Security Deposit Assistance Programs: A Landlord’s Guide

Written for landlords and property managers. Federal text below is quoted from the Code of Federal Regulations as in force 1 August 2026. You are reading this in 2026 — if that is later than the date just given, re-check any figure before relying on it, because these rules are amended.

Watch: Security Deposit Assistance Programs — What Landlords Actually Get Paid explained

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What deposit assistance is, and who actually pays whom

“Security deposit assistance” is a catch-all for programmes that cover a renter’s move-in costs when they cannot cover them out of pocket. From the tenant’s side it looks like a single question — who will help me pay this? From the landlord’s side it is a different question entirely, and one that almost nothing written on this subject answers: what am I agreeing to when I accept it?

Most published guidance on deposit assistance is written for the renter. It lists charities to call and programmes to apply for. That guidance is not wrong, but it leaves a landlord with no way to answer the practical questions that decide whether a placement works: how much will actually arrive, when, from whom, whether it comes to you or to the tenant, whether it changes what you may charge, and whether it changes what you must do when the tenancy ends.

Those questions have answers, and most of them are written into federal regulations rather than into a programme’s brochure. The rules below are quoted directly from the Code of Federal Regulations — Title 24, the HUD title, and Title 38 for the VA’s veterans programme — as in force on 1 August 2026.

One structural point first, because it prevents the most common misunderstanding. Deposit assistance is nearly always administered locally: by a public housing agency, a city or county department, a community action agency, or a non-profit that has been awarded federal grant money. The federal rules set the outer limits; the local administrator sets the process. So the answer to “what is the programme in my area” is always local, but the answer to “how much can it pay and what strings come with it” is usually federal, and that is the part you can learn once and rely on.

The federal programmes that can pay a deposit — and what each one caps

Four federal funding streams explicitly allow grant money to be spent on a security deposit (a fifth route exists inside the voucher programme when a PHA relocates a family, covered below). Three of them state the same limit; the fourth, which serves veterans, works differently and is the one landlords most often meet without recognising it.

Programme	What it may pay toward a deposit	Authority
Emergency Solutions Grants (ESG)	A security deposit “equal to no more than 2 months’ rent”. May also pay the rental application fee, and last month’s rent (capped at one month) “at the time the owner is paid the security deposit and the first month’s rent”.	24 CFR § 576.105(a)
Continuum of Care (CoC)	Security deposits “in an amount not to exceed 2 months of rent”, plus an advance payment of the last month’s rent in addition to the deposit and first month’s rent.	24 CFR § 578.51(a)(2); § 578.49(b)(4)
HOME tenant-based rental assistance	Loans or grants for security deposits, whether or not the jurisdiction provides any other tenant-based rental assistance under that section. HOME funds for the deposit “may not exceed the equivalent of two month’s rent for the unit”.	24 CFR § 92.209(j)
Supportive Services for Veteran Families (SSVF)	Security and utility deposits, with no two-month cap in the regulation. A participant may receive deposit assistance “a maximum of one time in every 2-year period”. Payment is mandatory to you, not optional.	38 CFR § 62.34(c)

Supportive Services for Veteran Families

SSVF is a VA programme rather than a HUD one, which is why it is missing from most guidance written around the HUD streams — and why a landlord can take an SSVF placement without ever learning that its rules differ. Two of those differences matter commercially.

“(c) Deposits. Payment of security deposits or utility deposits to help the participant remain in permanent housing or obtain permanent housing. (1) A participant may receive assistance with the payment of a security deposit a maximum of one time in every 2-year period … (3) Any security deposit or utility deposit must be paid by the grantee directly to the third party to whom the security deposit or utility deposit is owed.”

38 CFR § 62.34(c)

First, the regulation sets no two-month ceiling. That is not the same as saying there are no limits: your state’s cap still binds, the grantee’s own budget and VA programme guidance set what it will actually pay, and part 62 attaches conditions of its own — the deposit “must allow the participant to remain in the participant’s existing permanent housing or help the participant to obtain and remain in permanent housing selected by the participant” (§ 62.34(c)(3)), and under § 62.36(f)(1) a grantee paying a deposit for a participant moving into a new unit “will be required to conduct initial and any appropriate follow-up inspections of the housing unit”. Expect an inspection — the regulation says inspections “should occur no later than three (3) working days after the housing unit has been identified to the SSVF grantee” — unless the unit already has one that counts: under § 62.36(f)(2) an inspection “conducted pursuant to the requirements of a Federal, State, or local housing program” (HOME and the low-income housing tax credit programme among them) is valid for this purpose if, cumulatively, the unit “was determined to meet the requirements regarding housing quality or safety applicable to properties assisted under such program”, the inspection “was conducted within the past 2 years”, and — for a State or local programme only — the PHA has certified to the Secretary that its standard gives the same or greater protection. Second, and unlike HOME, direct payment is not a discretion to be negotiated: the deposit “must be paid by the grantee directly to the third party to whom [it] is owed”, which in a tenancy is you. If an SSVF grantee proposes routing the money through the veteran instead, that is worth questioning against the regulation. Do not assume the grantee pays all of it: “Grantees may require participants to share in the cost of the security deposit or utility deposit as a condition of receiving assistance” (§ 62.34(c)(6)), so ask whether a veteran contribution is expected and who collects it. SSVF also runs the stacking rule the opposite way from ESG and CoC: deposits “covering the same period of time in which assistance is being provided through another housing subsidy program are eligible, as long as they cover separate cost types” (§ 62.34(c)(5)); and where SSVF pays rental assistance the rent “must not be in excess of rents being charged by the property owner during the same time period for comparable non-luxury unassisted units” (§ 62.34(a)(4)). The once-in-two-years limit is also worth knowing, because it means a veteran who has already used the assistance cannot draw on it again for a subsequent move inside that window.

