If you’re getting ready to sign a new lease, one of the first costs you’ll likely face is the security deposit. This upfront payment helps protect the landlord in case of damage, unpaid rent, or cleaning costs—but how much can they legally charge?
In New Mexico, the rules around security deposits depend on the length of your lease. Here’s what you need to know before you sign:
🏠 Leases Less Than One Year: 1 Month Max
If your rental agreement is for less than one year, your landlord cannot charge more than one month’s rent as a security deposit.
✅ Example:
If your rent is $900/month and your lease is for 6 months, the maximum security deposit your landlord can ask for is $900.
This rule helps keep move-in costs reasonable for short-term tenants and protects you from being overcharged.
📅 Leases One Year or Longer: No Cap, But Interest Is Required
If your lease is for one year or longer, New Mexico law does not set a maximum deposit amount. That means your landlord can charge more than one month’s rent—but with one important condition:
👉 They must pay you annual interest on any amount that exceeds one month’s rent.
💡 Example:
If you sign a 12-month lease with $1,000 rent and your landlord charges a $1,500 deposit, they owe you interest on the extra $500 each year.
The goal is to discourage excessive deposits while still giving landlords flexibility for long-term leases.
🔍 A Few Extra Tips
- Always get a receipt for your deposit.
- Ask where your deposit will be held and how interest will be calculated (for longer leases).
- Do a move-in inspection with photos or a checklist to protect yourself when it’s time to move out.
Bottom Line
- Short-term leases (< 1 year): Security deposit can’t exceed one month’s rent.
- Long-term leases (≥ 1 year): No cap, but interest must be paid on any amount above one month’s rent.
Knowing the rules up front can save you headaches down the road—and help you spot any red flags before signing a lease.