What to Do If You Can’t Pay Your Rent

If you are struggling to keep up with your rent payments, research your options and take action before it's too late. Call now for help finding rental assistance programs and discover your options.

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Considering that more than one-third of people in the U.S. are living paycheck to paycheck with no real emergency fund or savings, it’s not surprising that many of us find ourselves in a tight spot when the rent comes due.

Sometimes the need for rental assistance happens because of a short-term emergency like a medical issue, a change in employment, or another significant, but temporary, life event. In these cases, one-time emergency rental assistant grants or a small personal loan (along with revisiting your budget) can help get you back on track.

However, rent prices nationwide have risen precipitously in recent years. Rents for one-bedroom apartments rose 25.5% in June from the previous year, and the increase was 26.8% for two-bedroom rentals. This continues a trend: Average rent has increased 8.86% per year since 1980, much faster growth than inflation.

In other words, a place to live costs more and we’re getting paid less, which creates a real problem for most consumers.

Financial planners suggest spending less than 35% of take-home income on housing, but many people aren’t listening. A staggering 25% of renters currently spend more than half their income on housing. Just finding and getting into a place to rent within 35% of our budget is getting harder.

The pandemic made that even more difficult, although more than 77% of renters paid their rent on time in the months after the first quarantines in the U.S., and 66% of those who were late made their payment within the month.

Still, that’s a lot of late payments, and with inflation at a 40-year high, it’s going to be even more difficult to pay security deposits and first and last month’s rent on top of the rent and bills they already have.

Short-Term and Emergency Rental Assistance

If an eviction notice has already been presented, you can get free, professional help through the process. The Legal Aid Society is an independent nonprofit legal service provided by the government to help low-income families and individuals with civil matters, like eviction.

They can help you get a payment extension, find a new home, or have an eviction blocked altogether. Search online or call your local courthouse to get the contact information for the Legal Aid Society office near you.

If you’re not quite at that point yet, reach out to local charity organizations for one-time grants to help cover the cost of rent before it gets far enough behind to warrant an eviction. Grants, unlike loans, do not need to be paid back, and that can substantially ease the financial burden of trying to get back on track. Some of these organizations can also provide temporary housing, should you need it, or help you find affordable housing.

Here are a few places to look for help. Be aware that having a job when you go there gives you a leg up. Most of these organizations want to know that if they give you help this time, you can manage the problem long term:

  • Local Salvation Army chapters provide one-time assistance grants to help you cover payments. You’ll need to apply in person and prove your hardship.
  • Catholic Charities offers emergency assistance grants, which you can use to pay your rent or other approved expenses. You’ll need to apply in person and talk with a caseworker.
  • Modest Needs provides grants up to $1,000 from private funders to cover a single emergency expense. Anyone with a job can apply by creating a grant request on the Modest Needs website or by calling (844) 667-3776.
  • Society of St. Vincent De Paul. This is a ministry at some Catholic churches. It specializes in one-time, crisis solutions. Not all Catholic churches have this ministry so call around until you find one.
  • Local charities. Local nonprofit groups may also offer rent assistance and other grant money. 211.org, a nationwide program of the United Way, provides local charity and non-profit resources information to users. In many communities, renters can dial 211 or 311 to find these resources.
  • The Department of Social Services may provide one-time assistance with rent in instances of serious financial hardship. It is dependent on available funding. The rental assistance services and help they provided vary from state to state, so contact your local office for specific information.
  • The Department of Housing and Urban Development (HUD) website offers services that include actual housing or help paying rent, security deposits, housing counseling, energy bills, and other needs. The program helps low-income families, the elderly, and persons with disabilities.

How Can I Apply for Emergency Rental Assistance?

Renters struggling to pay rent, utilities, or other housing costs should apply to the U.S. Department of Treasury’s Emergency Rental Assistance (ERA) program in their communities. Assistance can cover rent, utilities, and home energy costs, including includes electricity, gas, fuel oil, water and sewer and trash removal. Depending on the area, renters can apply for assistance themselves or will need landlords to submit an application first. Each local program has its own guidelines. Call 211 or contact the local housing authority.

Government Programs for Long-Term Rental Assistance

There are federal and state programs designed to help low-income individuals and families, the elderly, and those with disabilities secure long-term affordable housing.

