Rental Application Fee Laws: What You Can Charge

You post a listing, applicants line up, and someone asks the question you should have answered before you ever advertised the unit: how much can you legally charge them just to apply? Rental application fee laws vary more than almost any other landlord rule, and getting them wrong is one of the few mistakes that can trigger a lawsuit before a tenant has even moved in.

Some states ban the fee outright. Others cap the dollar amount and force you to refund it under specific conditions. Most states set no cap at all, but that does not mean you are free to charge whatever you want without paperwork — a separate federal law applies no matter where your rental sits. This guide walks through all three layers so you can charge a compliant fee on your very next application.

What a Rental Application Fee Is Legally Supposed to Cover

An application fee is not a general-purpose charge for your time. In every state that regulates it, the fee exists to reimburse the actual cost of screening the applicant — pulling a credit report, running a criminal background check, and verifying rental and employment history. It is not a deposit, not "key money," and not a way to recoup the cost of an empty unit.

That distinction matters because it is the legal theory behind every state cap. California's statute, for example, ties the maximum fee directly to "the actual out-of-pocket costs of gathering information" plus the reasonable value of the time spent processing the application, under Civil Code Section 1950.6. If your actual screening cost is $35 and the statutory cap is higher, you can only charge $35. Charging a flat fee that exceeds your real cost — even if it is under the state's dollar cap — can expose you to a refund claim.

Before you set a number, decide what you are actually screening for and price the fee to match. If you use our portable tenant screening reports guide to evaluate reports applicants already have, you may not need to charge a fee at all for that applicant, since several states require you to waive it when a compliant report is provided.

Is There a Federal Cap on Application Fees?

No. There is no federal dollar limit on what you can charge for a rental application. The dollar amount is entirely a matter of state (and sometimes city) law. But a separate federal law — the Fair Credit Reporting Act — applies to every landlord in every state the moment you pull a credit report, background check, or eviction history report on an applicant, regardless of whether your state caps the fee.

That distinction trips up a lot of independent landlords. You can be in full compliance with your state's fee cap and still violate federal law if you deny an applicant based on their credit report without sending the notice the FCRA requires. More on that below.

States That Ban Application Fees Outright: Massachusetts and Vermont

Two states do not let you charge this fee at all, in any amount.

Massachusetts limits what you can collect from a tenant before a lease starts to four items under Massachusetts General Laws Chapter 186, Section 15B: first month's rent, last month's rent, a security deposit capped at one month's rent, and the cost of a new lock and key. An application fee, credit-check fee, or background-check fee is not on that list, which means charging one is unlawful in Massachusetts regardless of what you call it.

Vermont is even more direct about it. Under 9 V.S.A. Section 4456a, "a landlord or a landlord's agent shall not charge an application fee to any individual in order to apply to enter into a rental agreement for a residential dwelling unit." The prohibition covers background and credit check costs specifically, not just a specifically labeled charge. If you own property in either state, you absorb the screening cost yourself and build it into your rent, not your application process.

How Much Can You Charge? States That Cap the Fee

Most states that regulate the fee do it with a dollar cap rather than an outright ban.

California caps the fee at a base of $30, adjusted annually for inflation under Civil Code Section 1950.6 — the adjusted figure typically lands in the mid-to-high $60s depending on the year's Consumer Price Index update, so check the current adjusted number before you set your fee. The cap only matters if your real screening cost reaches it; you still cannot charge more than your actual cost.
New York caps the fee at $20 for a background and credit check under Real Property Law Section 238-a, and you must waive the fee entirely if the applicant hands you a background or credit check completed within the prior 30 days.
New Jersey now caps application-related fees at $50 as of May 1, 2026, under a rental application fee cap law the state attorney general has been actively enforcing — landlords or agents who charge more than the cap face a penalty of $1,500 per violation, according to New Jersey Office of the Attorney General guidance. Our New Jersey landlord-tenant laws guide covers the rest of what changed for landlords this year.
Maryland caps the fee at $25 per applicant, and landlords with five or more rental units must accept a compliant portable screening report instead of charging a duplicate fee. Our Maryland landlord-tenant laws guide walks through that threshold in detail.
Illinois passed a new $50 fee cap under House Bill 3564, but it is not yet in effect — the law's effective date was pushed to January 1, 2027 by a companion trailer bill, so Illinois landlords are not bound by that cap yet as of this writing. Separately, Illinois already requires landlords to waive the fee for any applicant who provides a qualifying reusable screening report.

