How Much Is a Security Deposit? Understanding Costs and Best Practices

As a landlord, a security deposit provides peace of mind against potential property damage or missed rent payments from tenants. These upfront funds are a key part of most rental agreements, serving as protection for property owners. This overview covers key considerations for determining deposit amounts that follow regulations and tips for handling and returning deposits to tenants.

Nichole Stohler
Last Updated
June 25, 2024
How Much Is a Security Deposit? Understanding Costs and Best Practices

A security deposit is a common requirement when renting property, but determining how much it should cost can be tricky. Generally, landlords should have funds equal to at least one month's rent to handle eviction costs or major repairs, meaning that renters seeking a new place should budget for this mandatory rent deposit.

This article provides an overview of these deposits, including how to set the right amount, holding practices, legal deductions, and how to return funds. Tenants will also discover what deposit costs to expect, their rights regarding refunds, and allowable deductions.

If you're in the market for a new rental, this article will give you perspective on how much the initial move-in costs might be for your new home. Landlords will come away feeling prepared to set amounts, collect, and manage security deposits for their rental property.

Understanding security deposits

A security deposit is an upfront amount of money that a tenant provides to a landlord at the beginning of a rental agreement. This deposit protects the landlord by making sure funds are available to cover repair costs if a tenant damages the property. Or, if the tenant fails to pay rent, the deposit gives the landlord time to use the eviction process and get the rental unit ready for a new tenant.

Landlords typically refund the security deposit as long as the tenant meets all lease obligations and follows the terms. However, if the renter breaks things in the property or leaves a mess when they vacate, chances are they won't get the deposit back.

Laws and regulations around security deposits are different in each state, but many states set limits on the amount a landlord can charge. They may also outline the conditions for holding and returning the deposit.

Setting the security deposit amount

For landlords looking at what to charge for a security deposit, let's take a look at key considerations to help determine the right amount.

Factors impacting the cost

There are several elements that impact how you set a security deposit amount:

  • State and local regulations: 36 states limit the security deposit amount to one to three months' rent. For example, California allows a maximum of two months' rent for unfurnished units and three months' rent for furnished units. New York limits security deposits to one month's rent.
  • Property type: The value and type of rental property can influence the deposit amount. If you own or are looking to rent a property with extensive amenities, the deposit might be higher. This is because these amenities often require more maintenance and carry a higher risk of damage.
  • Risk factors: Landlords might also charge a higher security deposit for tenants with a higher risk for non-payment. This can include renters with lower credit scores or less stable income sources.
  • Special circumstances: The property management company or landlord may charge additional fees for pets or furnished units.

Calculating the security deposit amount

To calculate what to charge for a security deposit, check legal limits for your location, consider risk factors, and measure these against one months' rent. Then add any additional deposits if applicable.

Here's how this could look:

  • Legal limit: 2 month's rent
  • Monthly rent: $1,500
  • Maximum deposit: $1,500 x 2 = $3,000
  • Additional pet deposit: $300 (if applicable and legal)

Total security deposit: $3,000 + $300 = $3,300

Average security deposit amounts

The average security deposit amount depends on many variables, including location, legal limits, and landlord discretion. Current data for apartments and single-family homes shows the following trends:


As of June 2024, the average rent for a 700-square-foot apartment in the United States is $1,518 per month. This translates to a typical security deposit ranging from $1,518 to $3,036 for such properties.

Single-family homes

In January 2024, rents for single-family homes varied significantly across different cities, impacting the required security deposit amounts. The highest and lowest examples are:

  • San Francisco, CA: Rents averaged $4,812, which translates to security deposits between $4,812 to $9,624.
  • Saint Louis, MO: Rents averaged $1,604, so security deposits might range from $1,604 to $3,208.

Collecting and managing security deposits

Landlords should be aware of regulations around collecting and managing deposits, including:

Timing for security deposits

The timing for collecting a tenant's security deposit commonly falls within one of the following scenarios:

  • Lease signing: It’s best to collect the security deposit and the first month's rent when both parties sign the lease agreement. This timing makes sure the landlord has the deposit before the tenant moves in, offering protection against any potential damages or unpaid rent from the start of the tenancy.
  • Staggered payments: Sometimes, a landlord might agree to a payment plan where the tenant pays the security deposit in installments. While an uncommon approach, this could be a viable option in competitive rental markets.
  • Lease renewal: If a tenant renews their lease and there's a rent increase upon renewal, landlords may collect an additional security deposit to reflect the higher rental rate.

