Should You Charge an Application Fee? A Landlord's Cost Guide

TL;DR: Most owner-operators charge $30 to $75 per adult applicant, roughly what a credit and background check actually costs. Nine states, including California ($61.60 cap in 2024) and New York ($20 cap), limit or restrict the fee, so check your state before you set a number. Charge enough to cover the real cost, but not so much it scares off good applicants who are shopping several units at once.

_Last reviewed: July 2026 · 7 min read_

You've had a good applicant walk away because the fee felt steep, and you've also eaten a $40 background check cost on someone who never signed a lease. Both problems come from the same question: what's a fair application fee, and does it even make sense to charge one? Here's how to think about it without guessing.

Okoniq Property Hub keeps a running log of every applicant fee collected, refunded, or waived, so you're never digging through email receipts at tax time.

What does a typical application fee actually cover?

A typical application fee covers the hard cost of screening: a credit report, criminal background check, and eviction history search. Those three checks usually run $25 to $45 per applicant through services like TransUnion SmartMove or RentPrep, depending on how many counties get searched.

Most landlords add $10 to $20 on top of the raw screening cost to account for their own time, since verifying employment and calling references takes 20 to 30 minutes per applicant. That's how you land on the common $30-$75 range. Charging exactly what the screening costs, with no markup, is the safest position if you ever have to justify the fee to a state regulator or a disputing applicant.

Which states cap or ban application fees?

Nine states set a hard limit or require the fee match actual screening costs. California caps it at $61.60 per applicant as of 2024, adjusted annually for inflation, and requires you to provide a receipt showing how the money was spent. New York limits the fee to $20, and only if you're not also charging for a credit report you pull yourself. Massachusetts bans the fee outright in most cases, shifting screening costs onto the landlord.

| State | Rule | |---|---| | California | $61.60 cap (2024), receipt required | | New York | $20 cap | | Massachusetts | Generally not allowed | | Texas, Florida, most others | No state cap |

Before you set a number, search "[your state] application fee law" or check your state's landlord-tenant statute directly. Rules change yearly, so what applied in 2022 may not hold in 2024.

Should you refund the fee if you reject an applicant?

You're not legally required to refund it in most states, but showing your work matters more than the refund itself. If you screen someone, reject them, and keep $50 with no explanation, that's the kind of thing that ends up in a small claims filing or a bad review. Keep the screening report on file for at least a year in case a denial gets challenged under the Fair Credit Reporting Act.

Some owner-operators refund the unused portion if an applicant withdraws before screening starts, say within 24 hours. That goodwill costs you almost nothing and heads off disputes. If you're also tightening up habitability standards during turnover, it pairs naturally with a broader move-in checklist. This is the same instinct behind catching 5 signs your bathroom exhaust fan isn't doing its job before a new tenant moves in. Small fixes documented early save arguments later.

Does charging a fee scare off good applicants?

It can, if the number feels arbitrary or higher than a competing unit down the street. Applicants who are house-hunting seriously often apply to two or three places at once, and a $100 fee stacked three times adds up fast. Studies from apartment listing sites suggest fees above $75 measurably reduce application volume in competitive rental markets, particularly for units under $1,500 a month.

The fix isn't skipping the fee, it's pricing it transparently. State clearly on the listing what the fee covers and what checks you run. Applicants tolerate a fee they understand far better than one that shows up as a surprise at signing. The same transparency principle applies to any pre-move-in cost, the way you'd flag 5 signs your crawlspace vapor barrier has failed before handing over keys rather than after a dispute starts.

How do you set your own number?

Start with your actual screening vendor cost, add a flat $10-$15 for your time, and round to a number that matches your local market. If your competitors charge $50, going to $85 without a reason will cost you applicant volume even if your unit is nicer. Track what you spend per screening for two or three tenant cycles and adjust the fee up or down based on real numbers, not a guess.

Keeping a simple log of fee collected versus screening cost spent also matters if a state auditor or applicant ever asks you to justify the charge. This is the same record-keeping discipline that pays off when you're documenting maintenance costs, similar to logging 5 reasons your roof is aging faster than it should so you have receipts ready if a dispute or insurance claim comes up later.

FAQ

Is an application fee legal in all 50 states?

Yes, it's legal to charge one in every state, but nine states cap the amount or require it match actual screening costs, so check your specific state statute before setting a number.

Can I charge a separate fee for each adult applicant?

Yes, most landlords charge per adult over 18 who will live in the unit, since each person requires a separate credit and background check.

What happens if I overcharge the legal cap?

An applicant can dispute the charge, and in states like California you may owe a refund plus statutory damages if you can't produce a receipt showing the money went to actual screening costs.

Do I need a receipt for the application fee?

California requires one; most other states don't mandate it, but keeping a receipt protects you if a rejected applicant challenges the charge later.

Should I charge an application fee if I already require a security deposit?

Yes, they cover different things. The application fee pays for screening before you decide to rent to someone, while the security deposit protects against damage after they move in.

This is educational information, not legal advice. Consult your state's landlord-tenant statute and a local attorney before setting your application fee amount.