10 Proof of Income Documents Tenants Can Show for Renting

When you’re a landlord, you need cold, hard proof that prospective tenants can pay rent on time. And that’s where proof of income for apartments comes in—it shows you whether a soon-to-be tenant is financially stable. Pay stubs, tax returns, and bank statements are the usual paperwork, but other sources exist to verify income. I’ll enumerate the top 10 proof of income documents, what to do when tenants can’t provide one, and how to dodge fake paperwork. Let’s jump in!

1. Pay Stubs

• Best for: W-2 employees

Pay stubs, or check stubs, are the most commonly used method for income verification for apartment rentals. They are a part of the paycheck that lists the details of an employee’s pay and deductions for taxes, health insurance, and Social Security. They also show year-to-date information to get a sense of their annual earnings. Currently, 41 states require employers to deliver pay stubs electronically or physically to each employee, so tenants can likely provide these documents.

• How to verify: Landlords should request the two most recent pay stubs from each potential tenant as part of the rental application and screening process. While each pay stub may look different, it should all contain important information that a landlord can use to evaluate the tenant.

1. Applicant name and address: Verify against the information given on the application.
2. Employer name and address: Research employer to verify and/or call to confirm employment.
3. Year-to-date (YTD) gross earnings: Verify employment for the year to date. 
4. Gross income for pay period: Multiply the income per pay period by the number of paychecks per year. Then, divide that by 12 to get their gross monthly income. This number should be greater than or equal to the amount you’re charging for rent to determine if your tenant qualifies to afford your rental property.
5. Pay schedule/period: Use as multiple to determine gross income.

2. Tax Returns

• Best for: Self-employed business owners, freelancers, or contracted workers

Tax returns are supporting documents for W-2 employees or primary proof of income documents for the self-employed. They benefit self-employed individuals because they do not receive pay stubs, so tax returns document their proof of income instead of pay stubs. When screening potential tenants, landlords should ask for the past two years’ tax returns to verify income and continued income. The applicant can get the copy they filed directly from the Internal Revenue Service (IRS), their accountant, or download it online. 

• How to verify: The tax return confirms the numbers in pay stubs, sheds further light on additional income sources, and shows debts like alimony, student loans, and other owned properties. Landlords use this extra information to determine the debt-to-income ratio and adjusted income. For example, someone may earn $200,000 a year but have to pay $50,000 in alimony, which makes their actual income $150,000. This will be the difference in whether or not they can afford the apartment.

1. Applicant name and address: Verify against the information given on the application.
2. Gross income: Look at an applicant’s income to see whether they can afford the rent.
3. Adjusted gross income: Also compute their adjusted gross income and ensure it’s not significantly different from the gross income.
4. Date of tax return: Check if an applicant’s tax return is the most recent.

3. Bank Statements

• Best for: Reviewing transactions and corroborating tax returns, pay stubs, and social security benefits

While bank statements primarily serve as secondary proof of earnings, they have several unique benefits for landlords to verify tenant income. Bank statements show paycheck deposits, the tenant’s banking history, and cash reserves. Since many people use separate savings accounts, ensure you get copies of all bank statements to track where paychecks are deposited. In addition, they will indicate if the bank account is in the tenant’s name and confirm their current address.

• How to verify: Landlords should ask the applicant for two to three of the most recent checking and savings statements for review. From there, they should check each statement for the following items:

1. Applicant name and address: Verify against the information given on the application.
2. Date of bank statement: Ensure the statement is recent.
3. Beginning and ending statement balance: Evaluate their savings account to see if there are enough reserves to pay for rent if the applicant loses their job.
4. Money in (deposits/credits) and money out (withdrawals/debits): Double-check the deposits and withdrawals against the amount on the pay stubs to detect fraud and confirm monthly gross income.
5. Transaction history: Review the applicant’s banking history to ensure there is more money coming in than going out and that there are no frivolous purchases.
6. Bank name and address: If you’re unsure about the statement’s authenticity, contact the bank.

