How to Add a Co-Signer to a Lease Agreement

When an otherwise perfect renter doesn’t meet your financial criteria, adding a co-signer to the lease can help you move forward with confidence. Co-signers add a layer of financial protection for landlords considering renting to applicants with red flags. 

Ready to learn more about co-signers? You’re in the right place! Here’s a guide from TurboTenant explaining the steps you must take to add a co-signer to a lease agreement. We’ll cover what a co-signer is, why tenants might need one, the pros and cons of involving a co-signer, and how to add one to your lease. 

What is a Co-Signer?

A co-signer is someone with good credit and qualifying income who guarantees payment on a loan or lease. This added layer helps reduce the risk lenders and landlords take on. With a co-signer in place, they can still consider approving applicants with less than perfect credit.

You’ll find that co-signers are typically people close to the borrower in their personal lives. In most cases, they’re parents/legal guardians, family members, close friends, or mentors.

On a standard lease agreement, co-signers help rental applicants meet the landlord’s qualifications. Co-signers lend their good credit to renters and assume financial responsibility for the lease. If the tenant doesn’t pay rent, accrues property damage charges, or engages in illegal activity, the co-signer must cover the due balance.

Why Tenants Might Need a Co-signer

Renters don’t always meet a landlord’s criteria. Since co-signers provide financial backing, tenants usually need them when their credit score is low or their income doesn’t qualify. Here’s what you need to know:

Credit score: Poor credit signals high debts, a history of missed payments, or a lack of credit history. Most landlords require a credit score of at least 600–670 to protect their investments. If applicants don’t meet the credit score requirement, a co-signer can help reduce the risk of loan default.

Lack of qualifying income: To make sure renters can afford their monthly rent, most landlords set a rent-to-income ratio requirement between 20% and 30%. If the rent is more than 30% of the applicant’s gross income, it’s a red flag for late or missed payments.

Pros and Cons of Co-Signers

Stuck between requesting a co-signer or going with a different applicant altogether? Consider the benefits and drawbacks of having a co-signer on a lease:

Pros

They protect your investment: Co-signers help to guarantee payment in case the tenant fails to pay rent or other due balances, including late fees, repair costs, and lease break fees.

Co-signers are great for young renters: If your property’s in a college town or you’re considering younger applicants, co-signers can help you fill your vacancy with greater confidence. First-time or student renters may not have the credit history to qualify without a second-party backing them.

If you’re renting to multiple young tenants, you can require a co-signer for each applicant.

Better than increasing the security deposit: Charging a higher security deposit for applicants with poor credit is an alternative to requiring a co-signer. However, most states put a legal cap on how much landlords can charge for them. Even if you increase the deposit, you can’t guarantee the amount you collect will cover unpaid balances.

Cons

They don’t cover bad behavior: Co-signers offer a layer of financial protection, but that’s as far as it goes. They’re not a solution for tenants who violate leases, get noise complaints, or end up being bad neighbors. Find great tenants and avoid post-move-in surprises with TurboTenant’s free tenant screening reports.

Create a false sense of security: Even with a co-signer in place, both parties might fail to uphold their end of the agreement. There could be a situation where you’re chasing down both the tenant and the co-signer for late or unpaid balances.

Rent recovery issues: When a tenant fails to make payments, it’s not always quick or easy to recover the balance from the co-signer — especially if they live out of state. Since laws vary from state to state, it can be more difficult to take legal action.

How do I add a co-signer to a lease?

TurboTenant highly recommends creating a lease agreement that clearly defines the co-signer’s role and responsibilities. Having a written record of these details prevents future misunderstandings.

Follow these steps to add a co-signer to your lease:

1. Request a co-signer: If you use a pre-screener to qualify renters before they apply, interested renters may include co-signer details when filling it out. If they didn’t include a co-signer but their credit or income would require one, communicate the following to renters:

• Why you require a co-signer
• What the co-signer would be responsible for
• Your financial criteria for the co-signer

1. Send the co-signer an online rental application: Treat the co-signer like an additional applicant. Once the renter selects a co-signer, send them your online rental application and run their screening report.
2. Create your lease agreement: Outline the terms of the agreement and clearly define the co-signer’s responsibilities when creating your lease. Make the process quick and easy by customizing a state-specific lease agreement template.
3. Get all parties to sign the lease: If the renter and co-signer meet your criteria, send your digital lease to all parties and require their signatures to make it legally binding.

Closing Thoughts on Co-Signers

Co-signers can help protect your investment by guaranteeing payment if the tenant fails to pay rent, late fees, or other unpaid balances. Landlords typically require co-signers when the applicant doesn’t financially qualify for their property.

When selecting a co-signer, renters usually choose relatives or close friends. Make sure they have good credit and a qualifying income. It’s also important for tenants and co-signers to be in good standing. Tenants should respect their co-signers by abiding by all lease terms and paying rent on time.

Ready to make landlording easy? Sign up for your free TurboTenant account today.

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.

Co-Signer Lease Agreement FAQs