When it comes to leasing an apartment, why should a renter leverage a co-signer? What’s the benefit? What does the process look like? What is a co-signer, even? Don’t worry — we’re here to fill you in on the who, what, when, where, and why of co-signers (because knowledge is power, duh).
The rundown on co-signers
Sometimes when you’re applying for an apartment, the leasing agent on-site may suggest or require that you have a co-signer on your lease. Don’t be offended — most apartment properties aim to offer as many options as possible for prospective renters to get approved. Having a co-signer on your lease gives you the backing required to get that dream apartment, and gives the property reassurance that rent will be paid each month. A co-signer doesn’t have to live in the apartment, but their name will be on the lease.
We’re going to let you finish [reading], but…
We needed to address three frequently asked questions our agents get when it comes to co-signers: Does having one change the amount of rent? Nope, not at all. Does having a co-signer mean I’ll get the apartment for sure? Not necessarily, but it increases your chances of getting approved which will ultimately get you the apartment. Do they have to be a parent or guardian? Not unless you’re under the age of 18!
Okay, carry on…
Who might need a co-signer, and why?
Properties typically ask for co-signers regarding leaseholders with little to no rental history, bad credit, or whose monthly income isn’t at least three times the monthly rent. Where our agents see the need for co-signers are typically for recent grads, first-time renters, and people getting job stuff nailed down in the midst of relocating. If you’re renting with a roommate and one or both of you fall under one of the three categories listed at the beginning of this section, you’ll only need one co-signer for the lease.
What does having a co-signer on the lease look like?
First off, a co-signer will be asked to complete the same application and administration requirements as the leaseholder and is usually required to make five times the monthly rent. A co-signer is essentially insurance that anything requiring payment, deposit, or damage gets covered if the leaseholder(s) can’t cover it. That’s why properties like to see that their income matches the weight of that agreement and why they’re asked to make five times the monthly rent, instead of three like the leaseholder.
As we mentioned above, a co-signer is liable for the monetary assistance or repercussion of all leaseholders in the unit, which also means that when it comes to getting approved, they benefit ALL applicants, as well! This especially comes in handy for all those first-time renters out there who are building their portfolio of rental history and good credit.
What if I want to take my co-signer off my lease?
Okay, so, say your financial documents come to prove over time that you no longer need that “reassurance” on your lease, can you remove your co-signer? A leaseholder cannot take a co-signer off a current lease agreement. However, when it comes time for renewal, you can re-submit an application with your current financial documents to show your property that a co-signer won’t be necessary for your next lease term.
Deciding to co-sign on a lease
We are by no means a replacement for legal advice when it comes to taking on financial responsibility and obligations regarding apartments. However, we do want to touch on a few key things to keep in mind should you choose to co-sign on a lease. A co-signer is responsible for ALL leaseholders in that apartment, meaningyou assume equal responsibility of an apartment lease when you sign on. If rent cannot be paid, that means you’ll be at default and the repercussions can affect your credit.
That doesn’t mean those things will transpire, but you should definitely consider all the options when co-signing on a lease. Think about things like:
- How well you know the tenant(s)
- Financial track-record of the person/people you’re co-signing for
- If you are able/willing to make rent payments if the tenant(s) cannot
- The relationship you have with the tenant(s)
Leveraging a co-signer doesn’t work for every lease situation, and we in no way suggest that renters leverage a co-signer to seek out an apartment that exceeds what is doable financially. When used appropriately, though, a co-signer could be the perfect balance of stability a property needs in order to get you approved and moved into your dream place!
FAQs
A co-signer is a person who agrees to be legally responsible to pay a debt if the borrower does not pay back a loan as agreed. A co-signer may be an option if you are trying to make a large purchase, such as a car, and if you are unable to qualify for the loan on your own.
Why would you need a cosigner for an apartment? ›
The cosigner is a party with an established financial history who agrees to back up one or more tenants on the lease. They function as a safety net for the landlord. If the other people named in the lease can't make rent or cause damages they can't afford to repair, the cosigner has agreed to pay instead.