Emergency Solutions Grants

ESG is the programme most often behind a rapid-rehousing placement. Its financial-assistance rule is unusually explicit about move-in costs, and it is worth reading in full because it names three separate things a landlord may receive. One limit sits outside it: under § 576.105(d) this assistance “cannot be provided to a program participant who is receiving the same type of assistance through other public sources”, so an ESG deposit will not stack on a deposit another public programme is already paying. And the unit has a standard to meet: “when ESG funds are used for permanent housing under 24 CFR 576.105 or 576.106, the minimum standards in 24 CFR 5.703 apply”, subject to stated exceptions (§ 576.403(c)) — so expect the recipient to check the unit against HUD’s physical-condition standards before it pays. One of those exceptions is worth knowing: if an inspection finds deficiencies, “ESG funds must not be used … with respect to that housing unless the owner corrects the deficiencies within 30 days from the date of the initial inspection” and the recipient verifies the correction (§ 576.403(c)(3)).

“(2) Security deposits. ESG funds may pay for a security deposit that is equal to no more than 2 months’ rent. (3) Last month’s rent. If necessary to obtain housing for a program participant, the last month’s rent may be paid from ESG funds to the owner of that housing at the time the owner is paid the security deposit and the first month’s rent. This assistance must not exceed one month’s rent…”

24 CFR § 576.105(a)(2)–(3)

The clause the ellipsis omits is an accounting limit rather than a landlord-facing one: the last month’s rent “must be included in calculating the program participant’s total rental assistance, which cannot exceed 24 months during any 3-year period” — worth knowing if you are relying on a placement continuing.

The same subsection also allows ESG funds to pay “the rental housing application fee that is charged by the owner to all applicants” — note the condition inside that phrase. The fee has to be one you charge all applicants. A fee applied selectively is not an eligible cost, and that is a useful reminder that your own screening practice needs to be uniform for reasons that go well beyond this programme. If you are setting or reviewing that practice, our guide to tenant screening laws by state covers where state law constrains what you may charge and collect.

Continuum of Care

CoC money reaches landlords through two different routes in the regulation, and both carry the same ceiling. The ceiling is not the only condition: CoC rental assistance carries its own rent-reasonableness test — “HUD will only provide rental assistance for a unit if the rent is reasonable”, judged “in relation to rents being charged for comparable unassisted units”, and “reasonable rent must not exceed rents currently being charged by the same owner for comparable unassisted units” (§ 578.51(g)) — so your own unassisted rents set the ceiling — and under § 578.51(l)(1) “program participants must enter into a lease agreement for a term of at least one year, which is terminable for cause”, automatically renewable for terms of at least a month “except on prior notice by either party”. A month-to-month initial term, or a no-cause termination clause operating inside the first year, does not fit that — after the first year the lease renews in terms of at least a month “except on prior notice by either party”; the one exception to the one-year term is transitional housing, where § 578.51(l)(2) allows a term of at least one month up to a maximum of 24 months. Under the leasing route the rent “may not exceed HUD-determined fair market rents” as well (§ 578.49(b)(2)), and where CoC pays rental assistance the recipient must ensure the owner “provides the notice and certification form described in 24 CFR 5.2005(a) to the program participant with any notification of eviction” (§ 578.99(j)(4)(ii)). Two more conditions sit in the same part. Before any assistance is paid the recipient “must physically inspect each unit to assure that the unit meets 24 CFR 5.703”, and “assistance will not be provided for units that fail to meet 24 CFR 5.703, unless the owner corrects any deficiencies within 30 days from the date of the initial inspection”, with re-inspection “at least annually” (§ 578.75(b)). And CoC rental assistance “cannot be provided to a program participant who is already receiving rental assistance, or living in a housing unit receiving rental assistance or operating assistance through other federal, State, or local sources” (§ 578.51(a)(1)) — the same no-stacking rule ESG has. Under the leasing rules:

“(4) Security deposits and first and last month’s rent. Recipients and subrecipients may use grant funds to pay security deposits, in an amount not to exceed 2 months of actual rent. An advance payment of the last month’s rent may be provided to the landlord in addition to the security deposit and payment of the first month’s rent.”

24 CFR § 578.49(b)(4)

And under the rental assistance rules:

“(2) Grant funds may be used for security deposits in an amount not to exceed 2 months of rent. An advance payment of the last month’s rent may be provided to the landlord, in addition to the security deposit and payment of first month’s rent.”

24 CFR § 578.51(a)(2)

Read the phrase “in addition to” carefully, because it is the part that matters commercially. The last month’s rent is not carved out of the two-month deposit allowance; it sits on top of it. As a matter of federal programme rules, a CoC placement can therefore fund first month’s rent, last month’s rent, and a deposit of up to two months.

Massachusetts: the conditions are where the real exposure sits

It is easy to read § 15B(1)(b) as a quantity rule and stop there. The quantity is the least dangerous part. Clause (iii) permits that one-month deposit only “provided that such security deposit is deposited as required by subsection (3) and that the tenant is given the statement of condition as required by subsection (2)” — and those conditions, not the ceiling, are what carry the severe remedies.

§ 15B(6) makes a lessor forfeit the right to retain any part of the deposit — and to counterclaim for damage — where the lessor fails to hold the funds in the account subsection (3) requires, fails to furnish, within thirty days of the end of the occupancy, the itemised list of damages “in compliance with the provisions of this section” — which under § 15B(4) means a list “sworn to by the lessor or his agent under pains and penalties of perjury, itemizing in precise detail the nature of the damage and of the repairs necessary to correct such damage, and written evidence, such as estimates, bills, invoices or receipts” — uses a lease provision conflicting with the section and attempts to enforce it — or attempts to obtain from the tenant “a waiver of any provision of this section” — fails to transfer the deposit to a successor, or fails to return the balance within thirty days of termination. § 15B(7) then awards damages “equal to three times the amount of such security deposit or balance thereof to which the tenant is entitled plus interest at the rate of five per cent … together with court costs and reasonable attorney’s fees” for failures under clauses (a), (d) or (e) of subsection (6).

So the sequence that gets a Massachusetts landlord into trouble is not usually over-collection. It is taking a lawful deposit and holding it in the operating account — a § 15B(6)(a) failure, which forfeits the right to retain any of it and, under § 15B(7), trebles the exposure. Skipping the statement of condition is a separate breach: it is a condition of the (1)(b)(iii) deposit itself, not one of the five forfeiture triggers, but a landlord without one has no agreed baseline for any damage deduction. There is an earlier trap on the same path: § 15B(3)(a) requires that “a receipt shall be given to the tenant within thirty days after such deposit is received by the lessor which receipt shall indicate the name and location of the bank in which the security deposit has been deposited and the amount and account number of said deposit”, and “failure to comply with this paragraph shall entitle the tenant to immediate return of the security deposit” — before any question of damage arises. Exceeding the § 15B(1)(b) ceiling is itself a breach of that subsection rather than an automatic treble-damages case — but the conditions attached to the permitted deposit are a direct route to one.

