Everything You Need to Know About Lease Guarantors

published Sep 5, 2020
We independently select these products—if you buy from one of our links, we may earn a commission. All prices were accurate at the time of publishing.
Man And Woman Working On A Laptop In Their Home Office
Credit: VeaVea/Stocksy

At some point in your life, you might need a little help in the financial department. When you’re renting your first apartment, it’s not uncommon. Considering you usually have to put down first and last month’s rent as well as a security deposit—on top of all the other expenses of moving—it can be quite a pricey endeavor.

I certainly needed help when I was a sophomore in college seeking to escape dorm life (it wasn’t all it was cracked up to be) and rent an off-campus apartment with two friends. I had zero credit and no job. However, 19-year-old me was fortunate enough to to land the apartment (soon to become party central) thanks to a kindly lease guarantor: my dear old dad.

What is a lease guarantor?

A lease guarantor is someone who signs a lease agreement with you, the renter, with the understanding that they’re legally obligated to assume any financial liability if you can’t pay, whether it’s for your rent or damages. Often for college students and young adults, a guarantor is a parent or guardian.

Landlords typically prefer that the guarantor have an income that’s 80 times the monthly rent, according to NerdWallet, ensuring the guarantor will be able to cover your costs in addition to their own in the event they need to step in. 

Depending on the landlord, you may need the guarantor to be with you in person when you apply for the lease; at the very least, you’ll need paperwork from them attesting to their income.

What is the difference between a guarantor and a cosigner?

While some people use the terms “guarantor” and “cosigner” interchangeably—because both sign a lease alongside a renter and assume some financial responsibility—there is a difference.

A guarantor signs the lease with the understanding that they won’t be living in the home; they’re simply backing up you, the renter, in case of emergency. A guarantor is basically an insurance policy for the landlord so they don’t get stiffed on payments.

However, a co-signer is a second person—a tenant or roommate—responsible for splitting the rent payment with you and who will also reside in the unit. They usually have more rights under the lease than a guarantor, too, according to ApartmentGuide.com.

Does being a guarantor on a lease affect your credit?

Whether you’re thinking of asking someone to be a lease guarantor or doing someone the favor of being one yourself, you’re probably wondering if there are any additional risks associated with the deal.

A guarantor won’t take a hit to their credit just by being on a lease with someone. However, if the primary renter can’t pay or defaults on their lease and the guarantor can’t pay the amount owed, either, both people will take a hit to their credit, according to The Street. The default will be reflected on their credit reports for seven years.

Plus, if you’re a guarantor for someone and looking to buy a home, it may be tricky to secure a mortgage, according to The Street. A potential lender might consider you an unappealing candidate for a mortgage because, as a guarantor, you may have to pay money on that lease, which may prevent you from paying your mortgage.