A security deposit alternative lets you move in without paying a full cash deposit. You pay a nonrefundable fee instead, monthly or up front. The catch is simple. None of that fee comes back when you leave, and you can still owe money for damage or unpaid rent after you move out.
That is the short answer. The longer one depends on which product your building uses, because they do not all work the same way. A May 2026 report from the National Consumer Law Center sorted 15 of these products into three types. Here is what each type means for you, plus the places where you can pay a regular deposit in smaller pieces instead.
What a Security Deposit Alternative Is, and What It Is Not
A traditional deposit is your money. The landlord holds it, takes out unpaid rent and damage beyond normal wear and tear, and returns the rest. State law controls how that works.
A security deposit alternative is a product sold by a third company. In its report Tenant Insecurity, the National Consumer Law Center says these products involve nonrefundable payments. It also says landlords may encourage or even require them to avoid state laws that tightly regulate security deposits. The report says millions of renters across the United States now use them.
| Question | Traditional deposit | Deposit alternative product |
|---|---|---|
| Who gets your money? | The landlord holds it | A third company keeps it as a fee |
| Do you get it back? | Yes, minus unpaid rent and damage | No, the fee is nonrefundable |
| Does the total grow over time? | No, it is a fixed amount | It can, if the fee is monthly or yearly |
| Can you still owe money at move-out? | Yes, if damage is more than the deposit | Yes, the company can seek repayment of claims it paid |
| Covered by state deposit law? | Yes | The report says these products are designed to fall outside it |
The 3 Types and the 15 Products Behind Them
The report groups every product by how it collects from you when a landlord files a claim. This matters more than the price.
Direct billing authorization means you give the company permission to pull money from your bank account or card, up to a set limit. Insurance means you pay premiums, and the insurer can come after you for what it pays the landlord. A surety bond means the company guarantees your obligations, pays the landlord, and then seeks the full amount back from you.
| Type | Company | Product | How you pay |
|---|---|---|---|
| Direct billing | Obligo | Obligo | Monthly or yearly fee |
| Insurance | Entrata | Homebody Deposit Alternative | Monthly fee |
| Insurance | Findigs | Termwise | Monthly fee |
| Insurance | LeaseLock | Zero Deposit | Monthly fee |
| Insurance | Qira | Security Deposit Program | Monthly fee |
| Surety bond | Assurant | SureDeposit | One-time fee |
| Surety bond | DUAL Insurance | Deposit Choice | One-time fee |
| Surety bond | ePremium Insurance | eDeposit | Fee covers five years |
| Surety bond | Jetty | Jetty Deposit | Monthly or one-time fee |
| Surety bond | LeaseTerm Solutions | LeaseProtect | One-time fee |
| Surety bond | Leap Insurance Agency | Leap Deposit Replacement | Monthly fee |
| Surety bond | RealPage | DepositIQ | One-time fee |
| Surety bond | Rhino | Security Deposit Insurance | Monthly fee |
| Surety bond | TheGuarantors | Deposit Coverage | Monthly or one-time fee |
| Surety bond | United Indemnity Group | LeaseGuarantee | Yearly fee |
The report gathered this from company websites and terms of service between fall 2025 and spring 2026. For some products, it says the terms were not available online and the companies did not respond. So check the exact product name on your lease, then read its terms before you sign.
Why You Can Still Owe Money When You Move Out
This is the part people miss. The fee is not a deposit, so it does not pay for damage. It pays for the service.
The report quotes the companies directly. Rhino says the renter is responsible for reimbursing Rhino for the approved claim amount. Obligo says its service fee does not cover charges your property manager may set at the end of the lease. SureDeposit says that if the amount owed is more than the bond, the resident owes the landlord the excess.
One tenant story in the report sums it up. The renter paid premiums for four years and still had to pay the move-out charges in full.
Direct billing has its own risk. The report says a company may process a claim without telling you first. If your account is short, you can face an overdraft fee from your bank and a returned-payment fee from the company.
Bank fees like that add up fast:
What happened to the 5 dollar overdraft fee cap
A Worked Example Over Three Years
Here is a hypothetical case to show how the math moves. The numbers are made up for the example, not taken from any company.
| Item | Cash deposit path | Monthly fee path |
|---|---|---|
| Paid at move-in | $1,500 deposit | $0 deposit |
| Monthly fee, 36 months at $20 | $0 | $720 |
| Landlord damage claim at move-out | $400 taken from the deposit | $400 paid by the company, then billed to you |
| Money back at the end | $1,100 refunded | $0 |
| Total cost to you | $400 | $1,120 |
The fee path costs less on day one. Over three years it costs $720 more, because the fee never comes back and the claim is still yours to pay. Shorter stays narrow the gap. Longer stays widen it. The report makes the same point, saying monthly or yearly payments can add up to more than the deposit, especially over multiple years.
Honestly, the move-in day is the worst moment to do this math. You are tired, the boxes are in the car, and the leasing office wants a signature.
What Florida and Virginia Require
Florida set rules for these products. The 2023 law CS/HB 133, Fees in Lieu of Security Deposits, lets a landlord offer a fee instead of a deposit. The bill summary says the landlord has exclusive discretion over offering it, and cannot approve or deny an application based on your choice to pay the fee. It also sets notice and written agreement rules. It took effect July 1, 2023.
Virginia focused on disclosure. According to the National Low Income Housing Coalition, House Bill 2430 requires landlords to list all applicable rental fees on the first page of the lease.
Places That Let You Pay a Real Deposit in Installments
Here is the option the sales pitch never mentions. Some places let you split a traditional, refundable deposit into monthly payments. The NCLC report quotes these rules in its recommendations.
| Place | Who it covers | Installment rule quoted in the report |
|---|---|---|
| Washington State | Rentals of three months or longer | Deposits, nonrefundable fees and last month rent in three equal monthly payments |
| Seattle | Tenancies of six months or longer | Deposit and nonrefundable move-in fees in six equal monthly payments |
| Atlanta | Landlords with more than ten units who ask more than 60% of monthly rent as deposit | On request, the landlord must offer one of two options. One of them is at least three equal monthly payments |
| Cincinnati | Landlords with more than 25 units who require a deposit | On request, the landlord must offer at least one listed option. One of them is at least six equal monthly payments |
| Philadelphia | First-year deposits above one month of rent | One month paid at once, the rest in three equal payments |
Each rule has conditions. In Atlanta and Cincinnati, the landlord picks from a list, so installments are not guaranteed there. The report cites each code section by number, so you can look up the full wording for your city.
Pet charges are a separate cost on top of the deposit:
How California caps deposits but not monthly pet rent
What to Check Before You Sign
- Find the exact product name in the lease or the move-in packet.
- Locate the company terms of service and look for the word nonrefundable.
- Search the terms for reimburse or repayment. That tells you whether claims come back to you.
- Check whether the fee is monthly, yearly or one time, and multiply it by the months you plan to stay.
- Look up your city or state deposit rules for an installment option.
- Confirm in writing whether the building accepts a traditional deposit as well.
A monthly rent split is another way renters spread costs:
Whether splitting rent into two payments actually saves money
Move-in costs are easy to lose track of. A free tracker with a row for every move-in fee, refundable or not keeps them in one place.
Has your building offered a security deposit alternative, and did anyone explain that the fee does not come back?
Disclaimer: MoneyWisePro is not a property manager or financial advisor. This article is for general information only and is not financial or legal advice. Contact your local tenant rights office for guidance on your specific situation.
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