Last month’s rent carries its own duties in Massachusetts. Because these programmes fund an advance of last month’s rent, this matters the moment you accept one. § 15B(2)(a) requires a receipt at the time of payment stating, among other things, “that the tenant is entitled to interest on said rent payment at the rate of five per cent per year or other such lesser amount of interest as has been received from the bank where the deposit has been held”, and the lessor must pay that interest annually — at 5%, or at the lower rate the bank actually paid. Failure to pay it within thirty days after the tenancy ends yields damages of three times the interest owed, plus costs and fees. A landlord who takes CoC- or ESG-funded last month’s rent and issues no receipt has started that clock.

HOME tenant-based rental assistance

HOME is the programme with the most detailed deposit rules, and the one most often described incorrectly. Its deposit subsection, § 92.209(j), runs to six paragraphs; the first three decide the questions landlords ask most:

“(1) A participating jurisdiction may use HOME funds provided for tenant-based rental assistance to provide loans or grants to very low- and low-income families for security deposits for rental of housing units whether or not the participating jurisdiction provides any other tenant-based rental assistance under this section. (2) The relevant State or local definition of ‘security deposit’ in the jurisdiction where the unit is located is applicable for the purposes of this part, except that the amount of HOME funds that may be provided for a security deposit may not exceed the equivalent of two month’s rent for the unit. (3) Only the prospective tenant may apply for HOME security deposit assistance, although the participating jurisdiction may pay the funds directly to the tenant or to the landlord.”

24 CFR § 92.209(j)(1)–(3)

Three consequences follow directly, and each answers a question landlords routinely ask.

Deposit assistance can arrive on its own. Subsection (1) says HOME deposit help may be provided “whether or not” the jurisdiction provides other rental assistance. A tenant can therefore come to you with a funded deposit and no ongoing subsidy at all, which means you should not assume a deposit-assistance tenant is a subsidised tenant for the life of the tenancy.

You cannot apply on the tenant’s behalf. Subsection (3) restricts the application to the prospective tenant. A landlord who wants a placement funded has to point the applicant at the administering jurisdiction, not apply for them.

But the money can come straight to you. The same subsection lets the jurisdiction pay the funds “directly to the tenant or to the landlord”. Direct payment is a decision the administrator makes, so it is worth asking early — it is the difference between a deposit that is definitely in your account on day one and one that depends on the tenant passing it along.

Two separate limits, and only one of them is yours

This is the single most-mangled point in everything written about deposit assistance. The programme cap and your legal ceiling are different limits, doing different jobs, and neither one sets the other. HOME makes the relationship visible, because its deposit paragraph defers to state law on what a security deposit even is:

“The relevant State or local definition of ‘security deposit’ in the jurisdiction where the unit is located is applicable for the purposes of this part, except that the amount of HOME funds that may be provided for a security deposit may not exceed the equivalent of two month’s rent for the unit.”

24 CFR § 92.209(j)(2)

Note precisely what that does and does not say. It adopts your state’s definition of a security deposit for HOME purposes, and it caps the HOME funds at two months’ rent. It says nothing about the maximum a landlord may charge — that is governed by your state’s own deposit statute, which binds you whether or not any programme is involved. Both things are true at once, and the practical consequence runs in two directions:

• Where your state caps deposits below two months, that lower figure is your ceiling. The programme funds up to it and no further, because there is nothing lawful left to fund.
• Where your state caps above two months, or sets no cap at all, you may lawfully charge more than the programme will pay — but do not assume every programme will fund two months toward a larger deposit. HOME caps “the amount of HOME funds that may be provided” (§ 92.209(j)(2)), so a partial contribution fits its words. ESG’s text is that funds “may pay for a security deposit that is equal to no more than 2 months’ rent” (§ 576.105(a)(2)) — on its face a condition on the deposit itself, not a cap on the payment — and CoC’s “in an amount not to exceed 2 months of rent” reads either way. Where your deposit exceeds two months, ask the administrator in writing whether it will fund any of it before you quote the figure. A number of states set no statutory ceiling on residential deposits, and in those the limits are the market, your own written policy, any local ordinance, and — for a voucher tenancy — whatever your PHA has adopted under § 982.313(b), quoted below — so check your state’s rule rather than assuming a national figure.

The error to avoid is treating the federal number as your permission slip in either direction. It is not a ceiling on your charge, and it is not a floor either.

Alabama is a clean illustration. Its statute caps the deposit at one month, with named exceptions:

“A landlord may not demand or receive money as security, in an amount in excess of one month’s periodic rent, except for pets, changes to the premises, or increased liability risks to the landlord or premises, for tenant’s obligations under a rental agreement.”

Ala. Code § 35-9A-201(a)

Alabama’s text above was verified against published copies of the code current to 2025 (last amended by Act 2014-279); the state’s own legislative site could not be read directly. Confirm the current text before relying on it.

An Alabama landlord letting to a tenant with ESG or HOME deposit assistance cannot collect two months simply because the programme is willing to fund it. The state cap of one month binds, and the programme funds up to that. The exceptions in the Alabama statute — pets, alterations, increased liability risk — are also a reminder that a state “cap” is frequently conditional rather than flat, which is exactly why a single national number is unsafe to rely on.

Because these caps vary so much, and because several are conditional on the length of the tenancy, the age of the tenant, or whether the unit is furnished, we publish the rule for each jurisdiction separately rather than summarising them here. See security deposit laws by state for the cap, the return deadline and the statutory citation for your state, and security deposit interest requirements for the jurisdictions that require you to hold the money in a particular way or pay interest on it.

