New landlord vetting tenants in Califonia - Help!

[Zhenya Levchenko]

Hi all,

So here i am--just listed my front house for rent for the first time ever. Last night I showed it to my first prospective tenants and am realizing that I made a ton of mistake already. I would really love the community's input on how to handle a few things.

1. A couple showed up and seemed super eager to jump in right away. I was very excited until they filled out the application and I saw that they have two kids. I know that in California I can't discriminate against folks with kids, but how do I hadle these things. It's a 2 br house but very small. My application says: maximum occupants: 2.

2. My property is listed at $2200 and their combined monthly income is $4800.  My application clearly states we require income of 2.5 times the rent. I know that that automatically disqualifies them.

3. They gave me an application fee of $35 each, do I have to process their application by law or should I return their application fee? What's the law?

Anything else? I really appreciate any feedback. Thank you!