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Moving into your own apartment for the first time is one of life’s most exciting milestones but be prepared for some challenges. You must know how to apply for the place, what costs to expect, and how to budget for them.
Key Takeaways
- You’ll have to submit an application and usually undergo a credit check and background criminal check to rent an apartment.
- You’ll need at least fair credit to be approved but you might be able to qualify with the help of a cosigner or a larger security deposit.
- Many apartments require that you have a gross monthly income of three times the rent.
- List all your other expenses, subtract them from your monthly gross income, and leave a little buffer for one-off expenses to figure out how much rent you can afford.
- Apartment setup costs can include the application fee, administrative fee, security deposit, first and last month’s rent, moving expenses, utility hookup fees, and furnishing costs.
A Look at the Rental Process
Apartment complex owners typically hire office managers. Part of the office manager’s job is to find qualified renters to fill the apartments. This usually involves checking an applicant’s income, credit, background, employment, criminal history, references, and more.
Many rental applications come with application fees of anywhere from $15 to $100. These can add up so it’s helpful to do some research before applying to ensure that you meet the renter requirements of the complex.
The Approval Process
Apartment complexes are privately-owned businesses so each typically has its own tenant approval process. The requirements tend to be pretty similar, however. You must usually have a reliable source of income, a monthly gross income of at least three times the rent, renter’s insurance, and at least fair-to-good credit (a FICO score of 580 to 739).
You’ll also typically need to pass a criminal background and credit check. Some places may allow insufficient credit if you get surety bond coverage, pay a higher security deposit, or apply with a cosigner.
You’ll be able to move forward with the next steps of getting the apartment if you’re approved. You can ask why so you can learn what you need to work on to get approved in the future if you’re not approved. You can also try applying at another apartment building with more lenient requirements.
The best time to shop for an apartment can be between October and April when rental rates tend to be the lowest. It will depend on the weather where you live, however, and how difficult it is to move in the winter.
Paperwork You Need to Rent an Apartment
Now let’s talk paperwork. The first document you must fill out when you’re looking for an apartment is the rental application. It often requests information such as:
- Personal identifying information: name, birth date, Social Security number, phone number, address, and driver’s license number
- Residential history for the last two years
- Current employer
- Credit/financial account information: creditors, balances owed, and monthly payment amounts may be required
- Gross income per month
- Proposed occupants including people and pets
- Vehicles
- Permission to run a credit check
- Permission to run a criminal background check
You may also have to submit additional documents that verify the information on your application, including:
- Proof of income in the form of pay stubs, tax returns, bank statements, or other financial documents
- A government-issued ID for each occupant
- Letters of reference
- Letters of employment
- Proof of past residences
- Vehicle registration
- Proof of car insurance
- Proof of renter’s insurance
There’s no set paperwork checklist that applies to every apartment building but you can contact a specific property you’re interested in to find out what it requires.
Financial Tips for First-Time Renters
How can you prepare financially before renting an apartment for the first time? Here are a few financial tips.
Figure Out How Much Rent You Can Afford
Renting an apartment is going to require quite a bit of money on an ongoing basis so you should run the numbers before you start your search to determine what’s in your budget. Look at your gross income. How much are you making per month before taxes?
Divide this number by three to find the maximum amount of rent for which you can likely get approved. You can likely get approved for an apartment that costs up to $2,067 per month or $6,200 divided by 3 if your gross income is about $6,200.
What you can qualify for and what you can afford aren’t always the same, however. You can figure out what you can afford by making a list of your regular monthly expenses. Add up all your bills including groceries, gas, car payments, credit card and personal loan bills, phone bills, and utilities. Now add in any other things you tend to spend money on such as outings with friends, car washes, snacks, haircuts, or games.
Subtract all your expenses from your net income, the amount you take home every month after taxes and benefits are deducted from your paychecks. Here’s an example.
| Sample Budget | |
|---|---|
| Net monthly income | $5,000 |
| Groceries | $500 |
| Gas | $200 |
| Utilities | $300 |
| Car payment | $600 |
| Phone bill | $55 |
| Miscellaneous | $400 |
| Money left | $2,945 |
You’d theoretically have approximately $2,945 left over each month after covering your known recurrent expenses but not your non-recurrent and leisurely ones. As a rule of thumb in the industry, most apartments only allow your rent to consume a third of your gross income so you would likely be able to get an apartment with a rent of up to $2,067 per month.
You’d have $878 to spend on non-recurrent, unforeseen expenses, subscriptions, growth-related expenses, investing, and an emergency fund for the unknown if you deduct $2,067 from $2,945. That’s a pretty comfortable cushion.
You’ll have to look for a cheaper apartment If the amount of money you have left over each month ends up being less than 30% of your gross income even though you may qualify for a more expensive one. You may want to cap your rent budget at $1,600 to $1,650 even if a landlord might be willing to let you rent for $2,067 if your money left over was $1,900.
