Does a Massachusetts landlord have to approve a Section 8 applicant? No, so long as the reason for the rejection is not the Section 8 voucher. Landlords are required by state law to participate in the Section 8 program, if a Section 8 voucher holder is the most qualified applicant. That does not mean you have to approve the rental application for anyone just because they have a Section 8 voucher. You can reject their application for the same reasons you would reject other applicants, so long as the reason is genuinely unrelated to their receipt of public assistance.
Application fees are one of those areas where inexperienced Massachusetts landlords follow common sense instead of the law, and pay penalties as a result. The law for property owners and managers is clear. It states that prior to the beginning of a tenancy, no lessor may require payment for anything except first, last, security, and locks.