4. Letter of Employment

• Best for: Use with pay stubs from W-2 employees

If you’re wondering, “What is proof of income?” an employment letter is another option. A letter of employment is used as secondary proof of an applicant’s gainful employment and income. It is also a way to determine a potential tenant’s employment length. Some landlords require tenants to be employed for a specific time in their current role to be qualified to rent their property. This shows consistency in income and commitment, which are beneficial traits of a highly qualified tenant. 

However, a new job in a related field, especially one with higher pay, shouldn’t necessarily disqualify an applicant. For example, suppose they’ve transitioned from a director role at one company to a VP role at another. In that case, this shows career progression and logical consistency—something valuable that banks look for when assessing mortgage applications.

• How to verify: An employment letter often takes more effort to obtain than pay stubs or bank statements because it needs to be requested by the applicant from the applicant’s employer. But, the actual letter should be on company letterhead and contain the following elements:

1. Applicant name: Verify against the information given on the application.
2. Date of the letter: Ensure the letter isn’t outdated.
3. Beginning date of employment: Verify the start date to confirm the applicant’s job stability and tenure.
4. Position at the company: Cross-check with the details provided on the application.
5. Gross yearly salary (and guaranteed bonuses, if applicable): Verify the applicant’s salary to confirm their ability to pay rent.
6. Employer name, address, contact information, and signature: If you’re unsure about the authenticity of the employment letter, contact the company.

5. Offer Letter

• Best for: Newly employed W-2 individuals

If an applicant just accepted or is just beginning a new job, they may not have an employment letter yet to provide as part of the rental application. In that case, they can submit an employment offer letter to prove they will be gainfully employed. To remain valid, a landlord should only accept offer letters if the applicant has been hired within the past 30 days.

• How to verify: The applicant must request the offer letter from their new employer, or they may have a copy in their files. The offer letter should be on company letterhead and contain information similar to the employment letter. The landlord must contact the employer to verify the applicant’s employment to ensure its authenticity. While employers may not disclose income details, most will confirm whether the applicant does work there.

1. Applicant name: Verify against the information given on the application.
2. Employment start date: Confirm when their employment started to ensure they have a stable income by the time they move in.
3. Position at the company: Cross-check with the details provided on the application.
4. Gross yearly salary (and guaranteed bonuses, if applicable): Verify the applicant’s gross salary to confirm their ability to pay rent.
5. Employer name, address, contact information, and signature: If you’re unsure about the legitimacy of the offer letter, contact the company.

6. Profit & Loss Statement

• Best for: Self-employed business owners

A self-employed applicant should provide the landlord with a profit and loss (P&L) statement to show their business’s income and expenses. This secondary supporting document should be used with tax returns and bank statements. For added proof, they can also request a CPA letter. A tenant can ask their accountant or bookkeeper for their P&L or pull it from their records if they use a product like QuickBooks.

• How to verify: This document shows the landlord whether the owner is taking a draw from their accounts and how much or if they’re paid as a W-2 employee on the payroll. It also shows the applicant’s expenses, whether the applicant has positive or negative cash flow, and the business history. This data is vital for landlords as it will verify if the applicant is qualified and if the net income and the revenue are enough to pay rent.

The items that a landlord should be on the lookout for are:

1. Company name: Check with the Secretary of State’s corporate filings division to verify the business’s ownership and whether it is active and in good standing.
2. The time of the statement: Ensure the statement is recent.
3. The total profit or loss during the period stated: Verify the applicant’s profit or loss to assess their financial stability and ability to pay rent consistently.

7. Certified Public Accountant (CPA) Letter

• Best for: Self-employed individuals or freelancers

A CPA letter verifies income and employment for self-employed people. While they could write their employment letter, it would be less believable to landlords because the facts and figures are written by the self-employed applicants who own the business and want to live in the rental property. Therefore, having the CPA write it for them adds legitimacy.

