An earnest deposit shows a landlord you are serious about renting an apartment
An earnest deposit is money you give a landlord or property manager before you sign a lease, to show you intend to move forward with the rental. It is not the same as a security deposit. The earnest deposit is typically smaller — often $200 to $500, though it varies by property and location — and it is held only while you and the landlord are negotiating or while your application is being reviewed.
Once you sign the lease, the earnest deposit is usually applied toward your first month's rent, your security deposit, or both. If you back out of the rental after giving an earnest deposit, you may lose that money, depending on what the written agreement says. If the landlord rejects your application, they must return the earnest deposit to you.
Key Takeaways
- An earnest deposit is money held while a landlord reviews your application or you finalize lease terms, typically $200 to $500.
- Once you sign the lease, the earnest deposit is credited toward your first month's rent, security deposit, or both.
- If you withdraw your application before the lease is signed, you may forfeit the earnest deposit unless the written agreement protects you.
- Always get a written receipt and a clear statement of what happens to the earnest deposit if the deal falls through.
- An earnest deposit is separate from a security deposit and is not the same as a holding fee.
When a landlord asks for an earnest deposit
Landlords typically ask for an earnest deposit when you have passed the initial screening and they are preparing to run a background check, verify your income, or contact your references. It signals that you are a serious candidate and not shopping around to multiple properties at once.
Some landlords ask for an earnest deposit only after you have been approved and are about to sign the lease. Others ask for it upfront, before they even review your application. The timing and amount should be stated in writing before you hand over any money.
What happens to your earnest deposit after you sign
Once you and the landlord sign the lease, the earnest deposit does not stay in a separate account. Instead, it is credited toward your move-in costs. Most commonly, it goes toward your first month's rent or your security deposit. Some landlords credit it to both — for example, $250 toward first month's rent and $250 toward the security deposit.
Ask the landlord in writing how they will apply the earnest deposit before you hand over the money. This prevents confusion on move-in day when you are calculating what you still owe.
What to do if the landlord rejects your application
If the landlord denies your rental application after you have given an earnest deposit, they must return the full amount to you. This is the law in most states. Get a written explanation of why your application was denied, and contact the landlord in writing to request the return of your earnest deposit within a specific timeframe — usually 5 to 10 business days.
If the landlord does not return the money, send a follow-up letter by certified mail with a return receipt. Keep copies of all written communication. If the landlord still refuses, you may file a small claims court case in your county court.
What happens if you change your mind
If you decide not to rent the apartment after giving an earnest deposit but before signing the lease, you may lose the money. The outcome depends on what your written agreement says. Some agreements allow you to withdraw without penalty within a certain number of days. Others state that the earnest deposit is non-refundable if you back out.
Read the earnest deposit agreement carefully before you sign it. If it does not specify what happens if you withdraw, ask the landlord to clarify in writing. Never give an earnest deposit based on a verbal promise.
Earnest deposit vs. security deposit vs. holding fee
These three terms are often confused, but they are different. An earnest deposit is held during the application and lease-signing process and is credited toward move-in costs once you sign. A security deposit is held for the entire lease term and is returned to you after you move out, minus any deductions for damage or unpaid rent. A holding fee is a non-refundable charge some landlords ask for to take the unit off the market while you decide whether to rent it.
Ask the landlord which of these they are asking for. If they use the terms interchangeably or refuse to clarify, that is a red flag. A legitimate landlord will provide a written breakdown of all money you are expected to pay before move-in.
How to protect yourself when giving an earnest deposit
Always get a written receipt that includes the amount, the date, the property address, and the landlord's name. The receipt should state what will happen to the earnest deposit if you sign the lease, if the landlord rejects your application, or if you withdraw your application.
Pay by check or money order, never in cash. This creates a paper trail. Do not wire money unless you have verified the landlord's identity and banking details through the property management company or a phone number listed on the lease itself — not a number the landlord gave you verbally.
If the landlord asks you to send the earnest deposit to a personal bank account or to an address that is not the property management office, pause and verify that request independently. Wire fraud and rental scams often begin with an earnest deposit request.
Frequently Asked Questions
Can a landlord keep my earnest deposit if I change my mind?
It depends on what your written agreement says. Some agreements allow you to withdraw within a set number of days without penalty. Others state the earnest deposit is forfeited if you back out. Always read the agreement before you sign it and ask the landlord to clarify the withdrawal terms in writing.
Is an earnest deposit the same as a security deposit?
No. An earnest deposit is held during the application process and is credited toward your move-in costs once you sign the lease. A security deposit is held for the entire lease term and is returned to you after you move out, minus deductions for damage or unpaid rent. You may be asked for both.
What if the landlord cashes my earnest deposit check but then rejects my application?
The landlord must return your earnest deposit within the timeframe stated in your agreement, usually 5 to 10 business days. If they do not, send a written request by certified mail. If they still refuse, you can file a claim in small claims court in your county.
Can I pay an earnest deposit with a credit card?
Most landlords do not accept credit cards for earnest deposits because they want to avoid processing fees. Check or money order is standard. If a landlord insists on a wire transfer or gift card, that is a warning sign of potential fraud.
What should I do if I lose the earnest deposit receipt?
Contact the landlord or property manager and ask for a copy. Keep all written communication about the earnest deposit, including emails and text messages. If you signed a lease, the earnest deposit credit should appear on your lease or move-in statement.