The realities of today’s rental market have changed, but the practices used to verify income and identity really haven’t kept up with the times. Rental housing operators still rely on rules and workflows built for a world where income was predictable, documentation was straightforward, and identity fraud was rare. Today, we live and work in a completely different reality, one informed by prospects with multiple income streams, shifting earning patterns, and digital identity risks. Complicating matters further still is that everyone involved is carrying around new expectations regarding convenience and trust.
As part of an internal study, Payscore considered the verifications of income and identity for hundreds of thousands of individuals across the U.S. who were seeking housing. The goal of this exercise was to better understand how well traditional verification methods align with the fundamentals of today’s realities.
Our findings challenge several long-held industry assumptions:
- Most applicants don’t fit the 3x gross income rule
- Traditional methods misclassify 27% of potential renters who are actually income qualified
- Nearly 40% of failed applicants fall within 1x rent of qualifying
- Applicants are 4x more comfortable connecting their bank than their payroll provider
- ID verification at pre-tour does not reduce identity fraud rates at the application stage
Together, these five insights reveal a simple truth: the gap between how people live and how they’re evaluated as potential occupants has never been wider.
This study breaks down what we found, why it matters, and how operators can use more accurate, modern verification data to make better decisions without adding friction to the leasing process.
Most renters don’t fit the 3x gross income rule
The 3x gross income rule has long been treated as a universal benchmark for housing approval. Under this standard, applicants are expected to earn at least three times their monthly rent in gross income to be considered financially qualified for a dwelling.
However, Payscore’s 2025 analysis shows a significant gap between what traditional income verification identifies as “qualified” and what applicants can actually afford once their full financial picture is considered.
A major consideration when verifying income is for the reviewer to consider all income types. And, in fact, Payscore differentiates between recurring (e.g., W2 income) and non-recurring (non-W2 income/bonus/commissions, etc.) forms of income in order to both better represent the applicant’s earning power, and to also give the reviewer the comprehensive view of an applicant’s capacity to pay rent.
For consistency with industry-standard affordability benchmarks, and when applicants rely on bank-linking technology to verify their income, Payscore expresses income multipliers as gross-income equivalents. These figures are derived from verified net income using a standardized 1.2x conversion factor to approximate gross income for comparability purposes. Where applicants rely on payroll provider data to verify income, the data already is normalized to gross income factoring.
When evaluated using recurring income only, the standard approach used by most legacy methods, just 53% of applicants meet income requirements. This chart shows the distribution of multiplier versus threshold for recurring income only:
Digging in further still, state-level data from Payscore’s 2025 analysis points to a disconnect between this rule and how renters actually earn and qualify for housing, perhaps an expected outcome when only predictable recurring income is considered.
When evaluated using recurring income only, median renters in most states fall below the equivalent of a 3x gross income standard.
Traditional income verification misclassifies 23.9% of renters who otherwise qualify
Interestingly, when non-recurring income is included (such as bonuses, commissions, sides-hustles, gig work, tips, and seasonal earnings), the percentage of applicants who meet requirements rises sharply to 76.9%.
This means that 23.9% of applicants who appear unqualified under traditional methods are, in fact, financially capable of affording the unit when their non-recurring cash flow is considered. The below chart illustrates the relationship between total earnings and qualification:
In many states, renters show 4x to 5x rent coverage when all verified income sources are included.
This is consistent nationwide:
- Alabama renters show a combined 4.3x income multiplier
- Colorado sits at 4.0x
- New Jersey shows 4.1x
- Texas shows 4.2x
- Even high-cost states like California and Washington come in near 4.0x
In every case, combined verified income far exceeds both the 3x threshold and the gross-income-only measure. These facts suggest it is both relevant and meaningful to consider all earnings sources when evaluating the income qualification of prospective renters.
Nearly 40% of failed applicants fall within 1x rent of qualifying
When we look at the applicants who fail income qualification, a surprising pattern emerges. A large share of them (nearly 40%) are not dramatically underqualified. They fall within the equivalent of just one month’s rent of meeting the requirement. In other words, they sit just outside the cutoff rather than far below it.
This suggests that traditional verification rules, particularly the 3x gross income requirement, draw a rigid line that doesn’t reflect the reality of how renters earn or manage money. Many applicants who narrowly miss a threshold may have stable income patterns, recurring deposits, or multiple sources of earnings that aren’t captured cleanly by a gross-income-only multiplier. Yet the historic approaches to income evaluation group these “near misses” together with applicants who are truly far from qualifying.
The significance of this finding is not that certain populations should automatically be approved, but that old methodologies and hidebound rules lack useful nuance. A meaningful portion of failed applicants may not represent the level of risk implied by a binary pass-or-fail outcome. Instead, they highlight the need for more accurate evaluation tools—ones that measure actual cash flow and income consistency rather than relying solely on rigid multiplier cutoffs.
This near-qualified segment represents one of the largest areas where operators may be unintentionally turning away applicants who could otherwise prove themselves to be viable residents if evaluated using a more complete view of their income stability, consistency and earning power.
Applicants are 4x more comfortable connecting their bank than their payroll provider
In order to consider all income types, and to give full earnings credit to applicants, future-looking rental housing operators rely on Payscore to make available multiple data-first sources to verify prospect income. And what we have learned is that when applicants are given multiple pathways to verify their income, they overwhelmingly prefer to connect their bank account rather than their payroll provider.