  • Subsidized, or public, housing can range from single-family houses to high rise apartments. There are about 1.2 million households living in government-run public housing units.
  • The Housing Choice Voucher Program (formerly Section 8) is the federal government’s biggest program assisting struggling individuals and families. Unlike public housing, Housing Choice Voucher assistance is provided on behalf of the family or individual and provided directly to your landlord once a month. You’re responsible for covering the remaining balance due. With this program, you can choose any housing that meets the requirements of the program without being limited to units located in subsidized housing projects.
  • The HOME Investments Partnerships Program provides grants to states and local governments. These grants are designed exclusively to create affordable housing for low-income households either through direct rental assistance and assistance to homebuyers, as well as funds for the building and development of affordable housing. Because HOME funds are granted to states, you’ll need to contact your state or local government or visit HUD online to determine how the program operates in your area and learn which organizations receive HOME funding.

Many states also have their own departments and agencies that offer financial assistance programs with housing being one of the bigger ones. This type of assistance is available to in-state residents and helps with paying rent, moving costs and deposits, and other housing-related expenses. Your local Social Services or Housing Authority offices can provide information about these resources as well. The goal of these programs is to make sure that affordable housing is available over the long-term and most have income-based eligibility requirements. Even if you’re not eligible for direct assistance, they can usually provide a list of other local resources you might be able to use.

Other Rental Assistance Options

There are other solutions when you need rental assistance, whether for a short- or long-term need. The first thing you need to do, however, is to review or create your monthly budget to make sure that you’re not spending too much on housing and that you’ll be able to pay back any money you may decide to borrow (or that you’re currently behind on).

Here are some ways to solve your housing crisis:

  • Learn your renter protections
  • Talk to your landlord
  • Ask friends and family
  • Personal loans
  • Apply for grants in your industry
  • Modify living arrangements
  • Maximize your budget by reducing expenses and increasing income
  • Use your investments
  • Use credit cards
  • Cash advance

Learn Your Renter Protections

There have always been people who struggled to pay the rent before the coronavirus pandemic, which only made the situation worse. Federal, state, and local governments have programs designed to help you avoid eviction. The federal Emergency Rental Assistance (ERA) program was created to help you cover housing costs and stay in stable housing during the coronavirus pandemic. The funds are provided directly to states, U.S. territories and local governments for rental assistance programs, and the policies differ depending on where you live. Many cities and states also have rules restricting evictions during the pandemic.

Talk to Your Landlord

Most landlords will be flexible and might be willing to work with you if you’re typically on time with your rent. If you can’t pay, it’s important to talk with your landlord. This isn’t a fun topic, but tell your landlord why you can’t pay the rent – be specific – and whether you can pay at least some of it. The landlord will likely want evidence of your hardship, so if you have a termination notice or other documentation of a financial downturn, provide it.

Have this talk before the rent is due, which gives the landlord time to consider options. Your landlord may be open to payment plans such as rent determent (paying at a later date) or paying it in installments. Ask. If the landlord agrees, get the agreement in writing.

Before talking with the landlord, read over your lease to find out whether you have a grace period for paying rent and whether there are late fees.

Ask Friends and Family

The main advantage of receiving a loan from a friend or family member is that your “lender” is more likely to be flexible about payment arrangements (and usually at a lower interest rate than what you can get elsewhere). You still need to treat these loans like you would a bank loan and make sure that you have a repayment agreement in place.

Another way to approach this is through a crowdsourcing site like GoFundMe, which enables family, friends and even strangers to help in small amounts that can add up to a meaningful sum.

Personal Loans

Getting a small personal loan to offset immediate or emergency expenses, can be a good option. Personal loans are usually unsecured, which means they don’t require collateral. Most come with a fixed interest rate and fixed repayment term, which makes them more predictable than credit cards, where the rates and monthly payments vary.

But be careful. If you’re already having trouble making payments for necessities like rent, taking on more debt can cause bigger problems if your financial circumstances don’t turn around quickly. If your credit is good, you should be able to secure a loan from a bank or credit union.

However, avoid payday loans. The interest rates are astronomically high, most times 399% APR. Compare that against average credit card interest (19.2%) or personal loans (10.7%) and you easily can see that payday loans are a whole you don’t want to dig.

Apply for Grants in Your Industry

Some industries have raised money for people who have lost their jobs due to the pandemic, such as the Restaurant Strong Fund, which provides funds for restaurants and individuals. If you’re a member of a labor union, there may be funds you can access, too. Reach out to your employer or union rep for more information.

