Property management & leasing
Application Fee: Definition & Example
What Is an Application Fee?
An application fee is a charge a landlord or property manager collects when someone applies to rent, usually to cover the cost of screening and processing the application.
What does application fee mean?
Application fees typically range from about $25 to $75 per adult applicant. The money pays for costs such as background checks, credit reports, income review, and staff time spent processing the file. It is normally non-refundable once screening has started, even if the application is denied.
Many states and cities regulate application fees. Some cap the amount, some require the fee to match the landlord’s actual screening costs, and some require a refund if the landlord never runs the screening. A few jurisdictions also require landlords to accept a reusable screening report instead of charging a new fee.
An application fee is different from a holding deposit. The fee pays for processing. A holding deposit reserves the unit and is usually credited toward rent or the security deposit if the applicant moves in.
Application fee example
A property manager charges $50 per adult applicant. A couple applies together, so they pay $100. The manager spends about $30 per person on a tenant screening report and income review, and the remainder covers staff time. Because their state requires it, the manager gives each applicant a receipt that itemizes the screening costs.
Related terms
- ApplicantAn applicant is a person who formally asks to rent a property, borrow money, or join a program by submitting an application and the information the decision-maker requests.
- Holding DepositA holding deposit is money an applicant pays to take a rental unit off the market while their application is processed or until the lease is signed.
- Tenant ScreeningTenant screening is the process landlords use to evaluate rental applicants, typically by reviewing identity, income, rental history, credit, and background information against written criteria.
- Tenant Screening ReportA tenant screening report is a consumer report a landlord orders from a screening company, usually combining credit, eviction, and criminal record information about a rental applicant.
- Rental CriteriaRental criteria are the written standards a landlord uses to evaluate every applicant, such as minimum income, rental history, credit, and background requirements.
Application fee FAQ
- Are rental application fees refundable?
- Usually not once screening has been done. Some states require a refund if the landlord does not actually run the screening or rents the unit before reviewing the application. Check your state and local rules.
- Is there a legal limit on application fees?
- It depends on where the property is. Several states and cities cap application fees or tie them to actual screening costs, while others set no limit.