While the numbers are clear, the reasons behind this behavior are more nuanced and likely rooted in how people interact with their financial systems day-to-day.
One hypothesis is that banking apps are more familiar tools. People check their bank balance far more often than they log into a payroll portal, and may cycle through any number of payroll systems as they change jobs. In contrast, a bank account tends to remain stable and central in a person’s financial life. That sense of familiarity may make bank verification feel easier and more intuitive.
Another possibility is that bank data more accurately reflects the true financial reality for any applicant. When applicants rely on more than just traditional W-2 income, the deposits from gig work, tips, bonuses, reimbursements, and side jobs all flow into their bank account, even if they never appear on a payroll statement. Applicants may instinctively understand that connecting their bank gives them a better chance of being accurately evaluated, and approved, especially if their income doesn’t fit neatly into a single payroll source.
If applicant behavior helps explain why bank connections are chosen more frequently, the completion data reinforces that pattern. When looking only at successful verifications, bank connections account for more than 83% of all completed income checks, compared to just 14% for payroll. This suggests that the same factors influencing initial preference, like familiarity, perceived relevance, and a smoother user experience may also be contributing to higher success rates.
The intention with the verification process is to support a fair and equitable process so applicants get the benefit of their entire income and earnings profile. By reporting both recurring and non-recurring income types, and particularly when drawn from deposit history, applicants are putting their best feet forward and increasing the likelihood they are approved. For rental housing operators, they are better equipped to approve and progress applicants who’ve undergone a thorough income evaluation afforded by the comprehensive solutions supported by Payscore.
And not only is it so important to understand capacity to pay, it is invaluable to confirm the identity of any potential future resident. The following section examines perhaps unexpected outcomes relating to the verification of identity at tour.
ID verification at pre-tour does not reduce identity fraud rates at the application stage
Pre-tour identity verification is often assumed to reduce fraud by filtering out bad actors early in the leasing journey. However, the following Payscore data shows that pre-tour ID verification has no measurable impact on fraud or failure rates amongst applicants in the application stage.
Across more than 80,000 pre-tour and application-stage verifications, the data reveals:
- Pre-tour ID verification pass rate: 95.74 percent
- Application-stage pass rate for the same operators: 89.69 percent
- Application-stage pass rate for operators who do not use pre-tour: 91.15 percent
The application-stage fail rate is nearly identical whether or not pre-tour ID verification was performed:
- Group A (uses pre-tour): 10.31 percent fail rate
- Group B (application-only): 8.85 percent fail rate
As the data indicates, there is no meaningful reduction in identity-related failures based on stage of use.
One reason pre-tour identity verification fails to reduce fraud at the application stage is that the two checkpoints are fundamentally different in both purpose and rigor. While pre-tour ID verification does not reduce identity fraud rates at the application stage, it still plays an important role in the leasing process. Many operators use pre-tour identity checks as a safety measure - to confirm that the person arriving for a tour is who they say they are. This helps protect onsite staff, reduces uncertainty during in-person tours, and adds a layer of accountability before granting physical access to a unit or community.
At the application stage, identity verification becomes significantly more stringent, and maybe rightfully so. Applicants in this scenario typically undergo biometric matching, where a live selfie is compared against the photo ID to confirm that the person applying is the same individual shown on the document. And for an even richer analysis, this process is paired with SSN verification or identity-record matching, to check for inconsistencies, mismatches, and indicators of synthetic or stolen identities.
Because these stronger checks only occur during the application itself, not during pre-tour, it is expected that pre-tour verification does not meaningfully reduce application-stage fail rates. Fraudsters who can pass a basic ID check will often fail once the system requires biometric confirmation or SSN validation.
This distinction clarifies why operators should view pre-tour ID verification as an efficiency and safety tool, not a fraud-prevention mechanism. The true fraud gate remains at the application stage, where identity is verified with the full set of security signals needed to detect manipulation or impersonation.
The below map considers Payscore’s state-level data to illustrate how pre-tour identity verification is far from a universal practice, and in many markets, it is barely used at all. Adoption varies dramatically by state, reflecting differences in leasing workflows, fraud pressure, regulatory expectations, and operational maturity.
To elaborate, a few states show meaningful adoption of pre-tour identity verification:
- Florida: 47.4%
- South Carolina: 37.0%
- Georgia: 27.3%
- North Carolina: 26.7%
- Texas: 21.3%
Meanwhile, many states have near-zero adoption of pre-tour ID verification, including:
- Arizona, Illinois, Indiana, Iowa, Kansas, Louisiana, Michigan, New Jersey, New York — 0.0% adoption
- Alabama, Arkansas, Oklahoma — under 3% adoption
Even states with sophisticated multifamily markets such as California (13.5%), Colorado (11.1%), and Washington (16.7%), show relatively modest adoption. So, while the market suggests pre-tour use may be considered a preference, application-stage identity verification ought to occur in each case.
Conclusion
The data clearly show that new modalities are warranted for the evaluation of applicant income. When limiting underwriting to historic methods, prospects are being unnecessarily punished and rental housing operators are missing out on well qualified prospects, forgoing the opportunity to ease lease-up pressure. When instead relying on the best available tools and services, prospects enjoy fair and equitable consideration, and compliance teams can expedite their decision making, and do so with confidence as they rely on the best available information.
This sentiment also holds true with respect to identity verification. And the data from our study make it clear that using the best tools, and at the most relevant inflection points, will yield the most positive outcomes for property performance long-term.
