Tenant Screening- Joint Income?

Question

It's common knowledge that a basic qualification for a tenant is to show income that is 3x's the rent. However, if a husband and wife or a boyfriend or girlfriend are filling out the application, is this a joint requirement or an individual requirement.

Example: Rent is $1,000 per month.

Does each applicant need to show that they earn a gross income of $3,000 or combined?

Example: Rent is $1,000 per month.

Does each applicant need to show that they earn a gross income of $3,000 or combined?

Thomas S. · Answer

When I screen unmarried couples each must qualify individually unless they are legally common law. I prefer not to rent to boyfriend/girlfriend applicants and use the income to reject.

Brian Garlington · Answer

Account Closed

It's based on household income so the 3x is for their combined income. One thing to think about is what happens if one of the boyfriend/girlfriend moves out? They don't have to break up with each other, one of them could have family things or a job situation that comes up requiring them to move out. Then you get to deal with sob stories every month from the remaining tenant as to why they can't come up with the rest of the rent each month.

Just make sure BOTH are on the lease and they have a very clear understanding in writing that even if one of them moves out before the lease is up the full rent is still due on time each month.

If they give you even a little bit of pushback on this then there's your red flag and you should seek different people to rent to.

Lawson Ott · Answer

Account Closed i don't know for sure, but i would presume, it was a rule of thumb based off of the HUD/section 8 standards that a tenant pays 1/3 of their income.

Marcus Auerbach · Answer

@Wes Brand and @Lawson Ott - interesting debate you guys. I did not know, so I looked it up. HUD has the details. Here is a great summary from unmarried.org

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The (National) Federal Fair Housing Act prohibits discrimination on the basis of ‘familial status’, which pertains to the presence of children under age 18, but is silent on marital status.  About half of U.S. states explicitly prohibit marital status discrimination in housing, but about half the states are silent on it. In these states (unless there are stronger local laws), a landlord can legally refuse to rent to an unmarried couple. In these states, a town can decree that unmarried families, roommates or extended families cannot live certain neighborhoods.

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So, next is State level: in Wisconsin for example we have also Marital Status as a protected class (and some more like the Source of Income - interestingly does not seem to include Section 8).

And then there is County level: Dane County (Madison) for example does not allow to discriminate against Physical Appearance!  And they have a few other interesting ones like Political Believes, Section 8 (specifically!) or Student Status. Milwaukee County protects Domestic Partnership and Gender Identity.

Bottom line - it's worth to google local fair housing laws.

Wes Brand · Answer

The point above about married couples vs unmarried couples is that it's easy for one member of an unmarried couple to up and leave, leaving you holding the bag when the remaining member can't pay. Sure, you can go after them, if you can find them. And depending on how much rent you're talking about it may or may not be worth it. After all, they're outta there, so you're going after a person who already vacated your property for rent that was owed...it gets messy.

Wes Brand · Answer

3x your income is pretty local.

In NYC it's annual salary = 40-50x monthly rent (or, if it costs 1k/mo to rent, you'll need to make 40k-50k/yr)

You'll want to look at the actual purpose behind it, which is: You, as the landlord, want to make sure your tenants can afford to continue paying their rent. That's why you raise the ratio for cheaper properties, and lower it for more expensive ones -- 300/mo rent making 900/mo leaves no/very little room for, say, car trouble causing them to be late to work causing them to get fired with no savings causing you to miss income / have to evict. At the same time, 1k/mo making 3k/mo leaves a lot of room to take a taxi that day and not run into problems.

Lawson Ott · Answer

Account Closed

Housing discrimination is discrimination based on protected class status, variously including race, gender, religion, ethnicity, age, national origin, sexual orientation and gender identity, marital status, or veteran status, in the realm of housing and real estate.

so again, if you make the unmarried couple have 3x each, then the college kids need 3x each, and the married couple needs 3x each... be fair and consistent.

Thomas S. · Answer

Account Closed

No marriage licence required. People are generally honest on that subject but their are plenty of tells to identify married or single.

Lawson Ott · Answer

Account Closed

the 3x rule is combined household income.

rule of thumb, not law.

lower rent should require a higher multiple ($300/mo rent x5 = 1500/mo is barely qualifying while a 2000/mo rent x2 = 4000 income is plenty to spare)

Account Closed · Answer

A lot of great information here. I guess I will just go with household income and select the most qualified applicant.

Tenant Screening- Joint Income?

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