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Landlords often review dozens of applications for a single vacancy. While you want to believe what tenants say about their income, there’s a chance that some applicants won’t be entirely honest with you. Without proof of income for a rental application, you could face missed rent payments and costly, time-consuming evictions.
That protection isn’t just about checking a number, though. To do it properly, you’ll have to confirm that a tenant’s earnings are steady and sufficient to pay you the full rent amount consistently, month in and month out.
Income documents, combined with a comprehensive tenant screening, give you a tenant’s complete financial picture before anybody moves in. In this article, we’ll go over what documents you should request, how much income tenants should make, potential red flags, and how to check a rental application for proof of income efficiently.
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Sign Up Today What is proof of income for a rental application?
Proof of income consists of official documentation that a landlord can use to confirm an applicant’s earnings. You should review this information to verify that an applicant earns as much as they claim and to ensure they consistently have enough money to pay rent on time.
Some tenants might turn in a great-looking rental application, but if you fail to obtain proof of their income, you could easily end up with a non-paying or cash-strapped tenant on your hands. By going over verifiable source documents, landlords can improve their chances of renting to reliable, well-qualified tenants.
Why Income Verification Matters Before You Sign a Lease
It might seem easier to simply trust what a tenant reports during the rental application process, but without verifying their income, you’ll have no way of knowing whether they actually make as much as they say. Proof-of-income documentation will help you verify how much (and how often) the tenant gets paid.
Conducting income verification also helps you defend yourself against accusations of Fair Housing violations. By confirming a tenant’s income, you apply the same standard consistently across all applicants. Plus, it creates a paper trail to support your case.
How much income should a tenant make?
Most landlords calculate their income requirements based on the monthly rent amount. Typically, experts recommend rent to be no more than 30% of the tenant’s income. With that in mind, some states and local governments limit how landlords can set income standards. We’ll touch upon these laws later.
This formula doesn’t guarantee good rent-paying habits, though, as a high income combined with a poor history of on-time payments still poses risks. For this reason (among others), most landlords request multiple proof-of-income documents, including bank statements, to see where the tenant’s earnings go each month.
As you calculate your rent-to-income ratio for tenants, you should also plan to pay close attention to pre-tax rather than post-tax income. Documents such as W-2s and tax returns clearly state the tenant’s gross income, making it easier to verify their take-home pay.
What documents qualify as proof of income for a rental application?
When you require proof of income for a rental application, you can request a few different types of documents. Ideally, you’ll want to obtain two to three qualifying documents from the tenant, which will give you a more complete picture of their finances than any single form alone.
Below, we’ll go over which forms to request (and when you should ask for them), so you can start verifying your tenants’ income with confidence.
Pay Stubs
A renter’s pay stub will show their gross earnings, deductions, and net take-home pay for every pay period. Rather than just asking for one pay stub from last year, request the two to three most recent pay stubs to confirm the tenant earns the same amount consistently each month.
This isn’t a completely airtight method of checking tenants’ finances, however, as landlords who accept pay stubs as proof of income should note that pay stubs are among the most commonly forged documents on rental applications. Later in the article, we’ll go over a few red flags in more detail.
W-2 Form
A W-2 Form reports the total annual wages paid by the renter’s employer. Landlords can divide that annual amount by 12 to estimate the applicant’s monthly income. These forms are usually easy for traditionally employed renters to provide, and the penalties for forgery can discourage applicants from falsifying them.
And while W-2s work well for applicants with standard employment, they are less useful for contract, freelance, or gig workers. They also show past earnings (but not current income), so they may not reflect a recent raise, job change, or loss of employment.
Federal Tax Return (IRS Form 1040)
When you’re considering a self-employed applicant, an IRS Form 1040 will show all income sources in one document, including wages, freelance earnings, investment income, and more. If applicants no longer have the original 1040, they can request a digital transcript directly from the IRS.
Like W-2s, though, Form 1040s only provide a look at the tenant’s annual earnings from a past year. 1040s also don’t show variations in income, which includes seasonal contract work or other fluctuating income cycles. Not to mention, for contractors who claim business tax deductions, a 1040 may show a less-than-accurate gross income.
1099-MISC or 1099-NEC
You can also ask independent contractors, freelancers, and gig workers to provide an IRS Form 1099-MISC or a Form 1099-NEC. The equivalent of a W-2 for self-employed renters, these forms contain information about the tenant’s income, who’s paying the tenant, and the type of income they received.
Worth noting: A 1099-MISC or 1099-NEC only reports a person’s gross income, so their actual take-home pay may be much lower after you factor in business expenses. If this is the only proof of income you’re requesting for an apartment application, you should also ask for bank statements to reveal their expenses.
Bank Statements
Since bank statements show real deposits in real time, you can easily confirm whether (and how much of) the applicant’s income deposits into their account every month. Since some tenants will have privacy concerns, you should be flexible and willing to accept redacted statements that show deposit totals without account details.
During the rental application process, you can also use digital tools, like TurboTenant’s built-in Income Verification and Fraud Detection, to obtain verified deposit data straight from a rental applicant’s bank. With this tool, you won’t have to deal with paperwork or guesswork, and rental applicants won’t have to worry about you mishandling their sensitive information.