Plan for the Upfront Rental Costs
Be sure to plan for the upfront costs of renting an apartment in addition to knowing the amount of monthly rent you can afford and qualify for. You’ll have to pay a security deposit in many cases and this can sometimes equal one month’s rent, the first month’s rent, and the last month’s rent. You would need $4,500 upfront if your rent is $1,500 per month.
The security deposit is an amount the property manager will hold while you live in the apartment. The costs will come out of your deposit before it’s refunded to you if they have to make certain repairs when you move out. The repairs usually aren’t related to normal wear and tear depending on how long you lived there but rather to repair damage caused by you.
You may also have to pay a pet deposit and/or pet rent if you have a pet that will be moving into the apartment with you.
Don’t Forget Moving Expenses
You’ll likely run into other costs when moving into your new apartment. Here are a few to plan for:
- Moving costs: You’ll have to move all your belongings to the apartment. You’ll probably have to rent a truck if you don’t have one or access to one. Consider whether you’ll be able to move your belongings yourself or if you’ll need to hire movers. You may also want to budget for moving supplies like boxes, tape, and packing paper.
- Costs to furnish your new apartment: You may find after you move that you need a few things. Every home needs furnishings, pots and pans, utensils, plates and bowls, bathroom mats, shower curtains, and cleaning supplies. It’s good to set some money aside for all the household items you’ll need. You could also consider registering at a store like Target and throwing an apartment-warming party so friends and family can help.
- Utility deposits: Another expense that can catch you off guard is the cost to set up utilities such as electric, gas, water, and sewer if they’re not included in your rent. You may have to pay a deposit to open the accounts if you don’t have much credit established yet. Call the companies ahead of time to find out and prepare.
Know Your Credit Score
The company managing the property is going to want to check your credit score when you apply for an apartment. It’s a good idea to know where it sits before applying. You can get a free credit report from each of the three credit bureaus every week at AnnualCreditReport.com.
You’ll probably have to improve your score a bit before applying if it’s in the “poor” range of 580 or below. The same applies if you have no credit history. You’ll have to work on building a few positive credit lines before most property managers will approve you. You might still be able to get approved with a cosigner, however, or by taking other measures like making an increased deposit.
Consider Location-Based Savings
Location plays a big role in the cost of an apartment. The closer a building or complex is to desirable parts of town, shopping, amenities, entertainment, and colleges, the more it’s going to cost. You may be able to save money by choosing an apartment in a less popular area but it’s important to consider if the commute will subtract from your savings. You’ll also want to ensure that the complex is in a safe area where you’ll be comfortable and your belongings will be safe.
Get Renter’s Insurance
Property managers often require that you carry a renter’s insurance policy. Renter’s insurance typically covers:
- Personal property provisions cover electronics, clothing, and furniture against unexpected damage or loss. You could get a check from your insurer to help you replace it if someone breaks into your apartment and steals your stuff.
- Uninhabitable coverage has your back if you can’t live in your apartment due to a covered incident like a fire. Renter’s insurance can cover the costs of a hotel room or other living accommodations.
- Liability provisions cover you if you’re found liable for someone getting hurt or having their property damaged at your apartment. Renter’s insurance can help you cover the costs of their medical bills or damaged property.
Renter’s insurance is worth considering whether it’s required or not. It can protect you and your belongings at a very affordable price, averaging just $15 to $21 per month, according to Progressive.
How Much Money Do You Need for Your First Apartment?
The amount of money you’ll need for your first apartment will vary depending on the requirements of the apartment complex, your credit, and if you have pets. It typically includes an application fee of $50 per applicant on average but it could be as much as $100.
The costs upon approval can include an administration fee, a security deposit, your first month’s rent, your last month’s rent, and possibly a pet deposit at an average of about $300. You might then need funds for other expenses such as moving your belongings, furnishing the place, and setting up utilities.
What Is the 30% Rule?
The 30% rule is that no more than 30% of your gross income should go to your rent. Your gross income should be at least $6,000 per month if your rent is $2,000 per month. This is just a general guideline, however. You should consider what other expenses you have.
What Bills Will I Pay When Renting?
Your bills will likely include rent, electricity, gas, water, sewer, cable, and internet when you’re renting an apartment. You may have to pay trash, amenity fees, and parking fees in some cases, too. You can ask your property manager what bills you’ll be responsible for during the application process.
The Bottom Line
Renting an apartment for the first time is exciting. It’s important to spend some time getting prepared, however, so you can ensure a smooth transition. Run your numbers, note all your potential expenses, check your credit, get your paperwork in order, and research apartments. Then you’ll be ready to apply for your new place.