Housing Choice Vouchers: what you may collect, and what you must do

Section 8 Housing Choice Voucher tenancies are governed by their own deposit rule, and it is short enough to read in full. It is also the rule least often quoted in guidance aimed at landlords, which is unfortunate, because it contains an obligation that does not exist in most private tenancies. (It is not the only deposit provision in part 982: § 982.404(e)(3) lets a PHA use withheld and abated assistance payments to fund a security deposit for a family it is relocating out of a unit that failed inspection, and in that case it “may require the family to remit the security deposit returned by the owner of the new unit” when the lease ends — a federal arrangement under which a deposit lawfully flows back to the programme — capped at “the amount of the security deposit assistance provided by the PHA for that unit”, applicable to HAP contracts “executed on or after or renewed after June 6, 2024” (§ 982.404(f)) — and it runs through the family, not the landlord. HOME has its own version: deposit assistance “may be provided as a grant or as a loan”, and loan repayments are programme income (§ 92.209(j)(4)).)

“(a) The owner may collect a security deposit from the tenant. (b) The PHA may prohibit security deposits in excess of private market practice, or in excess of amounts charged by the owner to unassisted tenants. (c) When the tenant moves out of the dwelling unit, the owner, subject to State or local law, may use the security deposit, including any interest on the deposit, in accordance with the lease, as reimbursement for any unpaid rent payable by the tenant, damages to the unit or for other amounts the tenant owes under the lease. (d) The owner must give the tenant a written list of all items charged against the security deposit, and the amount of each item. After deducting the amount, if any, used to reimburse the owner, the owner must refund promptly the full amount of the unused balance to the tenant. (e) If the security deposit is not sufficient to cover amounts the tenant owes under the lease, the owner may seek to collect the balance from the tenant.”

24 CFR § 982.313

Four things follow.

You may charge a deposit. Subsection (a) settles a question that comes up constantly. A voucher does not eliminate the deposit; the tenant remains responsible for it.

Your housing authority may cap it by comparison. Subsection (b) is a permission granted to the PHA, not a federal cap and not a duty imposed on you. Until a PHA actually exercises it, it constrains nothing. But where one does, the benchmark is either “private market practice” or “amounts charged by the owner to unassisted tenants” — and that second benchmark is worth internalising, because it makes your own pricing of unassisted units the yardstick applied to your assisted ones. Ask your PHA whether it has adopted such a policy; the answer varies between authorities.

Charging a higher deposit because an applicant holds a voucher is a separate and more serious question, and § 982.313(b) does not answer it — though where your PHA has exercised (b), a deposit above what you charge unassisted tenants is barred on that ground alone. Where that is unlawful, the authority is a state or local source-of-income statute, not this regulation. Those exist in some jurisdictions and not others — see landlord-tenant laws by state.

State law still governs how you use it. Subsection (c) applies the deposit “subject to State or local law”. The federal rule does not displace your state’s deduction rules, its return deadline or its penalty provisions — it sits on top of them.

The itemisation duty is federal and unconditional. Subsection (d) requires a written list of every item charged against the deposit and the amount of each, and prompt refund of the balance. Many states impose a similar duty, but not all do, and the ones that do vary in what triggers the clock. In a voucher tenancy the itemised statement is required regardless. If you need a defensible format, our security deposit itemization form produces one, and how to handle a security deposit dispute covers what happens when the tenant contests the figures.

Deposit insurance and surety bonds: barred by the tenant, not just by the building

Deposit alternatives — surety bonds, deposit insurance, and similar instruments sold as a replacement for cash up front — are marketed heavily to landlords, and general guidance on deposit assistance routinely lists them as an option. Where HOME is involved they are not an option, and the scope of the bar is wider than most landlords assume.

The provision that matters most here is the one that attaches to the tenant rather than to the building:

“(6) Surety bonds, security deposit insurance, or instruments similar to surety bonds or security deposit insurance may not be used in lieu of or in addition to a security deposit in units occupied by tenants receiving tenant-based rental assistance.”

24 CFR § 92.209(j)(6)

Read the trigger carefully: units occupied by tenants receiving tenant-based rental assistance. It does not ask whether your building received HOME funds. An ordinary private-market unit, with no HOME money in it at all, falls inside this rule the moment it is occupied by a tenant receiving HOME tenant-based assistance — and § 92.209(j) is the paragraph under which security-deposit assistance itself is provided. The rule is addressed to the participating jurisdiction, which operates the programme; for a deposit-only placement it reaches you through (g), imported by (j)(5) — the tenant must have a lease the jurisdiction finds compliant — so in practice a landlord whose portfolio contains no HOME-assisted units meets it as a condition of the placement being funded.

Three further provisions surround it. The first is also tenant-triggered, despite sitting in the list of things HOME funds may not pay for — note its parenthetical, which confirms that deposit assistance counts as tenant-based rental assistance for this purpose:

“(10) Pay for surety bonds, security deposit insurance, or instruments similar to surety bonds or security deposit insurance, in lieu of or in addition to a security deposit in units occupied by tenants receiving tenant-based rental assistance (including assistance in paying security deposits).”

24 CFR § 92.214(a)(10)

— a restriction on spending rather than on use, but scoped to the same tenants as (j)(6), not to the building. The second is the genuinely building-scoped one, a flat prohibition on their use in HOME-assisted units:

“Surety bonds, security deposit insurance, or instruments similar to surety bonds and security deposit insurance may not be used in lieu of or in addition to a security deposit in HOME-assisted units.”

24 CFR § 92.252(i)

And the third is addressed to the participating jurisdiction, which must write the bar into its agreements with the owners of HOME projects:

“(3) The participating jurisdiction must prohibit project owners from charging for: (i) Surety bonds, security deposit insurance, or instruments similar to surety bonds or security deposit insurance, in lieu of or in addition to a security deposit in units; (ii) Fees that are not customarily charged in rental housing…; and (iii) Fees to inspect units or correct deficiencies in the property condition of units or common areas of the project that were not caused by the tenant or are only due to normal wear and tear.”

24 CFR § 92.214(b)(3)

Clauses (ii) and (iii) are worth reading even if deposit alternatives are irrelevant to you: in a HOME project you may not charge fees that are not customary in rental housing, nor charge the tenant to inspect the unit or to correct conditions they did not cause.

The phrase “in lieu of or in addition to” appears in all four. The prohibition is not limited to using a bond as a substitute for the deposit; layering a bond on top of a normal deposit is barred as well. A blanket policy of requiring deposit insurance across your whole portfolio will therefore collide with these rules in two distinct situations — in any HOME-assisted unit, and with any tenant receiving HOME tenant-based assistance wherever they live.

