Everything Tenants Need to Know About Rental Application Fees

Renting an apartment for the first time can be intimidating, especially when you’re blindsided by rental fees. In addition to the first month's rent, tenants often pay security deposits, pet deposits, administrative fees, and application fees. In most cases, these payments need to be made upfront which can easily overwhelm a first-time renter.

In this blog, we'll focus on what renters need to know about rental application fees. We’ll cover what rental application fees are, why they’re necessary, and how they differ by state. We'll also provide advice on how to minimize rental application fees and protect your interests as a tenant throughout the rental application process.

What is a rental application fee?

A rental application fee is collected by a landlord when a prospective tenant submits a tenant application for a rental unit. Most of the time, this fee is used to run tenant screening reports. Since property owners can only obtain these reports through third-party companies, they charge tenants a rental application fee to cover the cost. The average rental application fee is usually $30-$75, per person. 

Why are rental application fees necessary?

In addition to obtaining tenant reports, an application fee also covers other administrative tasks used to cross-reference the information provided on a tenant’s application. Although property owners are not legally required to charge a rental application fee, it’s in their best interest to do so.

Without a rental application fee, landlords are unable to conduct standard background checks on potential tenants or will have to pay for these checks out-of-pocket. If an unruly tenant slips through the cracks this can be a challenge not only for the property owner but for neighboring tenants as well.

In some cases, property owners will waive the rental application fee, such as when they are reconsidering a previous tenant. However, property owners should be careful when waiving the application fee. Federal law requires everyone to have equal access to rental properties. Waiving a substantial amount of fees for one tenant over another may classify as preferential treatment.

If a landlord chooses not to conduct background checks on prospective tenants, they shouldn’t charge application fees. These fees are not intended to be a source of revenue for property owners. 

What are rental application fees used for?

The purpose of a rental application fee is to help a property owner assess whether or not a rental applicant would make a good tenant. In addition to obtaining credit reports and background checks, landlords can use this fee to obtain eviction reports, income verification, and other information relevant to the applicant's tenancy.

Depending on the state, property owners may have to provide applicants with a detailed breakdown of how the rental application fee was applied. Most landlords have a standard tenant screening process. It can be helpful to share this process with tenants to confirm that the funds will be used appropriately. Property owners usually screen tenants by performing the following checks:

• Verification of the applicant's personal information
• TransUnion, Equifax, and Experian credit checks
• Income verification
• Address history
• Employment history
• Eviction records
• Criminal records

What do state laws say about rental application fees?

Rental application fee laws differ by state. Most states don’t have any restrictions while others prohibit rental application fees altogether. Here is a comprehensive list of laws governing rental application fees across the country:

