When potential tenants apply for a rental property, they’ll sometimes pay an application fee. This type of fee helps to cover the costs associated with running a background and credit check, so that the landlord can verify a tenant and ensure the applicant meets their rental criteria.
As a landlord or tenant, you may have noticed that this fee often varies, and the rules around these fees aren't the same everywhere. This is mostly because different states (and even cities) have their own application laws, many of which dictate the specific limits of what the fee is and what it covers.
In this article, we'll cover everything you need to know about rental application fees, including the average cost nationally, what they can be used for, what the individual laws are by state, and more.
Rental Application Fees: What They Are, How They Work
As you already know, rental application fees are part of the rental application process.
Completing a rental application allows the landlord or property management company to pull a tenant screening report to determine if the rental applicant qualifies for the rental.
A small fee is required in order to pull someone’s personal information from a private database. This usually results in the property manager (or landlord) having to charge a rental application fee to cover the cost of the screening.
What does the Average Rental Application Fee Cost?
The average rental application fee in the United States is $50, according to a recent Georgetown Law study. However, there are fee limits in eleven of the fifty states, and some states have banned them altogether.
Here's a breakdown of what application fees may cover:
- Identity Verification: Includes verifying details provided on the application, such as address, contact information, and employment.
- Credit checks: Helps a landlord access credit reports from major credit bureaus to determine financial status.
- Income and employment verification: Confirms the potential tenant’s income and employment history, often through verification services or contacting employers.
- Address history and public records: Checks for past addresses and searches public records, such as eviction or criminal records.
- Administrative costs: This is the general costs associated with processing applications, reviewing documents, and handling the screening process.
Who Pays Rental Application Fees?
Usually, every adult applying for a rental needs to pay an application fee as part of the rental application process.
This fee is typically charged when the person applies, so that landlords or property managers can then use the money to pay for a background check through a screening company.
There are, however, some cases where applicants will simply pay the screening company directly instead of adding an application fee.
Tip: If you manage applications in TenantCloud, you can choose how you want the screening fees to be applied so the application is a smooth process for both landlord and tenant.
Other Uses for Application Fees
Screening tenants manually for free can be labor-intensive, prone to errors, and might miss important details. This is why many landlords use software for their tenant screening process.
The application screening fee covers the cost of pulling rental screening reports. Here is some of the background information that may be required as part of a rental screening:
- Tenant Background Checks
- Tenant Credit Checks
- Income Insights
- Local County Checks
If the application fee is greater than the actual cost of the screening service, the application fees may also be used by a landlord or property manager to cover their employee's time and company resources used as part of the overall tenant screening process.
State-Specific Application Fee Laws
In some states, there are laws dictating how much a landlord or property manager can charge for rental applications. We’ll go over them in detail below.
Here is a quick visual guide of current limitations and restrictions across the states:
Closer Look: Rental Application Fee Restrictions by State
There are currently eleven states with notable fee limitations during the application process:
California
As of January 1, 2025, California bill AB2493 mandates that landlords only charge a screening fee when they have available units for rent and have already determined an applicant meets their rental criteria.
Additionally, the California statute—outlined in the California Civil Code §1950.6—mandates that rental application fees are adjusted annually based on the Consumer Price Index (CPI).
This statue also ensures that landlords can charge a rental application fee that does not exceed the landlord's actual out-of-pocket costs of gathering applicant information, such as checking a tenant's credit report. It should also cover only a reasonable value of time spent by the landlord or agent obtaining this information.
Since this statute states that the fee amount can change each year based on the CPI, landlords and applicants should refer directly to the most recent guidance from relevant California state government websites or legal resources.
Colorado
In Colorado, rental agreements must include a statement in English and Spanish about safety and healthy housing during the rental application process (Warranty of Habitability) as well as provide an address for written notice of uninhabitable conditions (Notice of Uninhabitable Conditions).
Also, according to HB19-1106, any fee a potential tenant pays when applying for rental housing should only go towards the cost of processing the tenant screening.
