How Much Security Deposit Is Required?

Every single state in the union lets a landlord collect a security deposit from a tenant but only half of the states limit how much the landlord can charge (not more than a month or two of rent). The point of a security deposit is to assure that the tenant pays rent on time and keeps the property in good condition, if they fail to do that then the security deposit could be, in part or in total, forfeited to the landlord. As for what happens to the money in the interim, some states require that it be put in escrow and interest be paid to the tenant.

The specific law varies by state so you’ll have to research that.