Before a renter can move into an apartment, they must show proof of income as part of the tenant screening process. So, before you start packing up your bags, here is a list of 15 certified ways to prove you have the wages to move into your next rental property.
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What is proof of income?
Proof of income is some documentation that you can use to show your landlord that you have a steady income to pay monthly rent payments. Many landlords will accept various documents from an applicant to prove their income.
Why is proof of income documentation important?
Landlords don’t want to have to go through having to evict a tenant simply because they aren’t able to pay their rent. However, many landlords require that potential tenants show them income verification documents that give them a general idea of how much the applicant brings in each month.
15 ways to show proof of income
Pay stubs are one of the most common ways applicants prove their annual income. Landlords will typically want to see at least four weeks’ worth of pay stubs. They may ask for more if the applicant is an hourly employee.
If an applicant has income but can’t provide pay stubs, a landlord may accept last year’s tax returns. Last year’s tax return is familiar for those whose pay stubs don’t reflect how much they bring in each month. In addition, restaurant staff or those who receive cash tips often need to provide their landlord with last year’s federal tax returns to prove their income.
Some individuals may own a business and receive cash from their clients or customers as payment for goods or services. In this instance, they may prove their income to their landlord if they show consistent deposits to their bank account. They may need to provide at least a year’s worth of bank statements to ensure that the money that they are receiving is consistent.
Many landlords are only concerned with how much an applicant brings in each year, and they may ask them to see their W2 form to prove their income. Many landlords prefer to see a W2 form instead of pay stubs for hourly employees whose income fluctuates. A W2 form allows them to get a better idea of whether or not an applicant will be able to pay their rent throughout the entire lease.
Independent contractors will usually receive a 1099 form at the end of the year, including their income. A landlord may accept this form as a way for an applicant to prove their income. This form is similar to a W2 form, except that the government did not collect the income taxes.
Income letter from employer
Some individuals won’t have pay stubs to show their landlord if they change jobs. Fortunately, they may accept an income letter from their employer. An income letter from an employer is a common practice for those who relocate to a new city for employment. This letter is usually for those receiving a salary instead of being paid hourly.
So, if you need to rent a property before you’ve received your first paycheck, you may be able to do so if your employer will provide you with an income letter that you can show your landlord.
Applicants may prove their income by providing their landlord with the pension distribution statement they receive each year. This document is called a 1099-R form and outlines how much of the individual’s pension is distributed each month.
Typically, a court-order payment may be enough to prove your income to rent a property. The landlord will most likely want to see an award letter that the court provided. In this letter, it should outline how much money you receive monthly.
When individuals get injured or have some illness, they may receive disability insurance payments. If these payments continue throughout the lease, the landlord may accept it to show verifiable income to rent their property.
The landlord will need to see some documentation to show them how much these payments are and how long they will continue. This documentation can include a benefit verification letter from the court or an award letter from the insurance company distributing the payments.
Just because someone isn’t employed doesn’t mean a landlord will not approve them for a rental. Some landlords will accept unemployment documentation from an applicant to prove their income. However, they may only offer them a short-term lease if the unemployment benefits document shows that the benefits will cease before 12 months.
Social Security documents
Those who want to use Social Security documents to prove their income can provide their Social Security benefits statement. If you have Social Security income, you can find these documents on the Social Security Administration’s website online.
It can be challenging to rent a property for those receiving worker’s compensation, but it is possible. The applicant must provide a workers compensation letter that includes how much and how long they will receive this compensation.
Child support income
This type of income is often used in conjunction with other forms of income to show the landlord that the applicant is financially stable enough to pay their rent. They may need to give them documentation from the court and bank statements or canceled checks that show that they are getting this money each month.
If you want to use an annuity statement to prove your income, you must request it from your insurance company. Fortunately, many landlords will accept it as proof that you have an income if the payments that you are getting are consistent.
Interest and dividend income
You can use interest and dividend income as a form of income for a landlord, but you will have to provide sufficient documentation. For example, you will need to show them that you own the assets or bank accounts. You will also need to provide them with account statements to see how much you receive in interest and dividend income each month.
How to show proof of income for self-employed individuals
Even self-employed, you can still show your landlord that you consistently bring in a self-employment income. If you receive a 1099, you can provide them with a copy of it. You can also show them your tax statement from the last two years.
How to show proof of income if paid in cash
If you need to prove your income and receive cash, you must have the correct documentation. For example, you will need to provide the landlord with bank statements that show consistent cash deposits into your account. They may also ask to see your most recent tax return.
Before you begin your next loft apartment, you’ll need some form of proof of income letter as part of the rental application. A landlord or a property manager wants to make sure you have the current income to make a rent payment.
Whether your sources of income are alimony, money from a divorce, or self-employment income, be sure you have the required documents.