Will I need a cosigner? ›
A lender might tell you they can provide you a loan only if you have a co-signer. However, they can't require you to have a co-signer if you qualify on your own. If you're told you need a co-signer, it generally means the lender will not offer you the loan based solely on your own income and credit record.
How does a cosigner work? ›
A co-signer is another person who also accepts full responsibility to pay back a loan. The co-signer is obligated to pay any missed payments and even the full amount of the loan, if the primary borrower doesn't pay. Having a co-signer on your loan gives the lender additional assurance that the loan will be repaid.
How do I know if I'll need a cosigner? ›
You have poor credit or no credit.
Because you don't have much experience with credit, your credit score is low and your credit history is slim. Having a parent with good credit cosign could help you qualify for the car loan you need.
Is it better to be a co-signer or co-borrower? ›
Choosing between a co-signer and a co-borrower largely depends on your situation. If you have a close friend, spouse or partner whom you want to purchase a home with, letting them be a co-borrower on the mortgage probably makes the most sense.
What to do if you need a cosigner but don't have one? ›
Four Alternatives to Having a Co-Signer
- Become a Subtenant or Roommate. ...
- Use a Co-Signer Service. ...
- Try a Peer-to-Peer Lender. ...
- Establish or Rebuild Your Credit History.
A co-signer typically stays on a lease for the entire duration of the lease term, which is usually one year for most residential leases. However, the specific duration can vary depending on the terms of the lease agreement and the policies of the landlord or property management company.
Why would you want a cosigner? ›
Why Would Someone Need Me To Cosign Their Loan? A person who can't qualify for a loan on their own might be able to get a loan if they have a cosigner. They might not qualify on their own because they're too young to have a credit history, have bad credit, or don't have a steady income.
What credit score does a cosigner need? ›
Typically, your cosigner should have: Good-to-excellent credit: Your cosigner is your backer, so it makes sense that they should have strong credit. An excellent credit score is best, but try to aim for at least good credit or above (so a score of 670 or higher).
You can still be denied, but only in rare circ*mstances, most of which will likely not apply to a first-time borrower. A borrower with a poor credit history or negative financial situations, such as bankruptcies or repossessions, will have a harder time getting approved for a loan—even with a good co-signer.
Does cosigning hurt your credit? ›
If you already have a high amount of debt, adding a co-signed loan could impact your own ability to qualify for additional credit. It can affect your credit scores. Because a co-signed loan is recorded on your credit reports, any late or missed payments can have a negative impact on your credit scores.
What rights does a cosigner have on an apartment? ›
A cosigner is a person who signs a lease together with the renter and, as a consequence, makes a legal promise to pay the rent if the renter fails to do so. This also gives the cosigner the right to visit or use the apartment and the stuff in it at any time.
Does a cosigner have to show proof of income? ›
Yes, a cosigner generally needs to show proof of income. They may be required to provide the same kind of proof-of-income documents as the primary borrower.
What are the rules for a cosigner? ›
Split the repayment obligation equally with the other borrower. Must have their income, assets, credit score and debt-to-income ratio considered in the loan application. Must have their income, assets, credit score and debt-to-income ratio considered in the loan application.
What are the advantages and disadvantages of being a cosigner? ›
- Pro: You're helping another person. Of course, you want your daughter to have a late-model car with all the newest safety features when she heads to college. ...
- Con: Your credit could take a hit. Does cosigning hurt your credit? ...
- Con: You might get turned down for credit. ...
- Con: The relationship could go south.
A cosigner can ease a lender's concerns that you're a high-risk borrower by ensuring the loan will be repaid even if you default. It could qualify you for a better interest rate. A cosigner's good credit score could offset your poor score, helping you get a more affordable auto loan with a lower interest rate.
Why do I need a co-signer for a house? ›
Much of the reason for having a cosigner is because the borrower doesn't have enough income, or has a debt-to-income ratio that's too high to qualify for a mortgage on their own. Mortgage cosigners may be parents who want to see their adult children living comfortably in a house.
