Key Takeaways
- Earnest money is a good-faith deposit that shows a seller you’re serious.
- It’s typically 1–3% of the purchase price, held in escrow.
- It’s applied to your down payment or closing costs at closing.
- With the right contingencies, you can usually get it back if the deal falls through.
When you make an offer, you back it with earnest money. Here’s what it is, how much to offer, and how to protect it.
What is earnest money?
It’s a good-faith deposit you put down when your offer is accepted, showing the seller you’re committed. It’s held by a neutral third party (usually an escrow or title company), not the seller directly.
How much earnest money should you put down?
Commonly 1–3% of the purchase price, though competitive markets may push it higher. A larger deposit can strengthen your offer, but you don’t want more at risk than necessary.
Can you get your earnest money back?
Usually yes — if your contract includes the right contingencies. Financing, appraisal and inspection contingencies let you walk away and recover your deposit if those conditions aren’t met. Skip them and you may forfeit it.
Frequently Asked Questions
Is earnest money the same as a down payment?
No, but it counts toward it. At closing, your earnest money is applied to your down payment or closing costs.
How much earnest money is normal?
Typically 1–3% of the purchase price, higher in competitive markets.
When do I lose my earnest money?
Generally only if you back out for a reason not protected by a contingency in your contract.
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