qualifying standard of income is a 3-to-1 ratio (income to rent). This standard applies to all the applicants that will occupy the premises (married couples or roommates), for example: the total gross income of all applicant(s) is $2,500, divide by 3, means that applicant(s) would qualify for rent that is less than or equal to $833 per month. (If first-time renters do not have sufficient income, may qualify by have the lease guaranteed by a guarantor.) Copies of current pay stubs form applicant(s) may be requested for proof of income and employment when submitting a rental application.
- The Number of Occupants– Occupancy restriction may be based on city, state, and federal laws.
- Limits on how many unrelated occupants can reside at a home.
- No more than two adults per bedroom.
- Family size must be appropriate for the available home.
- Criminal Background Check – The criminal background check reveals any convictions of a misdemeanor or a felony, such as history of violence, sexual crimes (including against children), DWI’s, and drugs. It is best to be upfront with the landlord about your circumstances and make an effort to explain the past and current situation.
- Falsification of information by applicant(s): failure to provide accurate, complete or unverifiable information on application.
Talk with your real estate agent about any issues, so that together you have a plan while looking for a home that will fit your needs and finances. Being knowledgeable about your finances is crucial when searching for a new home. Informing your real estate agent allows them to find the most suitable properties for you to consider.