Modify Living Arrangements

Sublet your apartment or a room if your lease allows it to make your rental more affordable. Another possibility is downsizing to a smaller unit if one is available in your apartment complex. The move from a two-bedroom to one-bedroom or a one-bedroom to a studio could save you hundreds of dollars a month and, if the landlord is OK with it, avoids the cost of breaking the lease. There would be the hassle or cost of moving, but it could be worth it. Downsizing might reduce your utility bills, too.

If that’s not possible, assess the cost of breaking the lease to move in with a loved one or to share the rent with someone else.

Maximize Your Budget by Reducing Expenses and Increasing Income

Even with the immediate relief of a loan or leniency from your landlord, you’ll likely need to reduce your spending or increase your income (or both) to help give you extra available money.

Sometimes the most logical solution is to not live on your own. Finding a roommate can be a smart, cost-effective way to cut housing and utility costs. At the same time, a side job could help bring in extra income that can be used toward rent, paying down debt, and establishing an emergency fund.

If you have a skill that other people need, freelancing could be an option. “Gig” jobs, like driving for Uber or Lyft or delivering for Amazon through Amazon Flex, are also flexible opportunities that you can schedule around your other commitments. Search online for opportunities available where you are and be sure to check that they’re legitimate before you start out, especially for any online work.

Generating or securing funds to move into housing you can afford, may be a better option, in the long run, than trying to secure funds to stay in a place you can’t really afford.

Which raises a question: Do you know how much you can really afford. If you don’t have a written budget, you don’t really know where your money is going. Creating a budget can identify expenses – a gym membership, subscriptions – that aren’t critical to your lifestyle.

Use Your Investments

Tapping into money that’s supposed to be for your future shouldn’t be your first choice, but in an emergency like needing to pay the rent, it’s worth considering. You can sell stocks from a taxable brokerage account or take a 401K loan – withdrawing money from your 401K or individual retirement account.

If you’re older than 59½, you can withdraw up to $100,000 from an eligible 401K or IRA without penalty. If you’re younger, there is a 10% early withdrawal penalty unless you meet an IRS exception. You’ll have to pay that borrowed money back, plus interest, within five years of taking your loan, but the interest you pay on the loan goes back into your retirement plan account. Missing a payment or defaulting on your 401K loan won’t ding your credit score because it won’t be reported to credit bureaus. The loan will be taxed as ordinary income, but you can claim a tax refund if you pay it back before three years.

Use Credit Cards

Another somewhat risky strategy is to use credit cards to pay rent. There are a few ways to do it.

One is to ask your landlord to pay directly by credit card. That’s not the norm, so you may need to sell the landlord that it would eliminate the need to go to the bank and increase the likelihood of paying on time by setting up an automatic bill. Understand, however, that whatever balance is on that card is subject to higher credit card interest rates. There may be fees attached, too, whether paying the landlord directly or using an alternative third-party service.

Also, you can borrow against your card’s credit limit and use that to pay the rent. Some cards let you borrow with a fixed interest rate and term. The money is deposited into a bank account without the need for a credit check or origination fee.

Cash Advance

Another last resort: Cash advance loans can offer quick cash, but it comes with high fees and interest rates that begin the moment you get your money. Cash advances increase your credit utilization, which may hurt your credit score.

Things You Shouldn’t Do if You Can’t Afford Rent

Clearly, there are several things you can do. Here are some things you should not do.

  • Don’t write a check that will bounce. It will make your landlord far less willing to work with you in the future, whether in providing grace for late payments or even renewing your lease. Of course, there are late fees and bounced check fees to consider.
  • Don’t lie. When you’re late with the rent, blaming it on hard-luck circumstances like sickness or being laid off won’t work when the landlord asks for documentation. Nothing sours a relationship like dishonesty.
  • Don’t procrastinate. Pay your rent on time or even early.

Seek Professional Financial Help

There’s a good chance your inability to pay the rent is part of a bigger financial problem. Getting credit counseling can help you get the information you need to make the decisions that improve your situation. By talking to a certified credit counselor from a nonprofit credit counseling agency, you can learn to create an affordable monthly budget and get advice on managing money and debt. You can learn the ins and outs of a debt management plan, which works with multiple creditors to set up an affordable monthly payment.

Talking to a counselor is free, and it may help you find money that will make paying the rent much less stressful.

About The Author

Max Fay

Max Fay has been writing about personal finance for Debt.org for the past five years. His expertise is in student loans, credit cards and mortgages. Max inherited a genetic predisposition to being tight with his money and free with financial advice. He was published in every major newspaper in Florida while working his way through Florida State University. He can be reached at [email protected].


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