When potential tenants are applying for a new rental property, the rental application is imperative. As part of the rental application, property managers and landlords often request pay stubs, bank statements, or some proof of income. This helps them ensure you have a consistent cash flow to pay for the monthly rent.
Do you have to prove your income to rent an apartment?
Prospective tenants aren’t required to provide proof of income unless the property owner or manager requires it in the application. However, it is common for landlords to require some visibility into your monthly income, credit score, or source of income. Landlords want to know if you can afford the rent payments from a steady income.
10 ways to prove your income to landlords
If your prospective landlord requires proof of income for the tenant screening process, there are many ways to go about it.
Pay Stubs
Pay stubs are one of the easiest and most common ways of showing an applicant’s income. Applicants receive pay stubs for part-time and full-time work either physically with their paycheck or electronically from their company’s digital portal.
Tax Returns
Every year tax return documents detail information about last year’s earned income. Applicants can request a copy of their IRS form 1040 if they don’t already have their tax documents in their possession to show their last annual income.
Worker’s Compensation Letter
If an applicant is injured at work and they qualify for worker’s compensation, they will receive a worker’s compensation letter from the insurance company. The letter will detail how much income they’ll receive and for how long.
W-2 Income Statement
The W-2 form is provided to employees at the end of every calendar year and provides income verification for the previous year. This gives potential landlords your previous annual income which is helpful in determining the reliability of your source of income.
Annuity Statement
Those who have an inheritance or are paid out consistently by an insurance company are given an annuity statement. An annuity statement will detail how much money the potential tenant will receive and over how much time.
Social Security Benefits Statement
If you live off of social security benefits from the government, you can use this as proof of income on your rental application. This is verifiable proof of income, however, social security can change at any time depending on new regulations.
Bank Statements
Providing bank statements for prospective landlords is normal practice, and usually part of most rental applications and background checks. Potential tenants can use their regular bank statements as proof of income.
1099 Form
Many freelancers or self-employed people don’t have the income statements that someone might have from a corporate job. However, self-employed individuals should receive 1099 forms from clients they’ve done work for. These tax forms help show proof of income, but often it isn’t consistent income.
Pension Distribution Statement
A pension distribution statement, also known as a 1099-R IRS tax form, shows a potential tenant’s pension income for specific pay periods.
Court-Ordered Awards Letter
A court-ordered awards letter is given to someone after settling an alimony or child support case. When using this type of letter for a rental application, alimony or child support paid to the potential tenant acts as another proof of income.
What is the general rule of thumb for income requirements to rent an apartment?
It is the general recommendation that renters spend no more than 30% of their gross income on rent payments. To calculate how much you should be spending on rent, simply multiply your monthly income by 30% and you’ll have the maximum rent amount you can reasonably afford. Most real estate landlords want to see that you can afford the amount of rent they’re asking for with an income-to-rent ratio of 30%. They do this by reviewing your proof of income and bank statements.
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