• How to verify: Landlords must request that business owners get a letter from their accountant as proof of their income and past income. The letter should include:

1. Accountant’s name, address, contact information, and signature: Contact the accountant to verify information in case of inconsistencies.
2. Applicant name and company name: Verify against the information given on the application.
3. Date of letter: Ensure the information provided is relevant to the applicant’s financial situation.
4. Date business started: A long-standing business often suggests consistent income, while a recently established one might indicate unpredictable income.
5. Stake in the company: Check the applicant’s ownership in the business to gauge their financial commitment and future earnings.
6. Income for the past two to three years: Double-check the applicant’s tax return documents and P&L statements against what is written in the CPA letter.
7. Projected or year-to-date income for the current year: This clearly shows the applicant’s earning capacity and whether they can afford the rent.

8. Social Security Benefits Statement

• Best for: Proof of retirement or disability income

A Social Security statement generally verifies income for retirees or tenants receiving Social Security Disability (SSDI). It’s best when used as a supporting document along with the applicant’s tax returns or bank statements. Remember, prospective tenants receiving SSDI may have other sources of support, such as Section 8 housing assistance vouchers, fuel or food assistance, or a part-time job. So, rather than focusing solely on the amount of SSDI, evaluate the tenant’s overall ability to pay the rent while adhering to laws protecting against income source discrimination.

• How to verify: Applicants can request their benefits statement directly from the Social Security Administration, and it should include the following items:

1. Applicant name and address: Verify against the information given on the application.
2. Date of request: Ensure the statement is recent.
3. Income payment amount: Call the Social Security office number on the letter and ask to verify that the applicant receives the benefits mentioned on the statement.
4. Payment schedule: Confirming the payment schedule ensures the applicant receives their income consistently.

9. Court-ordered Agreement

• Best for: Income payments from third-party sources like alimony or lawsuits

A court-ordered agreement is a signed legal document between an arbitrator and a third party that the court has ordered to pay. The most common types of court-ordered agreements include spousal alimony, child support, and a payout from a trust or lawsuit. Although court-ordered agreements are not as common, they can still be a verifiable income source for potential tenants.

• How to verify: Applicants may already have a copy of their court-ordered agreement in their files. If they don’t, they can get it from their attorney or the court clerk’s office where the ruling occurred. Unless they’ve been sealed, these documents are part of the public record, meaning you can look them up via the county clerk’s office or online through court dockets if available. Confirm the following details:

1. Shows the document is a court-ordered agreement: This guarantees the document’s legal authenticity and whether the financial obligations outlined are binding and reliably sourced.
2. Income amount and frequency: Verify if the payments are monthly or paid in one lump sum. If it’s a lump sum, request additional bank statements to ensure there’s still enough money to supplement or pay rent consistently.

10. Landlord Reference Letter

• Best for: Applicants with previous rental history

A reference from a previous landlord should be supplementary documentation, giving insight into the applicant’s character and financial standing at previous rental properties. Like the employment letter, the landlord reference letter must be requested from the applicant’s previous landlord, which may take more time and effort. In addition, some landlords may refuse to write them at all.

• How to verify: If the tenant has lived at the previous address for less than three years, it’s a good idea to verify two landlords, their current one and the one before. This protects you from a landlord not giving full information because they want to eliminate problem tenants. When reviewing the landlord reference letter, landlords should look for the following information:

1. Applicant and previous address: Verify against the information given on the application.
2. Previous landlord’s name and contact information: If you’re unsure about the details in the letter, call the previous landlord to confirm the stated information. Note that some landlords will only stick to the facts and not include a character reference or personal details on the tenant to avoid violating Fair Housing laws.
3. Amount of rent paid per month: Cross-check how much the applicant paid to their previous landlord and compare that to the rent you will be charging and their current income to decide whether they can afford the rent you require.
4. Length of tenancy: A longer rental tenancy suggests a lower risk of late payments, ensuring the applicant’s financial stability.
5. On-time rental payments: Check whether the applicant made their payments on time.

