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Rental housing prices are soaring nationwide―and along with rising rents, would-be renters faceadditional financial hurdles from rental application fees. Landlords typically charge application fees of $20 and up to cover the cost of screening potential tenants.
In today's housing market, finding your new home might require applying for dozens of rentals and paying hundreds of dollars in fees. Rental application fees can quickly eat into your already tight moving budget, but there are ways to reduce their impact. Here's what you should know to minimize rental application fees.
What Are Rental Application Fees For?
To confirm that potential tenants can pay rent, landlords and property managers typically ask for proof of income and conduct a background check for each individual age 18 and up. Rental application fees cover the cost of these background screenings, which generally include a credit check, criminal records check and rental history.
Rental application fees average $45 nationwide, according to TurboTenant, a software platform for landlords, but can vary depending on:
- Background screening: The more screenings are performed, the more a background check costs. Conducting a credit check, criminal background check and rental history check costs more than just a credit check.
- Labor: In addition to charging for the screening, which is typically outsourced to a background check company, some landlords add fees for their labor to pay for the times it takes to order background checks, review the results and process rental applications.
- Location: Most states set no limits on rental application fees. In areas with high rents, landlords may charge correspondingly high application fees. Some states do regulate fees, however: Massachusetts forbids them altogether; New York and Wisconsin limit them to $20; and Delaware limits the fee to 10% of the monthly rent or $50, whichever is greater. In Minnesota and Washington, fees can't exceed the actual cost of the background screening. California sets a maximum fee that changes annually based on the consumer price index.
- Number of tenants: Because separate background checks must be performed for each person, landlords often require a rental application fee for everyone age 18 and up who will live in the rental. This could increase your rental application fees substantially.
Are Rental Application Fees Refundable?
Generally, rental application fees aren't refundable, but some states provide for full or partial refunds in certain situations. For example, in Oregon, landlords must refund your application fee if they don't actually screen you. In California, landlords must give you an itemized receipt of charges, including screening costs and labor. If they spend less than what they charged you, they must refund the difference.
Familiarize yourself with state and local laws regarding rental application fees before beginning your rental search. Local tenants' rights or legal aid organizations can help. The rental application should state whether the rental fee is refundable and when, so carefully read the fine print before you fill anything out. If you still have questions, ask the landlord for clarification.
While it's not exactly a refund, landlords are sometimes willing to apply application fees toward your rent if you end up renting the unit. This can help recoup some of your expenses.
How to Minimize Rental Application Fees
Rental application fees may be unavoidable, but these tips can reduce the cost.
- Be selective. Limit your applications to rentals you're really interested in. Fewer applications mean fewer application fees.
- Apply through rental aggregate services. You can use services such as Apartments.com, Avail, Trulia, Zillow and Zumper to fill out one rental application, pay for one tenant screening and use that information to apply to multiple rentals listed on the site. Before paying, check the site to see if enough potential rentals accept these applications, and clarify any limitations. For instance, Apartments.com charges $29 plus tax to apply to up to 10 participating rental listings for up to 30 days. Landlords may charge additional fees; ask about this before you apply for a rental.
- Find out if the fee is refundable. Confirm what you must do to get the refund, such as getting copies of receipts.
- Seek financial assistance. States, cities and nonprofit local housing organizations may offer financial assistance with rental application fees. Find local housing organizations through the Department of Housing and Urban Development, by contacting your state or city housing authority, or by searching online for charitable organizations.
- Apply to smaller properties. Individual landlords may be more willing to negotiate than large property management companies. However, laws may limit landlords' flexibility. Charging application fees for some applicants but not for others can violate the federal Fair Housing Act, which prohibits discrimination in housing.
- Calculate your odds. Before submitting a rental application, find out how many people have applied for the unit or how many applications are expected. In tight housing markets, landlords may receive hundreds of applications for a single unit. If you're facing stiff competition and a non-refundable application fee, consider looking elsewhere.
- Beware of scams. To avoid losing a rental fee to fraud, know the amount and purpose of the fee before you pay. Never pay a fee to view a rental property. Also, be wary of landlords who don't conduct credit checks. They could be trying to attract tenants with poor credit and few options to substandard housing.
How to Save to Cover Rental Application Fees
Building rental application fees into your housing budget helps prevent sticker shock. To save money for rental application fees:
- Create a budget. Develop a budget that accounts for the costs of your housing search, such as application fees, first and last months' rent, and security deposits. This will also help determine your maximum rent budget.
- Eliminate extras. Reducing extraneous expenses is an easy way to save. Try entertaining at home instead of going out, finding free family activities, giving up your morning latte or foregoing new clothes, even just for a little while.
- Cancel unused subscriptions. Search for subscriptions or memberships you aren't using, such as streaming services or gyms, and cancel them.
- Tighten your belt. If the above measures aren't enough to build your rental application fund, get serious about cost-cutting.
- Cut back on utility use.
- Carpool to work instead of driving.
- Switch to a budget grocery store and look for coupons and sales.
- Join a buy-nothing group.
- Tap into savings. Your housing search may require breaking into your savings account (that's what it's there for, after all). Just be sure to make a budget for replenishing your savings after you move in.
Ready, Set, Rent
The average renter had a credit score of 638 in 2020, according to apartment industry blog RENTCafé; in some big cities, scores average over 700. If your credit score doesn't pass muster, you could lose your application fee and not have an apartment to rent.
Avoid this risk by checking your credit report to make sure it's complete and accurate before starting your rental search. If you see anything unusual, dispute it with your lender or the credit bureau on whose report the information appears. Also check your credit score and, if necessary, take steps to improve your credit before applying for rentals. Experian Boost®ø, a free service that gives you credit for on-time payments of utility, streaming and cellphone bills, can help improve your score quickly and without any extra effort on your part.