How to Choose a Security Deposit Amount
December 31, 2022The security deposit is your first line of financial protection against unpaid rent or property damage, but setting the right amount means balancing real protection against staying competitive with what applicants are willing (and legally required) to pay.
Check your state's legal maximum first
Many states cap security deposits at a set number of months' rent — commonly one to two months, though some states have no cap at all and others set lower limits for furnished units or higher limits for tenants with pets. This limit, where one exists, is the ceiling you're working within before considering strategy.
One month's rent is the most common baseline
Absent a specific reason to go higher, charging the equivalent of one month's rent is the most common practice nationally, since it's a familiar figure to applicants and easy to budget for both sides — a higher deposit can reduce your applicant pool, particularly among otherwise qualified tenants who simply can't front more cash upfront.
Consider a higher deposit for higher-risk situations
A thinner credit history, a shorter employment history, or a first-time renter can justify a higher deposit (where legally permitted) as additional protection, rather than declining the application outright — just make sure whatever criteria triggers a higher deposit is applied consistently, not selectively.
Pet deposits are often handled separately
Many landlords charge an additional pet deposit or pet fee on top of the standard security deposit, within whatever limit their state allows — check whether your state treats pet deposits as part of the overall deposit cap or as a separate allowance.
Frequently Asked Questions
Is there a legal limit on security deposit amounts?
In many states, yes — commonly capped at one to two months' rent, though the specific limit (and whether one exists at all) varies significantly by state. Check your specific state's rule before setting an amount.
Can I charge a higher deposit for a tenant with a pet?
Many states allow an additional pet deposit on top of the base security deposit, subject to whatever overall cap applies. Some states count it toward the same cap as the standard deposit, so check your specific state's treatment of pet deposits.
Should I charge less than the maximum allowed deposit?
It can widen your applicant pool, since a high deposit is a real barrier for many otherwise-qualified renters. Many landlords settle on one month's rent as a competitive middle ground rather than charging the full legal maximum by default.
Can I require a higher deposit from a specific applicant?
Yes, if it's based on legitimate, consistently applied screening criteria — like credit history or income — rather than a protected characteristic. Document the criteria in writing and apply it the same way to every applicant who meets that criteria, to stay compliant with Fair Housing law.
Is first month, last month, and security deposit all required upfront?
It's a common practice but not universally required — whether you require first month, last month, and a security deposit, or just first month and deposit, is a business decision within whatever your state's overall deposit cap allows.