Ways Renters Can Show Proof of Income
If you’re looking for a new place to rent, you will most likely be required to show proof of income to your potential landlords. There are many ways that you can show proof of income. Your landlord may request a specific method for proving your income before accepting you as a tenant, so you must stay aware of the different ways that you can show proof of income to potential landlords.
How Renters Can Show Proof of Income
There are several ways that renters can show proof of income to landlords. Be aware that some landlords may ask for more than one proof of income documentation to verify your income. Generally, you should expect to show that you make at least two to three times the monthly rent.
1. W-2 Income Forms
W-2 forms are reliable documents as they provide the applicant’s income from the previous year. However, a W-2 may not be sufficient as proof of income as they do not give an up-to-date view of the renter’s income. A renter may have changed jobs in the past year or had a change in income, which the W-2 would not reflect.
If you submit a W-2 form, your landlord may also request recent paystubs or a letter of employment.
Another alternative to a W-2 form is to present a federal tax return (1040). This option is great for those who have multiple jobs, as it provides a comprehensive view of all of your income earned throughout the year.
2. Pay Stubs
Pay stubs are probably the most common way that renters show proof of income to potential landlords, as it is the most reliable method. Pay stubs generally show the applicant’s full name, the employer’s name, and relevant contact information.
Most renters already have access to their pay stubs, so it is a quick way to verify income. Renters should expect to provide two months of pay stubs to show the landlord how frequently they are paid and how much they get per month. Landlords typically check the pay stub for the amount of income per pay period and the employee’s year-to-date earnings.
People can create fake pay stubs online; therefore your landlord may request a second document for proof of income.
3. Bank Statements
Self-employed people do not receive traditional pay stubs (although they may be able to create pay stubs) and may likewise not receive pay in regular intervals. Providing bank statements from at least the past two months is a good way to show landlords that they have a regular income. Landlords may request more than two months’ worth on bank statements to not only show proof of income but steady income.
Bank statements also give landlords an idea of the applicant’s financial position and help them understand if the applicant can afford the rent. However, if you are a landlord, be aware that some applicants may be hesitant about providing bank statements because of the personal nature of the documentation.
Another alternative for self-employed individuals is to provide a 1099 form. As it is a tax document, it is easily verified; however, you may need to provide more than one 1099 form to prove stable income.
4. Letter of Employment
A landlord may request a letter of employment or employment agreement to confirm your employment status. Some companies generate generic letters to detail your length of employment and salary. You may approach your manager for a formal, more personal letter which may also provide that landlord with proof of your character and serve as a positive reference.
Likewise, letters of employment are easily forged, so be aware that landlords may call your employer to verify the letter. Furthermore, letters of employment may take longer to obtain than other forms of proof of income.
Letters of employment may be requested in addition to W-2 forms.
5. Social Security Benefits
If you are unemployed and your income comes from Social Security, that generally looks good to landlords as it means that your income is stable. For further verification, you may also have to provide a Social Security proof of income letter to verify your income, which you can download online.
6. Pension Statement
If you are retired, a landlord may request a 1099-R form to verify your pension distribution. This document is considered generally reliable; however, your pension distribution may change, and some landlords may be wary of that fact.
7. Unemployment Statement
Renters who get unemployment benefits may be less desirable to landlords; however, through unemployment statements, they have a way to prove steady income. The only concern is that unemployment benefits may run out, in which case the tenant may no longer be able to pay rent, presenting a form of risk to the landlord.
8. Worker’s Compensation Letter
If you have been injured at work and are receiving worker’s compensation, you can use it to show proof of income. Your insurance company can provide you with a letter to submit to your landlord to prove that you have been awarded compensation that can act as consistent income.
Other less common methods of verifying income include:
- Court-ordered awards letter
- Severance statement
- Incentive payments
Tips for Verifying Proof of Income
- If you are a landlord, and potential tenants present your proof of income, you must verify the information that you are given. Contact the applicant’s employer to ensure that they are indeed still employed.
- If you are a renter, have your proof of income ready in advance (before seeking a new residence) to avoid delays in the rental application.
Understanding How to Show Proof of Income
Proving proof of income as a renter is important to give your landlord peace of mind and trust that you will be able to make your monthly rent payments on time. As a renter, you have several options when it comes to proving your income. However, landlords are wary about the way a renter may prove their income, so it is best to have multiple methods and documents prepared, if possible.
Renters are always asked to show at least one document as proof of income. FormPros can help you easily put together multiple tax forms, such as a W-2, as well as pay stubs and employment agreements to save you time and help ensure that you have the right documents ready.