Security deposit collection methods

Landlords have several options for collecting deposits from tenants, such as:

  • Cash, check, or money order: Collecting the deposit via any of these methods is pretty straightforward. Just make sure both parties get a receipt for the transaction so that everyone has a record of the payment.
  • Online methods: Electronic bank transfers and online rent payment services like Azibo are convenient and quick. They allow for immediate and traceable fund transfers and easily provide clear records for both parties.

Best practices for holding security deposits

Here are commonly recommended procedures for handling security deposits:

  • Separate account: Always hold tenant's deposits in a separate bank account. This ensures that you won't mix up your personal and operational finances. It also makes it easy to track the status of the deposit at all times. The last thing you want is to find yourself without enough funds to refund the deposit when a tenant moves out.
  • Interest-bearing account: In some states, landlords must place security deposits in an interest-bearing account and pay the interest to the tenant. Check your local laws to determine if this applies to you.
  • Provide receipts: Be sure to give tenants a receipt for their security deposit and document the amount, the date received, and the holding bank account.
  • Written documentation: Use services like Azibo to detail your security deposit terms in the lease agreement to avoid confusion or misunderstandings. Include information on how the deposit applies, the conditions for its return, and any applicable interest.
  • Compliance with laws: Verify that you follow all state and local laws for deposits. This includes how to hold them, when to return them, and any required notifications to tenants. Additionally, if there are repairs you need to deduct, you should provide an itemized list of damages.

Applying a tenant's security deposit

Besides non-payment of rent or deductions for damages, you can also apply the security deposit to:

  • Miscellaneous fees: Examples of charges a landlord might include under miscellaneous fees are unpaid utility bills, accumulated late payment fees, and unreturned keys.
  • Early termination: If a tenant breaks the lease, the landlord may also deduct early termination fees from the security deposit.

Security deposit return due dates

A landlord must return a tenant's refundable security deposit within a timeframe specified by local regulations. This typically ranges from 14 to 30 days after the tenant moves out and returns the keys. The steps to return deposits are:

  • Move-out inspection: Inspect the rental property to assess any damages beyond normal wear and tear. Take notes and photographs of any damages or issues that will require deductions from the security deposit.
  • Calculate deductions: Itemize any deductions for remaining rent, repairs, or other allowable expenses.
  • Documentation: Create a written statement of the deposit return and list out the itemized deductions.
  • Return the balance: Provide the remaining security deposit balance along with the deductions statement to the tenant’s forwarding address in accordance with the legally permitted timeframe.

How much is rent deposit?

Security deposits play an important role in protecting both landlords and tenants during a rental agreement. For landlords, setting the right deposit amount while following regulations provides financial security and protection. For tenants, getting an idea of the typical costs and refund requirements helps you budget and prepare for your new home.

Knowing the rules and procedures for collecting and returning security deposits improves the rental process for all parties. After all, no landlord or tenant wants to deal with disagreements or heated debates when it's time to move on to the next chapter. Getting deposits right from the start makes for a smoother transition down the road.

How much is a security deposit? FAQs

How much is a security deposit in NYC?

The maximum security deposit allowed in NYC is one month's rent for residential leases. Landlords must return the deposit within 14 days of the tenant moving out and provide an itemized list of any deductions.

How much is a security deposit in FL?

Florida has no legal limit for security deposits, but landlords typically ask for one to two months' rent.

How much is a security deposit in Texas?

The amount for a security deposit in Texas has no legal cap, but it usually ranges from one to two months' rent.

Important Note: This post is for informational and educational purposes only. It should not be taken as legal, accounting, or tax advice, nor should it be used as a substitute for such services. Always consult your own legal, accounting, or tax counsel before taking any action based on this information.

Nichole Stohler

Nichole co-founded Gateway Private Equity Group, with a history of investments in single-family and multi-family properties, and now a specialization in hotel real estate investments. She is also the creator of, a blog dedicated to real estate investing.

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