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Why are security deposits of more than 6 month’s rent sometimes required in New York ?

By 23/11/2016 No Comments

When choosing or recommending a tenant, landlords and leasing agents in New York look to various data sources to assess tenant risk :

  • Credit score +700

At least a good to very good credit score under the FICO models – for example :

670 – 739 = good
740 – 790 = very good
800 – 850 = exceptional

  • Stable income

A tenant’s salary should cover monthly rent by 40 times – for example : Monthly rent of $2,500 = $100,000 salary.

Salary typically means base salary, not bonuses – unless bonuses are guaranteed and not performance based.

Often guarantors are sought if income is less than 40 times – requiring 80 times coverage, meaning $200,000.

  • Employment duration

In most cases, continuous employment with the same employer for more than a year – with supporting references.

  • Verifiable assets

2 / 3 consecutive months of bank statements ; and
1 / 2 years of 1040 Tax Returns

  • Housing history

A reference letter from previous landlord(s).

And so taking some examples :

  • a tenant with bad or no credit ; or
  • an international applicant with no social security number or US tax history,

may be required to pay a security deposit of many months rent.

This can vary from 2 / 3 months’ rent in low risk cases to +6 months’ rent in higher risk cases – landlords and leasing agents will define the ask.

The Deposify Team