What Is a Guarantor on a Lease? You May Need to Help Your Kids Rent as One

A guarantor pays the rent when the tenant on the lease cannot. With rental prices rising, you may need to find one for yourself, or become one for someone else.

A woman looks at a rental listing on her phone.
(Image credit: Getty Images)

Rent prices nationally took a jump up after 2020. While they've somewhat stabilized since 2022, median rent is still high above pre-pandemic levels, according to Apartment List. Paired with recent inflation increasing the overall cost of living, many people are finding rent harder to make up.

Because of that, many people looking to rent their next home or apartment may be in need of a guarantor. If you're the parent or guardian of a rent-seeker, you may be asked to be their rent guarantor. So, what exactly is a guarantor, and what are the possible risks to you?

Here, we take a look at what a rent guarantor is, who can benefit from one, who can serve as a rent guarantor, and some alternatives.

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What does a rent guarantor do?

A rent guarantor, also referred to as a lease guarantor, is someone who agrees to pay the rent if the tenant cannot pay. This also puts you on the hook for the terms stipulated in the contract, including not only the monthly rent but also move-in and move-out fees, late fines, and other rent charges.

For landlords, a guarantor offers a layer of assurance that the rent will get paid if the tenant defaults, mitigating the landlord’s risk exposure. And for prospective renters, having a guarantor can make them a stronger candidate when submitting a rental application. 

Who needs a rent guarantor?

A prospective renter may need a guarantor if their credit score or income is below a certain level. Most landlords require tenants to have a credit score of 600 or above and an annual salary of at least 40 times the monthly rent. 

If a prospective renter doesn't meet those criteria, they should consider finding a guarantor who has a credit score of 700 or higher and an annual income of at least 80 times the monthly rent. For example, if the rent is $2,000 a month, the guarantor would need to make at least $160,000 a year. 

Here are a few types of renters who could benefit from a guarantor:

  • First-time renters. If a person lacks a rental history, a landlord may feel more comfortable renting to them if they have a guarantor with solid references and a track record of paying their bills on time.
  • Students. College students who are studying full-time and not earning an income could also benefit from a guarantor with a steady income.
  • Low-income earners. People who can’t meet the income threshold set by the landlord may need a helping hand.
  • Irregular income earners. Many landlords are reluctant to rent to people who have sporadic income unless they have a guarantor. The same applies to rental applicants with a history of unstable employment.
  • People with no credit or limited credit history. A lack of credit history can be an obstacle, since you haven’t established proof of financial responsibility.

Who can act as a rent guarantor?

Typically, rent guarantors are parents, relatives or close friends of the tenant. To qualify as a guarantor, you will need to provide the landlord with proof of income (such as paystubs), bank statements, and your Social Security number for a credit and background check. (If you are self-employed, you'll need to provide your tax returns from the past two years.)

If a prospective renter is having trouble finding a guarantor, there are also guarantor companies they can hire to guarantee the lease. But these services don’t come cheap; fees generally range from 4% to 10% of the annual rent, according to credit bureau Experian, with the money due upfront. For a $2,000 rental with a one-year lease and a 7% fee, you’re looking at a guarantor service fee of $1,680.

Alternatives to a rent guarantor

There are several alternatives to having a guarantor, as a renter, including:

  • Rental assistance. Eligible low-income earners could qualify for rent assistance from community organizations or government agencies, such as the Department of Housing and Urban Development’s Section 8 housing program.
  • Negotiate with the landlord. Some landlords may be willing to lower the rent, especially if they’re having trouble finding a tenant. Pro tip: Look for apartments that have been vacant for several months or longer — you’ll have more negotiating power.
  • Find a roommate. Pairing up with a roommate who does meet requirements can help qualify for a lease.

Bottom line on agreeing to be a rent guarantor

If your child, grandchild, niece or nephew comes to you and asks you to be a guarantor for their rent, there are a few things to consider. 

First, think about their own trustworthiness as well as your own financial situation. Being a rent guarantor can be effectively harmless and cost you nothing — as long as they pay their rent in full every month. If they fall behind or fail to pay a certain cost like a late fine, however, you will be on the hook for that payment. So, consider what impact that possibility would have on your own finances, as well as what the likelihood of that happening could be. 

This could be a bright opportunity for you to have a conversation with them about financial responsibility and talk through ideas like budgeting, especially for younger people making their first salaries. You could also discuss — and write down — action plans for if they start falling behind on rent.

Consider, too, that for your loved one, you acting as a guarantor could be their best shot at being able to put a roof over their own head. Median national rent is $1,404 as of May 2024, per Apartment List. Since landlords generally require an annual salary at least 40 times the monthly rent, they would need to make over $56,160 to be accepted as a tenant, which is just below the average annual salary nationally. That means that many people in the U.S. would need a guarantor to be accepted as a tenant at the median national rent level. 

This could be their opportunity to begin their independent life as they get their footings in a career. Just make sure you'd be able to afford it if, for whatever reason, they falter a little. 

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Daniel Bortz
Contributing Writer, Kiplinger's Personal Finance

Daniel Bortz is a freelance writer based in Arlington, Va. His work has been published by The New York Times, The Washington Post, Consumer Reports, Newsweek, and Money magazine, among others.