If your state is not on this list, that generally means there is no statutory dollar cap — but as the next section covers, "no cap" does not mean "no rules."

Rental Application Fee Refund Rules: When You Must Return It

A capped fee and a refundable fee are two different things, and several states now require both.

Washington does not set a fixed dollar cap, but RCW 59.18.257 ties the fee to your actual cost: if you order a third-party report, you can only charge what that report actually costs; if you screen applicants yourself, the fee cannot exceed what a screening company would typically charge in your area. You also have to give the applicant written notice — before you screen them — describing what you are checking, how to dispute the results, and which reporting agency you are using. Skip that notice and you forfeit the right to charge a fee at all, and you can be liable for up to $100 plus the applicant's court costs and attorney's fees.

California went further in 2025 with an overhaul of Civil Code Section 1950.6 that gives you exactly two compliant options once you charge a screening fee: either process applications strictly in the order received and stop charging a fee to any applicant you never actually consider, or refund the entire fee to every applicant you do not select — within seven days of choosing a tenant or 30 days of the application, whichever comes first. A flat, always-non-refundable fee is no longer a safe default for a California landlord.

The pattern across states with any refund requirement is the same: a fee is supposed to track a real cost, and if you did not incur that cost for a given applicant — because you never screened them, or the report cost less than you charged — you generally have to give the money back. If you are pricing a listing before applications open, our rental calculator can help you settle on rent first so your fee policy is the last piece, not something you are improvising mid-application.

The FCRA Layer Every Landlord Owes, No Matter the State

Every state fee rule above sits on top of a federal requirement that applies to you no matter where your rental is located: the Fair Credit Reporting Act. The moment you use a credit report, criminal background check, or eviction history report to make any part of a leasing decision, the FCRA requires you to send the applicant an adverse action notice if that decision goes against them in any way.

According to the Federal Trade Commission's consumer guidance on tenant background checks, "adverse action" is broader than a flat denial. It also covers requiring a higher security deposit, requiring a co-signer, or offering less favorable lease terms than you would offer an applicant with a cleaner report — any time a consumer report is a factor, even a minor one. The notice has to identify the screening company you used (name, address, and phone number), tell the applicant they can get a free copy of the report if they ask within 60 days, and explain their right to dispute inaccurate information directly with that company.

There is no statutory waiting period before you send the notice, but sending it promptly — landlord attorneys commonly recommend within about five days of the decision — protects you if the applicant later disputes the denial or files a complaint. Skipping the notice does not just risk a complaint to the FTC; it exposes you to a private lawsuit under the FCRA, separate and apart from anything your state's application fee law covers.

One more thing worth building into your process: apply the same fee and the same screening criteria to every applicant for a given unit. Charging some applicants a fee and waiving it for others — even with good intentions — can look like disparate treatment under fair housing law if it correlates with a protected characteristic, so consistency is not just good practice, it is legal cover.

Building a Compliant Application Fee Policy

Pull the pieces together into one written policy before your next listing goes live:

Check your state's rule first. Confirm whether you are in a ban state (Massachusetts, Vermont), a capped state (California, New York, New Jersey, Maryland, and a growing list of others), or an uncapped state where your fee still has to track actual cost.
Price the fee to your real cost, not the statutory maximum. If your background check vendor charges $35, charging the full $65-plus California allows (or any other state's cap) invites a dispute over reasonableness.
Decide your refund model in advance — first-in-line processing with no fee for unconsidered applicants, or a fee with a guaranteed refund for anyone not selected — and put it in writing so every applicant sees the same terms.
Have your adverse action notice ready before you screen anyone. Waiting until you deny someone to figure out FCRA compliance is how landlords miss the requirement entirely.
Decide your portable-report policy up front. Several states already require you to waive the fee for a compliant reusable report; deciding your standard in advance avoids an inconsistent, case-by-case call that looks arbitrary later.

Getting this right once, in writing, is far cheaper than fixing it after a denied applicant files a complaint. Vantric's free landlord tools can help you apply one screening standard consistently and keep a record of what you charged and why for every application, so you have a clean paper trail if a fee or a denial is ever challenged. If you are ready to put your whole leasing process — applications, fees, and screening decisions — in one place, start a free trial with Vantric.