• Alabama – Application fees are allowed with no limits
• Alaska – A landlord may ask for a nonrefundable application fee to place a prospective tenant on a waiting list. An application fee that covers the landlord's true screening service costs is legal.
• Arizona – Application fees are allowed with no limits.
• Arkansas – Application fees are allowed with no limits and they're non-refundable, even when a tenant is denied.
• California – Application fees should not exceed the landlord's actual out-of-pocket costs for tenant screening activities. Fee limits change every year according to the Consumer Price Index (CPI) (CA CIV § 1950.6).
• Colorado – Application fees are allowed at the state level with no limits. However, several cities in Colorado restrict application fees at a local level. Property owners should check with their local laws before charging a screening fee.
• Connecticut – Application fees are allowed with no limits.
• Delaware – Application fees can be either 10% of what tenants pay in rent or $50, whichever value is greater according to DE Code § 7020.
• Florida – Application fees are allowed with no limits. However, the state advises property owners not to charge more than the average out-of-pocket expense for screening tenants.
• Georgia – Application fees are allowed with no limits and they are non-refundable.
• Hawaii – Application fees are allowed with no limits and they are non-refundable.
• Idaho – Application fees are allowed with no limits.
• Illinois – Application fees are allowed with no limits and they are non-refundable.
• Indiana – Application fees are allowed with no limits and they are non-refundable.
• Iowa – Application fees are allowed with no limits and they are non-refundable.
• Kansas – Application fees are allowed with no limits and they are non-refundable.
• Kentucky – Application fees are allowed with no limits and they are non-refundable.
• Louisiana – Application fees are allowed with no limits and they are non-refundable.
• Maine – Application fees are allowed with no limits and they are non-refundable.
• Maryland – Application fees are allowed with no limits and they are non-refundable.
• Massachusetts – Property owners are not allowed to charge application fees. nly a licensed broker can charge an application fee according to MA G.L. c 186 § 15B(b).
• Michigan – Application fees are allowed with no limits and they are non-refundable.
• Minnesota – Applications fees are allowed but are restricted to the actual cost of screening the tenant. Any funds that remain unused must be refunded back to the applicant.
• Mississippi – Application fees are allowed with no limits and they are non-refundable.
• Missouri – Application fees are allowed with no limits and they are non-refundable.
• Montana – Application fees are allowed with no limits and they are non-refundable.
• Nebraska – Application fees are allowed with no limits and they are non-refundable.
• Nevada – Application fees are allowed with no limits and they are non-refundable.
• New Hampshire – Application fees are allowed with no limits and they are non-refundable.
• New Jersey – Application fees are allowed with no limits and they are non-refundable.
• New Mexico – Application fees are allowed with no limits and they are non-refundable.
• New York – As of June 2019, application fees must not exceed $20. The fee must be waived if the applicant is able to provide a valid copy of their background check or credit check conducted within the past 30 days according to NY Real Prop. L. § 238-a.
• North Carolina – Application fees are allowed with no limits and they are non-refundable.
• North Dakota – Application fees are allowed with no limits and they are non-refundable.
• Ohio – Application fees are allowed with no limits and they are non-refundable.
• Oklahoma – Application fees are allowed with no limits and they are non-refundable.
• Oregon – Application fees are allowed with no limits and they are non-refundable.
• Pennsylvania – Application fees are allowed with no limits and they are non-refundable.
• Rhode Island – Application fees are allowed with no limits and they are non-refundable.
• South Carolina – Application fees are allowed with no limits and they are non-refundable.
• South Dakota – Application fees are allowed with no limits and they are non-refundable.
• Tennessee – Application fees are allowed with no limits and they are non-refundable.
• Texas – Application fees are allowed with no limits and they are non-refundable.
• Utah – Application fees are allowed with no limits and they are non-refundable.
• Vermont – Application fees are not allowed.
• Virginia – Application fees cannot exceed $50 and must be refunded within 20 days to the applicants whose application was denied according to VI Code § 55.1-1203.
• Washington – Application fees cannot exceed the actual cost of screening the tenant and the property owner must provide the applicant with an itemized receipt displaying the cost of a background check according to RCW § 59.18.257.
• West Virginia – Application fees are allowed with no limits and they are non-refundable.
• Wisconsin – Application fees are limited to $20 and the property owner must provide the applicant with a copy of the background checks that were conducted according to ATCP § 134.05.
• Wyoming – Application fees are allowed with no limits and they are non-refundable.

The bottom line on rental application fees

Although a rental application fee is not as significant an expense as the first month’s rent or a security deposit, the fee can still impact the rental application process. This is especially true if you are submitting applications to multiple rental units with little to no chance of getting these rental application fees refunded. 

It's also important for you to understand the laws governing rental application fees in your state, as well as what you can do to minimize the overall cost of rental application fees. Prospective tenants should be cautious of scammers who are unable to explain how the rental application fee will be used, as well as property owners who are minimally concerned with whether or not you'd make a good tenant.

By being selective with the properties you apply to, confirming the cost breakdown of rental application fees, and including smaller properties in your apartment search, you can secure a rental unit confidently and with minimal stress.

Rental application fees FAQS

How can I minimize rental application fees?

You may not be able to avoid application fees completely, but there are ways you can reduce the overall cost of rental application fees. Consider the following tips when applying to rentals to save money on application fees:

Apply to smaller properties

Individual property owners may be more willing to negotiate with prospective tenants than large property management companies. Small-time real estate investors don't always fill their units the same way large-scale real estate investors do. This provides them with more flexibility in terms of how they accept and process rental applications. 

Apply to properties with fewer applicants

Before applying for an apartment, find out how many other prospective tenants have applied. In competitive housing markets such as New York and San Francisco, it’s not uncommon for property owners to receive hundreds of applications for a single unit. Property owners usually prioritize early applicants with strong applications, so if you’re facing stiff competition and a nonrefundable application fee, consider looking elsewhere.

Watch out for scammers

Ask the property owner how much the application fee costs and what it will cover. If they propose an absorbent amount or change the price after you've already agreed to one, consider this a red flag. You should also check if the fee is refundable. If it is, find out what is required for you to receive a refund. Tenants should never have to pay a fee to view a rental property and should be especially cautious of property owners who don’t at least check their credit. These individuals may be trying to attract tenants with poor credit because they plan to provide substandard housing.

Are rental application fees refundable?

Once a rental application fee is paid, it usually cannot get refunded in full. This is because the fee covers the tenant screening process which is required whether the applicant gets approved for the apartment or not. When state law requires rental application fees to be refundable, it means that the landlord must refund the portion of the rental application fee that was not used. For example, if a landlord charges a prospective tenant a $75 rental application fee, but only spends $35 assessing a tenant’s eligibility, a total of $40 must be refunded to the applicant.