Another recent law (HB23-1099) lets rental applicants use one detailed background report to apply to different places without paying extra fees each time.
Delaware
A Delaware statute governs the application fee cap at the greater of 10% of the monthly rent or $50, according to § 5514(d) of the Delaware Code.
This means that landlords may charge an application fee to cover the costs associated with processing a rental application, including but not limited to credit checks for no more than the greater of either 10% for the monthly rental unit or $50.
Illinois
In Illinois, if an applicant provides a reusable tenant screening report that meets certain criteria, the landlord may not charge a report fee or application screening fee (Illinois Tenant Screening Statute).
Maine
In Maine, landlords can only charge fees that cover the actual cost of screening processes such as credit and background checks, according to section §6030-H of Title 14, Chapter 710 of the Maine Revised Statutes.
Additionally, Main has implemented a new law in 2025 requiring landlords to provide a written disclosure of all costs, including application fees, to potential tenants before the lease is signed (§6030-J).
Massachusetts
In Massachusetts, a new law states that landlords cannot charge rental application fees.
Only licensed real estate brokers are allowed to charge application fees. This regulation can be found in Massachusetts General Laws, Chapter 186, Section 15B(b).
Minnesota
In Minnesota, landlords can only charge fees that cover the actual cost of screening potential tenants according to the state’s rental regulation laws. This means that the application fee should only reflect expenses such as credit checks and background checks. If a landlord charges more than these costs, they are required to refund the excess amount to the applicant.
New York
In New York, the law regarding rental application fees is found under the New York State Real Property Law § 238-a. This statute caps application fees at $20 and requires landlords to waive this fee if the applicant provides their own recent background check or credit check conducted within the past 30 days.
Rhode Island
New rental disclosure law (Rhode Island Public Laws 308 and 309) makes it easier for tenants to understand the full cost of a rental. This addition requires a landlord to disclose all fees to a tenant as part of a written rental agreement or a separate disclosure. These fees must be mentioned in the same section as rent.
Vermont
Application fees are banned in Vermont, according to a statute (found under 9 V.S.A. § 4456a). This means that landlords or their agents are not allowed to charge an application fee to individuals applying to enter into a rental agreement for a residential dwelling unit.
Virginia
Virginia's statute that limits rental application fees to a maximum of $50 is found under § 55.1-1203 of the Virginia Residential Landlord and Tenant Act. However, that $50 is “exclusive of any actual out-of-pocket expenses paid by the landlord to a third party performing background, credit, or other pre-occupancy checks on the applicant.”
Washington
In Washington, Chapter 59.18 RCW requires that the amount charged for rental application fees must exactly match the cost of the screening services provided, preventing landlords from making a profit from these fees.
Wisconsin
For Wisconsin's rental application fee regulations, per ATCP § 134.05, the rental application fee cannot be more than $25, and the landlord is required to give the applicant a copy of the screening results.
Conclusion
This guide has shown how the rules for what you can charge a renter when they apply to rent a place from you differ greatly depending on where you live.
Some places don't limit what you can charge, while others have strict rules, including how much can be charged, what the fee can be used for, and whether or not all or some of the funds are refundable or not.
Because legislatures are actively updating residential rental laws, it's important to check the most recent changes in your state and local region if you're not sure what application fees you are — or are not —permitted to charge.
Frequently Asked Questions
Why are rental application fees so expensive?
Rental application fees cover the costs of checking potential renters' backgrounds and credit histories. The expense ensures that applicants meet the rental criteria, protecting the landlord's property and other tenants.
What is the difference between a rental application fee and a security deposit?
A rental application fee is a one-time charge for processing a rental application and conducting background checks. A security deposit is a refundable payment held by the landlord to cover any damages or unpaid rent during the lease.
What can rental application fees be used for?
Application fees are used to pay for the cost of background checks and credit checks, and sometimes, the administrative time needed to process the application and screen potential tenants.
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