Security Deposits Vs. Move-in Fees: What to Know Before You Move

Moving into a new apartment or rental home is exciting, but it can also be stressful. All the packing, logistics of moving, and making sure you have the finances to cover things like the security deposit and move-in fees takes a lot of physical and mental energy.

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Ensure you're prepared by exploring the differences between security deposits and move-in fees.

What’s an Application Fee?

The first fee you’ll come across in applying for a rental property is an application fee. An apartment or rental application fee is charged by the landlord to the prospective tenant at the time of applying for the property.

The application fee covers the costs of credit checks and other background checks. In some cases, this fee also secures your spot and takes the apartment out of the rental pool while the screening is being done. In other cases, the rental will remain on the market until a lease is signed. Ask the property manager what will happen in your case. Typically, an application fee is nonrefundable, even if you aren’t approved for the apartment in the end.

Application fees are usually in the range of $20 to $100, though some property managers waive them entirely to encourage people to apply. In some jurisdictions, there are laws that limit how much application fees can be, which prevents unscrupulous landlords from collecting a bunch of high application fees, only to deny the applicants the apartment. In Illinois, for example, the fee must be “reasonable,” and it cannot exceed the cost of the necessary background checks.

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What’s a Security Deposit?

You’ve been approved for the apartment! Congratulations! Unfortunately, now is when the costs really start to stack up. At the time of signing the lease, you’ll probably be asked to provide funds for a security deposit.

A security deposit is money you pay to the landlord to ensure you won't damage the property. If the landlord notes damage beyond normal wear and tear after you move out, they can keep part of your security deposit — or the entire thing if the cost to repair the damage is the same or more than the deposit. Any money not used for repairs will be returned to you after you move out. Each state has different rules for how security deposits must be handled and how long the landlord has to either return the deposit or explain why they're keeping it after you move out.

Assuming you give proper notice of your move-out, property managers in Alaska only have 14 days to return your deposit, while in Maryland, they have up to 45 days.

Typically, security deposits are the same as the monthly rent amount, and many states have a cap on how much those deposits can be. For example, in Colorado, the maximum amount for a security deposit is two months’ rent.

What Are Move-In Fees?

Move-in fees are fees required by some landlords when you sign the lease before you move in. These fees are not part of your security deposit or monthly rent. Landlords use these fees to cover their administrative costs and the general upkeep of the building. Common examples of move-in fees include cleaning fees, amenity fees (if the property has a pool, a gym or other common spaces) and pet fees.

Key fees may also be required. Whether landlords are allowed to charge move-in fees and how much they can be depends on the state. Review your state's rules before signing anything to ensure you understand your rights and what landlords are allowed to do.

What Is First (and/or Last) Month’s Rent?

Before you pick up your keys (or before the lease is signed, depending on the agreement), you may be asked to pay for the first month’s rent. If your lease starts May 1, for instance, this payment covers the rent that you would have paid on that date. It’s simply a prepayment of that rent amount.

You could also be asked to pay last month’s rent. This money is a protection for the landlord, in case you decide to stop paying rent in your final month of tenancy. While it adds to the amount of money you’re asked to pay up front, keep in mind that this money truly is earmarked for your last month of rent. The landlord is not allowed to use it for anything other than rent. Not having to pay for your last month in the apartment can be helpful when you’re looking for a new place, and you could use that money for the associated fees.

Whether a property manager is allowed to charge you a security deposit, first month’s rent and last month’s rent depends on state and local laws. Chat with an attorney to make sure you’re not overpaying.

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What Are the Main Differences Between Security Deposits and Move-In Fees?

Security deposits and move-in fees serve different purposes and are governed by different sections of state law. Below are some of the common differences between security deposits and move-in fees to be aware of.

Refundable or Not

Security deposits are technically refundable, but it's common for landlords to hold part or all of your security deposit for repairs after you move out. However, each state has specific guidelines for when this is allowed, and a landlord can't just keep a security deposit without reason or for things that would fall under normal wear and tear.

Move-in fees are generally nonrefundable. In some cases, you may be able to get your move-in fees back if you cancel the lease before actually taking possession, but landlords are typically not required to return these fees or prorate them.

Typical Price Range

Security deposits and move-in fees vary greatly in amount. A security deposit is generally equal to one month's rent. In the United States, the average monthly rent is $1,372 (CAD 1,849).

Move-in fees, on the other hand, are generally 20% to 50% of a month's rent, which means they're generally just a few hundred dollars. Using the national average rent above, that would make the average move-in fees between $275 and $686 (CAD 371 and CAD 925).

When They Need to Be Paid

Generally, both the security deposit and move-in fees need to be paid when you sign the lease. However, if there’s a gap between when you sign the lease and the lease start date, you may not be required to pay some fees (like a pet deposit) until your lease actually begins or you go to pick up the keys. Fees for amenities or having a pet can also be charged on a monthly basis. In some cases, you may have to have your move-in fees paid to secure the apartment, so make sure to ask the landlord when any fees are due.