Employment Verification Letter
Tenants who are between pay cycles or don’t have pay stubs available can provide an employment verification letter to document their current employment status, job title, and salary. The letter should include the employer’s contact information, the applicant’s official job title, their start date, and current earnings.
Unfortunately, tenants can easily fake an employment verification letter using company letterhead, so you shouldn’t accept this as the only proof of income for the rental application. To avoid forgeries, you may want to call the employer listed in the verification letter to confirm employment, though doing so could slow down your tenant selection process.
Social Security or Benefits Statement
Retired rental applicants and those with disabilities can obtain an official Benefit Verification Letter from the Social Security Administration that states their monthly benefit. Tenants can easily obtain these forms by phone, online, or in person, and they’re difficult to falsify compared to pay stubs or other documents.
When dealing with Benefit Verification Letters, you should run the same checks you would with any other documentation and ensure the income is approximately 3 times the monthly rent. But since verification letters may not reflect real-time changes like cost-of-living adjustments, you’ll have to cross-check the information with other documents.
Workers’ Compensation and Unemployment Statements
If you’re renting to tenants who receive workers’ compensation or unemployment benefits, be aware that both forms of income are valid (albeit temporary) forms of income. Workers’ compensation replaces a tenant’s regular wages after a workplace injury occurs, while unemployment benefits have a defined end date or set amount.
When tenants provide these documents, always check the dates and confirm whether the benefit period will cover the full lease term. If you approve solely based on these sources of income, you’ll need to ensure the tenant has sufficient income (or savings) to continue paying rent on time.
How to Spot Fake Proof of Income Documents
An applicant forging income documents happens all the time. Fraudsters use free online tools to fabricate a pay stub or alter tax forms in minutes, so you should keep an eye out for these red flags when verifying an applicant’s income:
- Perfectly rounded dollar amounts: Real paychecks rarely involve even numbers, so watch out for tenants whose income amounts look too clean.
- Inconsistent fonts, misaligned text, or background color shifts: A document with these issues may have been altered or forged.
- Os and 0s: Watch for forged documents that mix up the letter O and the number 0, or use them inconsistently.
- Stated income vs. bank deposits: Cross-check the tenant’s stated income with deposit information from their bank statements to see where their earnings go every month.
- Employer name and address: The tenant’s employer name and address should match a verified public business listing.
Even the most careful landlords can miss details while reviewing a tenant’s proof of income. Conducting a thorough tenant screening (including a credit check) will help you catch inconsistencies, put together a complete picture of a renter’s finances, and protect your rental income better than any single document could.
How many proof of income documents should you require?
As we mentioned, you should typically ask tenants for two to three different documents to prove their income. Requesting multiple documents provides enough information to cross-reference different sources without causing a qualified tenant to walk away from the rental application due to unreasonable or frustrating requests for proof of income.
Ideally, you should ask for one official tax or employer document and one recent bank statement or pay stub. Here’s a more detailed look at what to ask from each applicant:
For employed applicants: Traditionally, employed applicants should provide two to three recent pay stubs, plus a W-2 or a recent tax return.
For self-employed applicants: Self-employed, freelance, or gig worker applicants should provide a 1099, their most recent tax return, and 3 to 6 months of bank statements.
For retired or non-traditionally employed applicants: Ask them to provide a Social Security Benefits statement or a workers’ compensation letter, in addition to a recent tax return.
How TurboTenant Makes Income Verification Faster
Missing rent payments or evicting a tenant for non-payment can cause serious problems. Luckily, you can improve your chances of avoiding these outcomes before the tenancy even starts, simply by requesting the right documents as proof of income for a rental application.
TurboTenant helps landlords safely and securely confirm a tenant’s income. Applicants authorize a secure connection to their bank accounts, and landlords can access verified income data without the need for additional paperwork (or chasing down applicants for their documents).
As important as verifying income is, it’s worth noting that this is just one part of the complete tenant screening process. Sign up for a free TurboTenant account to send and receive rental applications at no cost, verify income, and conduct detailed background checks with ease.
Proof of Income for Rental Applications FAQs
How much income should a tenant make to qualify for a rental?
Many landlords look for a tenant’s gross monthly income to equal about three times the monthly rent. That said, landlords should check state and local laws before using this standard. Colorado, for example, prohibits landlords from requiring annual income above 200% of the annual rent, which means a three-times-rent rule would exceed the state limit (Colo. Rev. Stat. § 38-12-904).
Can landlords require tenants to make three times the rent?
In many places, landlords can use a three-times-rent standard if they apply it consistently to every applicant. Still, some jurisdictions limit this practice. Portland, Oregon, caps income requirements at 2 or 2.5 times rent, depending on the unit’s rent (Portland City Code § 30.01.086).
Do income requirements apply differently to tenants with housing vouchers?
Yes. Some laws require landlords to calculate income requirements based on the tenant-paid portion of rent, not the full contract rent. California, for example, prohibits landlords from using an income standard that is not based on the portion of rent the tenant will pay when there’s a government rent subsidy (Cal. Gov. Code § 12955).
Disclaimer: This blog is for informational purposes only and is published by TurboTenant. It is not legal, financial, or tax advice. Laws and regulations for landlords vary by state and locality and may change over time. Always consult a qualified attorney, accountant, or local housing authority before making decisions related to your rental property. The publisher and authors assume no responsibility for actions taken based on the information provided.