Accepting HOME deposit money brings lease conditions with it

This is the part landlord guidance rarely covers, and it is where the conditions sit. Taking HOME deposit assistance is not just a payment; it imports a set of conditions on the tenancy itself, through a short chain of cross-references:

“(5) Paragraphs (b), (c), (d), (f), (g), and (i) of this section are applicable when HOME funds are provided for security deposit assistance, except that income determinations pursuant to paragraph (c)(1) of this section and inspections pursuant to paragraph (i) of this section are required only at the time the security deposit assistance is provided.”

24 CFR § 92.209(j)(5)

Paragraph (g) is the one to read next:

“(g) Tenant protections. The tenant must have a lease that complies with the requirements in § 92.253. Upon termination of the rental assistance contract, the HOME tenant-based rental assistance tenancy addendum shall automatically terminate.”

24 CFR § 92.209(g)

Paragraph (5) also imports (f), and that one decides whether your placement happens at all:

“(f) Rent reasonableness. The participating jurisdiction must disapprove a lease if the rent is not reasonable, based on rents that are charged for comparable unassisted rental units.”

24 CFR § 92.209(f)

Note “must disapprove” — this is not a discretion. If the jurisdiction finds your asking rent “not reasonable, based on rents that are charged for comparable unassisted rental units”, it is required to refuse the lease, and it applies where HOME money is paying only the deposit. It is a reason a funded placement can collapse after you have held the unit, and it is worth asking about before you agree to hold anything.

Back to (g): if HOME funds pay the deposit, the lease has to comply with § 92.253 — and § 92.253(b) sets out prohibited lease terms. Several are clauses that appear routinely in commercial-off-the-shelf residential leases. The lease may not contain, among others:

• Agreement to be sued — “Agreement by the tenant to be sued, to admit guilt, or to a judgment in favor of the owner in a lawsuit brought in connection with the lease”;
• Excusing owner from responsibility — an agreement “not to hold the owner or the owner’s agents legally responsible for any action or failure to act, whether intentional or negligent”;
• Waiver of notice — “Agreement of the tenant that the owner may institute a lawsuit without notice to the tenant”;
• Waiver of legal proceedings — agreement that the owner may evict “without instituting a civil court proceeding in which the tenant has the opportunity to present a defense”;
• Waiver of a jury trial — “Agreement by the tenant to waive any right to a trial by jury”.

The list runs to nine items. One of them is worth quoting in full, because it is routinely misread in both directions:

“(8) Tenant chargeable with cost of legal actions regardless of outcome. Agreement by the tenant to pay attorney’s fees or other legal costs even if the tenant wins in a court proceeding by the owner against the tenant. The tenant, however, may be obligated to pay costs if the tenant loses”

24 CFR § 92.253(b)(8)

So the federal rule does not bar an ordinary loser-pays clause — the regulation says so expressly. What it bars is the one-way version under which the tenant pays your costs whatever the outcome. That is a carve-out from a federal prohibition, not a permission against state law, and the same caution this page applies to deposit figures applies here. In Massachusetts, G.L. c. 186 § 20 provides that wherever a residential lease lets the landlord recover attorneys’ fees “there shall be implied in such lease a covenant by the landlord to pay to the tenant the reasonable attorneys’ fees and expenses incurred by the tenant … in the successful defense of any action or summary proceeding commenced by the landlord”, and “any waiver of this section shall be void as against public policy”. New York Real Property Law § 234 implies the same reciprocal covenant and adds that “a landlord may not recover attorneys’ fees upon a default judgment” (with a carve-out in subdivision 2 for co-operative unit owners and shareholders, where fees “may be awarded to either party in the event of default judgment”). A fee clause you keep in because federal law allows it may cut against you under your state’s. If your standard lease carries a jury-trial waiver, or a costs clause that bites even when the tenant wins, it is not compliant and the fix is a lease change rather than a signature.

§ 92.253(c) additionally requires good cause to terminate or refuse to renew, and written notice specifying the grounds served at least 30 days beforehand — and good cause “does not include an increase in the tenant’s income”. (c) addresses itself by its own terms to “a tenant of rental housing assisted with HOME funds”, but two provisions carry it into a deposit-only tenancy: (g), imported by (j)(5), requires a lease that complies with § 92.253 as a whole; and § 92.3(d)(4), quoted in the box below, names “the tenant protections provided in § 92.253, including … § 92.253(b) through (d)” as applying where the jurisdiction “entered into an agreement to provide security deposit assistance on or after April 20, 2025”. Plan on needing good cause and 30 days’ written notice specifying the grounds, not the shorter no-cause notice your state may otherwise allow. Ask the participating jurisdiction what it requires in writing before you sign.

The Choice in Affordable Housing Act: enacted, but not what most sources say it does

Guidance on this subject frequently cites the Choice in Affordable Housing Act as a source of landlord incentives, including help with deposits. The name is now law — and the incentives are not.

It was enacted as section 405 of Public Law 119-101, the 21st Century ROAD to Housing Act, which became law without the President’s signature on 11 July 2026, under the section heading “Choice in Affordable Housing Act”. It carries no separate short-title clause, so the accurate way to cite it is as section 405 of the 21st Century ROAD to Housing Act, Pub. L. 119-101, rather than as a free-standing Act.

The phrase “security deposit” does not appear anywhere in that public law. The landlord incentive fund and the deposit-related provisions that appeared in the standalone bills over several Congresses were not carried into the enacted text. So if a source tells you this Act will pay you a signing bonus for accepting a voucher, or fund a tenant’s deposit, that is still wrong — but for a different reason than “it never passed”.

What section 405 does enact is worth knowing, because it addresses the delay problem described further down this page:

• Early inspection for landlords new to the voucher programme. It adds a provision under which, at the request of a “new landlord” — defined as an owner who has not previously entered into a housing assistance payment contract with a PHA — the agency may inspect the unit before any tenant selects it. A passing inspection satisfies the housing-quality-standards requirement if the landlord signs a lease with an assisted tenant within 60 days of that inspection.
• A list of pre-inspected units given to each family. When a PHA selects a family for the voucher programme, it “shall include in the information provided to the family a list of dwelling units that have been inspected” under that provision and found to meet the standards.
• Inspections done under other programmes can count. A unit is deemed to meet voucher inspection requirements if it was inspected and passed within the preceding 12 months under the low-income housing tax credit, the HOME programme, or the Rural Housing Service — provided the PHA “is able to obtain the results of the inspection”. For tax-credit buildings only, an inspection the PHA “performed … itself” also counts.
• Remote or video inspections in rural or small areas. For a unit “located in a rural or small area”, the Secretary “may allow a grantee to conduct a remote or video inspection” provided it “is thorough”, “does not misrepresent the condition of the unit” and gives enough information “to fully and accurately evaluate the conditions of the unit”.