Besides managing rental properties and collecting rent, landlords can use PayRent to screen applicants. It offers advanced features like autopay, payment tracking, and cash flow management. If you’ve ever been asked for a landlord reference letter, refer to your PayRent records to vouch for your previous tenant. In addition, landlords can ask prospective tenants if they’ve previously used an online rent payment service to see if they’ve always paid their rent on time.

What to Do if Tenants Cannot Prove Income

Sometimes, applicants may struggle to prove their income or not fully meet the landlord’s financial requirements. For example, a newly graduated college student may be looking for their first apartment, or an individual recovering from bankruptcy could be working to stabilize their finances. In this scenario, the landlord has two options: reject the tenant or ask them to get a co-signer or guarantor.

If you’ve decided that you do not want to accept the applicant as a tenant, it is essential to handle declining the applicant properly. It’s a good idea to create a rejection letter, also known as an adverse action letter, with a checklist of potential legal reasons an applicant is denied.

On the other hand, if you feel that the prospective tenant has a promising background but does not have enough income to meet rent requirements, you can ask them to seek a co-signer or guarantor. It could be a family member, friend, co-worker, or anyone the applicant knows who is on the lease and liable if the tenant doesn’t pay the rent. The guarantor should complete a rental application and submit their proof of income documents for the landlord to review to ensure they are qualified to co-sign. Typically, this is a parent, guardian, or rental assistance program.

If the applicant has no one, they can get a third-party guarantor. TheGuarantors is an insurance company that provides financial solutions, minimizing risk for landlords and providing opportunities for tenants. Landlords must sign up and choose the right level of protection for their property. Then, potential tenants can apply through TheGuarantors to get financial assistance to rent a home.

Tips for Spotting Fake Proof of Income

You must know how to spot fraudulent documents to avoid rental scams. Knowing what to look for can help you vet your prospect’s proof of income for an apartment, thus saving you time, money, and possible litigation. Here are some tips for how to spot fake income documents:

• Listen to your gut: If the applicant’s income doesn’t add up or you feel something isn’t right, go with your intuition. If you have trouble verifying their claims, you should reject them as a tenant. If there are issues initially, they often become magnified later on and may cost you evictions and legal fees.
• Use a checks and balances system: The purpose of collecting several documents to prove an applicant’s finances is to apply a checks and balances system. Review pay stub financials against tax returns and bank statements. Check the letter of employment against the pay stubs. Compare the CPA letter to tax returns and P&L statements. Reviewing all the documents next to each other will show if there are any fakes or inconsistencies.
• Do research online: Since most individuals and businesses are on the internet, landlords can easily do research online through Google, government websites, and LinkedIn to verify information provided by the applicant. Use the internet to your advantage, but remember that not everything on the internet is truthful.
• Pay attention to inconsistencies: When checking and balancing the paperwork, note the specific numbers you find. If the salary on a letter of employment reads $60,000, but the pay stubs say the salary is $55,000, you should immediately be alert for a fake document.
• Notice if paperwork has official markings: Documents from employers should all be on letterhead or include the company’s logo for which the prospective tenant works. Tax returns, court-ordered agreements, and Social Security statements should have government markings. A red flag should be raised if you do not see these titles and logos on official paperwork.

Frequently Asked Questions (FAQs)

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Bringing It All Together 

Landlords must request specific documentation as part of their rental application process to verify the income of each potential tenant. Without income verification for apartment documents, landlords can put themselves into a challenging situation, resulting in a loss of profit, time, money, or eviction. Review each document with a fine-toothed comb, and don’t hesitate to ask for supplemental papers to protect your real estate investment and profits. 

Have any questions about these proof of income documents? Let us know in the comments!