In the real estate industry, it’s commonplace for landlords to request information about tenants to ensure they’re a good fit for the residence before they move in. This is referred to as tenant screening, and it’s an important part of renting a home. One of the ways that a landlord may check if you’re right for their unit is by verifying your credit, your rental and eviction history, and your proof of income.
But what is proof of income or income verification? When applying for a rental, it’s crucial that the landlord ensures that you can afford to pay rent each month and will pay both consistently and on time. A tenant can claim to have the financial means to support the listed rent price, but landlords have a responsibility to confirm this claim through documents that provide proof of the applicant’s income, like pay stubs, tax documents, and other records of earnings. Proof of income is exactly what it sounds like: proof that your revenue matches what you claim it to be.
What Proof of Income Documents Can Landlords Request?
In our society, income tends to be a private subject, but landlords require proof of income documents to ensure you have steady income and can afford their monthly rent payments. If a landlord asks you for proof of income, there are a variety of documents they could request to see. We’ve compiled a list of 11 different documents that landlords can request as proof of income so you can be prepared when applying to rent an apartment.
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Pay Stubs
Pay stubs, also known as check stubs, are the most common method of proving income. If you work a full or part-time job, you likely have access to pay stubs for each pay period, whether it’s monthly, bi-weekly, or weekly.
Pay stubs entail the income you’re receiving from your job as well as any deductions for benefits, taxes, or social security. They also include your name and address, allowing landlords to cross-check your pay stubs with other information used in tenant screening to validate your identity. Pay stubs aren’t a federal requirement, but many states have regulations for them, so they’re used often as proof of consistent income.
A landlord may request multiple recent pay stubs to see whether your income varies from period to period and what your gross and net income total to. If you regularly receive employee incentive payments, such as bonuses or commissions, these may also be included.
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W-2
W-2 tax documents often go hand in hand with pay stubs because they provide your income over the past year. Just like with pay stubs, a W-2 gives insight into any fluctuations in your annual income and what deductions come out of your paychecks. Your employer should send a physical or digital copy to you each year, but you can request your W-2 at any time.
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1099
While a W-2 is a helpful document for proof of income, self-employed renters won’t receive one because they don’t have traditional employment. So how can you prove your income if you’re working on your own? The answer is a 1099 tax document.
A 1099 is commonly used for self-employment records of wages and taxes, just like a W-2 would be for people working for an employer.
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Tax Returns
The 1040 tax form is a tax document that details all sources of income you’ve received over the previous tax year as well as any debts you may have. This is good proof of income to use either as a supplementary document or, for self-employed individuals, as a primary document. Your landlord may request tax returns from the past two or three years to get a full picture of your income and to check them against other income verification documents.
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Bank Statements
Along with tax returns and 1099s, bank statements can be helpful for self-employed renters. Bank statements shed light on money that is deposited into your account, and can be checked with other documents like social security benefits, tax returns, and pay stubs to verify different forms of income that are deposited into your account. This type of proof of income will also corroborate your name and current address so the landlord can further verify your identity.
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Income Letter From Employer
A letter from an employer can be a good supplemental document for verifying income. If you’ve provided references on your rental application, a landlord can reach out to your employer to confirm your role at their company as well as your salary. This is a good option for offering a secondary method of proof along with documents like a W-2 or pay stub, but make sure you’re being honest about your income — if you provide an inflated wage and your employer gives a landlord a different salary amount, you may be questioned by the landlord or be rejected from the rental entirely.
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Job Offer Letter
Let’s say you’re in the process of making a big move for a new job and are looking to rent a place in your new city. It’s possible that you’re not bringing in any income yet because you’ve just accepted the position but haven’t started working yet. In that case, your proof of income could come from a job offer letter from your new employer that includes your name, start date, salary, and employer information.
If you provide a job offer letter to a landlord, you’ll likely still be asked to share your pay stubs once they come in, too. That way, you can prove to a landlord that you’re newly employed, then back up the information with the appropriate numbers.
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Social Security Benefits Statement
Over a quarter of American adults receive Social Security benefits, primarily for retirement or a disability. If this is the case for you, your Social Security benefit statement can be used as proof of income for a rental unit. A landlord will usually want this in conjunction with bank statements since Social Security checks are sometimes smaller and they want to ensure you’re in a good cash position. Applicants may also be able to provide proof of supplemental security income if they receive it.
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Pension Distribution Statements
Your company may offer retirement benefits such as a pension plan, allowing you to receive payments upon retirement. If this is your regular income, your pension statements in addition to your 1099-R can stand as your proof of income when applying for an apartment.
A 1099-R is a tax document that covers many different types of accounts and often refers to people with retirement funds. It will help to verify the information on your pension statement since the documents can be checked against each other for accuracy.
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Worker’s Compensation Letter
If you’ve been injured in a workplace accident, you may be receiving worker’s compensation which can either supplement or become your income altogether. In this case, you can use your worker’s compensation as proof of income. You can get a copy of your worker’s compensation letter from your insurance company or the court handling the case.
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Court-Ordered Award Letter
Renters who are divorced, single parents, or have won a legal settlement may receive court-ordered payments like child support or alimony from the other party. Though less common, this kind of earning can be used as proof of income.
The court should give you a letter detailing the agreement and the payments, but if you don’t have one, you can contact a lawyer or the court itself to obtain a copy of the letter to share with a landlord.
What If You Can’t Prove Your Income?
There may be situations where you may not be able to prove your income. If you’re a current college student or have recently graduated, or if you’re recovering financially from an event like bankruptcy, you may not have the funds to afford an apartment or a way to provide proof that you can afford one. In this case, a landlord can do one of two things: reject your application or ask you to find a co-signer or guarantor.
If you’re ultimately rejected from a rental because you can’t provide proof of income, you’ll receive a letter from the landlord that explains the reason for the rejection. In other cases, you may be asked to seek out a lease co-signer or guarantor who can agree to be liable for your rent payments if you cannot or will not pay. Co-signers and guarantors can be friends, family members, co-workers, or anyone else in your life who you trust and who is willing to sign for that responsibility. If a co-signer or guarantor signs onto your lease, you’ll have the opportunity to rent a unit that would otherwise have been unavailable to you.
Conclusion
If you’re looking to rent a home, it’s vital that you prepare for every step of the rental process, and part of that process is knowing what documents a landlord might request (like the ones from this list) for proof of income for apartment, condo, or house living. That way, you can be prepared with the proper documentation and get accepted for a rental smoothly, quickly, and efficiently.
