Why Proof of Income is Important for Landlords

While every rental home is different, the rental application process has a few absolute factors. You want to tour the house, your landlord wants to run a background check, and you are asked to show proof of income. Most landlords have no problem providing tours, most applicants have no problem agreeing to a background check. But the proof of income often trips up an otherwise smooth rental process. 

You may wonder why your income is any of your landlord's business or how to prove income that is not earned in a stable, salaried manner. Which is exactly what we're here to explain today.

Why Landlords Ask for Proof of Income

When a landlord asks to see your proof of income before sending you the lease to sign, they are not trying to insult you. Landlords know that most people fully intend to keep up with rent payments and have a plan to do so. But most landlords have also had to deal with at least one tenant who habitually fell behind on rent which leads to a whole slew of drama and potential legal trouble that nobody needs.

As a result, landlords have taken it upon themselves to prevent this heartbreak by making sure (or as close to sure as they can) that each tenant can comfortably afford their rent without sacrificing other lifestyle essentials like bills, groceries, and the occasional night out. These are things people need to survive and stay sane, so landlords are just making sure that tenants are living within their means and won't become miserable or effectively destitute while living in the rented home. Which leads us to the 3x Rule.

What is the 3x Rule?

You have likely come across the rental industry's 3x rule already when browsing rental homes and application policies. In plain terms, the 3x rule requires each tenant or renting household to make at least three times the amount of the rent. This is the ratio that was calculated to ensure that, on top of rent, tenants can also afford to pay their bills, groceries, and expenses.

Tenants who make less than 3x their rent are statistically more likely to fall behind on rent in order to pay for other essentials like food and heat. On a human level, landlords don't want anyone paying rent instead of eating, so the 3x rule is there to protect both parties equally.

How to Provide Proof of Income

Of course, knowing why your landlord wants to know and why the rules are how they are doesn't help you with the logistics. How, exactly, does one prove their income to a landlord without revealing other personal or financial information? Fortunately, the millions of other renters and their landlords have already worked this process out and you can pick one of the routes that has been used to prove income in the past. Whether you earn a predictable salary or make most of your money in cash tips.

  • Standard Methods
    • W2 or 1099 Forms
    • Pay Stubs and Electronic Pay Stubs
    • Tax Return
    • Social Security, Pension, or Retirement Fund Documentation
  • Non-Standard Solutions
    • Employer Verification (employer confirms regular pay)
    • Employer Offer Letter (for a new job)
    • Co-Signer Verification

Proof of income is important to landlords because they are looking for tenants who are both reliable in paying the rent and who will be able to live well while making rent payments. Landlords don't' want you to go without groceries to make rent, as well as avoiding the troubling process of eviction for non-payment. If you do not make enough to qualify for a rental place, your best solutions are to find a roommate, a co-signer, or seek out a rental opportunity for which you do meet the 3x rule. For more rental insights and helpful tips, contact us today.



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