Proof of Income: What Is It and How Do I Prove It?
As renters navigate the rental process, one frequent question that comes up is, "What is proof of income?" Your potential landlord will want proof that you can pay your monthly bills when you sign a lease, and this is how they’ll get it. Consider it a background check for your finances.
How can I prove my proof of income?
For renters, the primary sources to show proof of income include common documents. Prior to completing any application, it's best to gather copies of these and have a file ready to submit to your potential landlord. You should typically have two or more of the following per co-applicant. If you are applying with a spouse or co-signer, you’ll each need to submit these documents.
Employer-based documents include pay stubs, letters of employment or employment contracts. Some employers will even offer a proof of income letter. Make sure all of these items include your full name and identifying information.
Tax documents are usually your federally filed income verification. Your previous year's tax return or your W2 detailing year-end earnings will work for almost all application purposes. These documents are highly reputable, but are only available yearly and may not be an accurate representation of your current financial status if you have made significant career changes since year-end.
Unearned income is an unfair title, because the person generating this income typically has done many things to earn it. By unearned, the government simply means that this income doesn’t reflect wages for work performed or services given.
Unearned income typically includes government checks like social security payments, disability benefits and pensions. These types are guaranteed, and usually work similar to a W2 style proof. Alimony and child support are also unearned (again, meaning wages) but may require additional proof as payments can sometimes be interrupted.
Short term disability, workers compensation and unemployment benefits are additional examples of unearned income. Student loan disbursements may also be included in this group. As income, it’s technically verifiable but it all has a limited time window — you only get it for a little while. For different landlords, this time-limited income may not be enough to verify a future ability to pay rent.
For many self-employed workers, yearly tax information includes tax returns or a 1099 form which help provide proof of income. Another method available to this group is to provide a profit and loss statement, usually prepared by a CPA. Additionally, bank statements may be an option for the self-employed. As with unearned incomes, however, some landlords will want to see a steady income over a period of time.
The specific requirements for proof of income will vary based on the potential landlord, so make sure to ask them exactly what they’re looking for. Documents showing a continued, reliable income from an authoritative source like an employer or federal tax return are likely to be accepted by most.