For a landlord weighing a voucher placement, the first two are the practical change: the inspection that would otherwise hold your unit off the market can be requested up front, and doing so puts you on a list that voucher families actually see.

We have set this out at length because the error is instructive in both directions. An earlier version of this page stated flatly that the Act was not law, on the strength of searches that looked for it as a bill and as a public law of its own name — and it is neither. It is a titled section inside a larger act, which is how a great deal of housing legislation is enacted and exactly what such a search cannot see. Before you plan around any Act, check whether it was enacted inside something else.

How the money reaches you in practice

The regulations set limits; the local administrator sets the mechanics. The questions below are worth asking before you hold a unit for an assisted applicant; most have no federal answer, and where one exists it is quoted:

Who receives the payment?

HOME expressly permits payment “directly to the tenant or to the landlord” (§ 92.209(j)(3)). Which one happens is the administrator’s choice. Ask, and get the answer in writing, because a deposit routed through the tenant is a different risk from one paid to you.

When does it arrive relative to move-in?

Programmes typically pay after a unit passes inspection and the lease is executed, not on application. That gap is the reason a landlord can be asked to hold a unit for several weeks. Decide in advance how long you are willing to hold, and say so.

Is it a grant or a loan?

HOME allows either — § 92.209(j)(1) says “loans or grants”. This does not change what you receive, but it changes the tenant’s position, and a tenant repaying a deposit loan has a call on their income that a grant recipient does not.

What happens at the end of the tenancy?

Start from the rules that do answer it. In a voucher tenancy § 982.313(d), quoted above, requires you to “refund promptly the full amount of the unused balance to the tenant“. State law is emphatic in the same direction: Massachusetts provides that “a security deposit shall continue to be the property of the tenant making such deposit, shall not be commingled with the assets of the lessor”, and New York that “the entire amount of the deposit or advance shall be refundable to the tenant upon the tenant’s vacating of the premises except for an amount lawfully retained for the reasonable and itemized costs” the statute lists, with the landlord forfeiting any right to retain any portion if the itemised statement and balance are not provided within fourteen days, and punitive damages of up to twice the deposit available for a wilful violation.

Against that, some programme agreements ask for the unused balance to be returned to the administering body rather than to the tenant. Read such a term carefully before signing it, and do not assume it displaces the statutory duty — in Massachusetts and New York the duty to return the balance to the tenant is exactly the one whose breach carries forfeiture and multiplied damages. If a programme agreement and your state’s deposit statute point in different directions, that is a question for your own lawyer rather than something to resolve on the day.

The related detail worth knowing: HOME assistance may be a repayable loan rather than a grant, which changes the tenant’s position even though it does not change yours.

Who is actually administering the money?

It is worth knowing what kind of body is on the other side of the transaction, because it determines who you chase if a payment does not arrive. For Continuum of Care rental assistance the regulation is specific:

“(b) Rental assistance administrator. Rental assistance must be administered by a State, unit of general local government, or a public housing agency.”

24 CFR § 578.51(b)

So a CoC rental-assistance payment is administered by a governmental or quasi-governmental body, even where a non-profit service provider is the organisation you have been dealing with day to day. ESG and HOME funds, by contrast, are commonly passed through to non-profit subrecipients. If you are being asked to hold a unit, ask which entity will actually issue the payment and get that name in writing — it is a different question from which caseworker is arranging the placement, and the two are frequently not the same organisation.

The deposit is not a ceiling on what the tenant owes

One more provision of the voucher rule deserves separate attention, because landlords routinely assume the opposite. The deposit limits what you hold, not what you may recover:

“(e) If the security deposit is not sufficient to cover amounts the tenant owes under the lease, the owner may seek to collect the balance from the tenant.”

24 CFR § 982.313(e)

This matters most in exactly the situation deposit assistance creates. Where a state cap holds the deposit to one month and the tenant causes damage costing more than that, the federal rule permits you to seek the balance from the tenant. It does not decide that the amount is owed or recoverable — that turns on your lease and your state’s law — and it does not relieve you of the itemisation duty in subsection (d), or of your state’s rules on what may be deducted and by when. Before you pursue a formerly homeless tenant for a shortfall, note that CoC funds may be able to cover it: “recipients and subrecipients may use grant funds in an amount not to exceed one month’s rent to pay for any damage to housing due to the action of a program participant”, as a one-time cost incurred when the participant leaves (24 CFR § 578.51(j)). Ask the administrator before you write the balance off or chase it. A landlord who fails to itemise properly can find the deduction itself challenged before the question of any balance is reached. The practical protection is documentary: a dated move-in condition record, a matching move-out inspection, and an itemised statement that ties each charge to a specific documented condition.

What to verify before you accept a deposit-assistance placement

Scope of this list. It reflects the rules quoted above and covers each programme’s tenancy conditions only where the deposit transaction triggers them. The full lease, inspection and termination rules of a voucher tenancy or a rental-assistance placement are their own subject, and nothing here substitutes for reading the programme agreement and lease addendum you are asked to sign.

