Earnest money is a good-faith deposit a buyer makes after a seller accepts an offer. It is usually held in escrow and, at closing, is generally credited toward the buyer’s down payment or closing costs.
Why it matters
The deposit shows a seller you are serious. The amount, due date, and rules for returning or forfeiting it come from your purchase agreement.
On a $500,000 home, a buyer might offer a $5,000 earnest-money deposit. That is only an example—the right amount depends on the market, the offer strategy, and the contract.
What to remember
- ✓Earnest money is not an additional cost when the transaction closes; it is normally applied to what you owe.
- ✓Missing a contractual deadline can put the deposit at risk.
- ✓Financing, appraisal, and inspection contingencies may provide protection when written and used correctly.
Before you send a deposit, I’ll walk you through the deadline, the holder, and the exact contract protections tied to it.
This guide is for education, not a loan quote or legal, tax, insurance, or financial advice. Eligibility and transaction details vary. Confirm your options with the appropriate licensed professional.