Take a higher deposit if you want to rent to them would be my recommendation

Lastly, it could be that the bank is going to portfolio your loan at below-market pricing because they want the entire banking relationship (deposits, transaction processing, consumer lending, etc) or simply want the risk (yield).Lots of local and regional banks have been retaining loans at really aggressive pricing recently as the current environment makes this favorable for them.

I'd immediately go to a higher deposit, several months paid up front, etc. 

My realtor/PM says $0.95 to $1.05 per sq. ft. is a reasonable monthly rent for a 4 BR/2 BA property in that area, which (according to the BiggerPockets calculator estimate I did) is enough to cover the monthly payment plus the above costs I mentioned.I anticipate putting down my deposit and earnest money in the next few days. 

Nothing herein is legal advice.Effective July 1, 2024, California Civil Code section 1950.5 generally prohibits a landlord from collecting more than one month’s rent as security deposit, whether the rental is furnished or not.

The seller could simply retain the deposit.

They're offering the full asking price with a $1k escrow deposit, and they're also requesting $10k for closing costs.

For example, I often see Buyers purchase property thinking there is a $1,000 deposit but then the tenant claims it was $2,000 because they paid the last month's rent.

We use Rentec Direct and really love it.It collects our rent, applies late fees, deposits our rents in our bank account, tracks expenses, screens our tenants, markets our properties, generates forms we can send out for docusigning by our tenants, tracks leases, and much more.  

Regarding nonrefundable deposit on lease option to purchase for a home selling for $375K.What does the nonrefundable deposit entail?