A short list that reflects the rules above:

• Your state’s deposit cap, and whether it is flat or conditional. That number binds you; the programme’s two-month allowance does not. Check your state’s rule first.
• Your state’s limit on the total collected at move-in, including advance or last month’s rent — a separate question from the deposit cap, and the one most guidance omits. Massachusetts and New York both restrict it.
• Whether payment comes to you or to the tenant, and on what trigger.
• Whether the programme requires the balance to be returned to it rather than to the tenant at move-out, and whether the assistance is a grant or a repayable loan.
• For voucher tenancies, whether your PHA has exercised its authority under § 982.313(b) to cap deposits by reference to what you charge unassisted tenants.
• That you are not requiring deposit insurance or a surety bond either in a HOME-assisted unit (§ 92.252(i)) or from any tenant receiving HOME tenant-based assistance, wherever the unit is (§ 92.209(j)(6)).
• If HOME funds are paying the deposit, that your lease complies with § 92.253 — check it for a jury-trial waiver, a waiver of notice or of legal proceedings, any agreement to a judgment in your favour, and any costs clause that bites even when the tenant wins — and check any fee clause you keep against your state’s reciprocal-fee rule. On the same reading, check too that it is a written lease of at least a year (or a shorter term agreed with the tenant) carrying the VAWA lease addendum § 92.253(a) requires — which obliges you to notify the jurisdiction before serving an eviction notice.
• If ESG rental assistance is also being paid on the unit (the usual rapid-rehousing shape), that the rent “does not exceed the Fair Market Rent established by HUD” and “complies with HUD’s standard of rent reasonableness” (§ 576.106(d)(1)) — a deposit-only ESG payment is not subject to that ceiling, a bundled placement is. A bundled placement also brings two owner duties a deposit-only one does not: a rental assistance agreement under which “the owner must give the recipient or subrecipient a copy of any notice to the program participant to vacate the housing unit or any complaint used under State or local law to commence an eviction action against the program participant” (§ 576.106(e)), and a “legally binding, written lease” between you and the participant carrying the 24 CFR part 5, subpart L (VAWA) lease provision or addendum (§ 576.106(g)) — and, for project-based ESG rental assistance, “the lease must have an initial term of 1 year”.
• That the unit will pass the programme’s own inspection: for ESG, the 24 CFR 5.703 minimum standards (§ 576.403(c)), with any deficiency corrected within 30 days and re-inspection “every 12 months during the period of assistance” (§ 576.403(c)(2)), plus — for pre-1978 housing — the lead-based-paint rules in 24 CFR part 35 that § 576.403(a) applies to “all housing occupied by program participants”; for CoC, the § 578.75(b) inspection against 24 CFR 5.703 before any assistance is paid, with the same 30-day cure; for SSVF, the grantee’s inspection, which the regulation says “should occur no later than three (3) working days after the housing unit has been identified” (§ 62.36(f)(1)), or a qualifying prior inspection under § 62.36(f)(2).
• For a voucher tenancy, that your lease fits the voucher rules on three points. Termination: “during the term of the lease, the owner may not terminate the tenancy except” for serious or repeated violation of the lease, violation of law bearing on the occupancy, “or other good cause” (§ 982.310(a)) — and “during the initial lease term, the owner may not terminate the tenancy for ‘other good cause’, unless the owner is terminating the tenancy because of something the family did or failed to do” (§ 982.310(d)(2)); “the owner must give the PHA a copy of any owner eviction notice to the tenant” (§ 982.310(e)(2)(ii)). Term: “the initial lease term must be for at least one year” unless the PHA approves a shorter one, and “during the initial term of the lease, the owner may not raise the rent to owner” (§ 982.309(a)). Addendum: “all provisions in the HUD-required tenancy addendum must be added word-for-word to the owner’s standard form lease”, and “the terms of the tenancy addendum shall prevail over any other provisions of the lease” (§ 982.308(f)(2)).
• In New York: the pre-occupancy inspection offer and written condition agreement (§ 7-108(1-a)(c)), the written notice of the tenant’s right to an end-of-tenancy inspection, “at least forty-eight hours written notice of the date and time of the inspection”, and afterwards “an itemized statement specifying repairs or cleaning that are proposed to be the basis of any deductions” so the tenant can cure (§ 7-108(1-a)(d)), and the itemised statement with the balance within fourteen days (§ 7-108(1-a)(e)).
• For a CoC rental-assistance placement, that your lease is for at least one year and terminable only for cause (§ 578.51(l)(1)), and that the rent will pass the CoC rent-reasonableness test (§ 578.51(g)).
• For a HOME deposit-only placement, that the unit will pass the jurisdiction’s property-standards inspection — § 92.209(j)(5) imports (i), with the inspection “required only at the time the security deposit assistance is provided”.
• If HOME funds are paying the deposit, that your termination and non-renewal practice meets § 92.253(c) — good cause, and written notice specifying the grounds at least 30 days beforehand — on the reading set out above, whatever shorter notice your state allows in an unassisted tenancy.
• Whether the jurisdiction considers your asking rent reasonable against comparable unassisted units. Under § 92.209(f) it must disapprove the lease if it does not — ask before you hold the unit, not after.
• For a voucher placement, whether you qualify as a “new landlord” able to request an inspection before a tenant selects the unit, which also puts you on the list the PHA shows voucher families (section 405 of Pub. L. 119-101).
• In Massachusetts specifically: that the deposit is in the account § 15B(3) requires; that the tenant has the § 15B(2)(b) receipt on taking the deposit and, within thirty days, the § 15B(3)(a) receipt naming the bank, the amount and the account number — “failure to comply with this paragraph shall entitle the tenant to immediate return of the security deposit”; that the tenant has the statement of condition — a “separate written statement of the present condition of the premises”, furnished on receipt of the deposit “or within ten days after commencement of the tenancy, whichever is later” (§ 15B(2)(c)); that a deposit held for a year or longer earns interest “at the rate of five per cent per year, or other such lesser amount of interest as has been received from the bank”, paid “at the end of each year of the tenancy” (§ 15B(3)(b)); that any move-out deduction for damage will be backed by the § 15B(4) list — sworn “under pains and penalties of perjury”, itemised “in precise detail”, with “written evidence, such as estimates, bills, invoices or receipts” — because a list that does not comply is a § 15B(6)(b) forfeiture; and that any last month’s rent carries the § 15B(2)(a) receipt and interest at 5% or the lower rate the bank paid.
• That your screening criteria are written and applied uniformly — the ESG application-fee rule assumes a fee “charged by the owner to all applicants”, and consistency matters for reasons far beyond eligibility. Our tenant screening guide and tenant background check explainer cover how to set criteria you can apply the same way every time.
• Your move-out documentation, since a voucher tenancy carries a federal itemisation duty. A move-out checklist and a documented inspection are what make a deduction defensible.
• Your adverse-action process, if you decline an assisted applicant on the basis of a consumer report — see adverse action notices for landlords.

Frequently asked questions

How much of a deposit will a programme actually pay?

Up to two months’ rent under all three of the main federal streams. ESG pays “no more than 2 months’ rent” (24 CFR § 576.105(a)(2)); CoC “not to exceed 2 months of rent” (§ 578.51(a)(2)); HOME “may not exceed the equivalent of two month’s rent for the unit” (§ 92.209(j)(2)). Whether the full amount is available depends on the local administrator’s budget and policy. Note the difference in wording: HOME caps the funds; ESG’s text conditions payment on the deposit being no more than two months’ rent, so treat a larger deposit as something to clear with the administrator first.

Does the two-month federal limit override my state’s deposit cap?

No, and it does not raise it either. The federal figure limits what the programme may spend; what you may charge is set by your state’s own deposit statute, which binds you independently. HOME adopts the state or local definition of a security deposit for its own purposes (§ 92.209(j)(2)) but says nothing about your maximum. Where your state’s cap is lower than two months, that is your ceiling and the programme funds up to it; where your state sets a higher cap or none, you may charge more — HOME then funds up to its cap and the tenant covers the rest, while ESG’s text ties payment to a deposit of no more than two months’ rent, so ask before assuming a larger deposit is part-funded.

Is the deposit cap the only thing I need to check before taking a move-in payment?

No, and this is the most common way a careful landlord still gets it wrong. Some states limit the total collected at or before the start of a tenancy, not just the deposit. Massachusetts caps it at first month, last month and a one-month deposit (G.L. c. 186 § 15B(1)(b)); New York provides that “no deposit or advance shall exceed the amount of one month’s rent” (Gen. Oblig. Law § 7-108(1-a)(a)), subject to stated exceptions. Check what your state limits in total.

Can I apply for the assistance on my tenant’s behalf?

Not under HOME. “Only the prospective tenant may apply for HOME security deposit assistance” (§ 92.209(j)(3)).

Can I require deposit insurance instead of a cash deposit?

Not where HOME is involved, and the bar is wider than the building. § 92.209(j)(6) prohibits surety bonds and deposit insurance “in lieu of or in addition to a security deposit in units occupied by tenants receiving tenant-based rental assistance” — the trigger is the tenant receiving the assistance, so an ordinary private unit with no HOME money in it is caught once such a tenant moves in. Separately, § 92.252(i) bars them in HOME-assisted units, and § 92.214(a)(10) bars HOME funds from paying for them. Note “in lieu of or in addition to”: layering a bond on top of a normal deposit is barred too.

If HOME pays the deposit, does anything change about my lease?

Yes. § 92.209(j)(5) makes paragraph (g) applicable when HOME funds are provided for security deposit assistance, and (g) requires that “the tenant must have a lease that complies with the requirements in § 92.253”. § 92.253(b) prohibits a list of lease terms including a waiver of a jury trial, a waiver of notice, a waiver of civil legal proceedings before eviction, and any agreement by the tenant to a judgment in the owner’s favour; and, on the reading set out above, § 92.253(a)’s written lease of at least one year (unless a shorter term is agreed) with the VAWA lease addendum, and § 92.253(c)’s good-cause and 30-day-notice rule, reach the tenancy the same way. Check your standard lease against all three before you sign the assistance agreement.

My tenant has a Housing Choice Voucher. Can I still charge a deposit?

Yes. “The owner may collect a security deposit from the tenant” (24 CFR § 982.313(a)). But your PHA “may prohibit security deposits in excess of private market practice, or in excess of amounts charged by the owner to unassisted tenants” (§ 982.313(b)), so check your authority’s policy.

What do I have to give the tenant at move-out in a voucher tenancy?

“The owner must give the tenant a written list of all items charged against the security deposit, and the amount of each item,” and must “refund promptly the full amount of the unused balance” (§ 982.313(d)). This applies on top of your state’s own return deadline and deduction rules.

Is the Choice in Affordable Housing Act a source of landlord incentives?

Not for deposits. It was enacted as section 405 of Public Law 119-101 on 11 July 2026, but the phrase “security deposit” appears nowhere in that public law — the incentive-fund and deposit provisions from the earlier standalone bills were not carried into the enacted text. What it does provide is an early-inspection route for landlords new to the voucher programme, valid for 60 days, plus placement on the list of inspected units that PHAs give to voucher families.

Can the programme pay me directly, or does it depend?

It depends on the programme. HOME leaves it to the administrator — the jurisdiction “may pay the funds directly to the tenant or to the landlord” (§ 92.209(j)(3)). ESG is framed the other way: its funds “may be used to pay housing owners, utility companies, and other third parties”, not the participant (§ 576.105(a)). SSVF is mandatory — a deposit “must be paid by the grantee directly to the third party to whom [it] is owed” (38 CFR § 62.34(c)(3)). Ask which applies before you hold a unit.

Does accepting deposit assistance oblige me to accept the tenant?

The federal deposit rules quoted above do not address who you must rent to, and whether refusing an applicant because of their source of income is lawful depends on your state and city — some jurisdictions prohibit it, others do not. But there is a federal rule if you own HOME-assisted rental housing: § 92.253(d)(4) requires written tenant selection policies that “do not exclude an applicant with a voucher under the Section 8 Tenant-Based Assistance: Housing Choice Voucher Program (24 CFR part 982) or an applicant participating in a HOME tenant-based rental assistance program because of the status of the prospective tenant as a holder of such voucher or comparable HOME tenant-based assistance document.” That bar operates regardless of whether your state has a source-of-income statute. Check the rule for your jurisdiction before adopting any blanket policy.

Related guides

Security deposit laws by state · Deposit interest requirements · Handling a security deposit dispute · Deposit itemization form · Move-out checklist for landlords · Landlord-tenant laws by state · Tenant screening laws by state · Adverse action notices

Disclaimer. This page quotes federal regulations and statutes from Massachusetts, New York and Alabama. The federal text is quoted as in force on 1 August 2026 and was re-checked unchanged on 25 August 2026; the Alabama text was verified against published copies current to 2025, as noted beside it. It is not legal advice, and we are not your attorney. Programme availability, budgets and local administrator policy vary, and state deposit rules change — confirm your own jurisdiction’s current rule, and consult a licensed attorney in your state before relying on any figure here in a tenancy.