What is earnest money in real estate?

Earnest money is a deposit made to a seller showing the buyer's good faith in a transaction. It's typically 1-3% of the home's purchase price and is held in escrow until closing, where it's applied to your down payment or closing costs.

How much earnest money should I put down?

Typically 1-3% of the purchase price. The exact amount depends on local market conditions, the home's price, and how competitive your offer needs to be. In hot markets, offering 2-3% can make your offer more attractive.

Is earnest money refundable?

Earnest money is usually refundable if the buyer backs out for reasons specified in the contract contingencies (like inspection issues, financing problems, or appraisal gaps). If you back out without a valid contingency reason, you may forfeit the earnest money.

What's the difference between earnest money and down payment?

Earnest money is a good faith deposit made when the offer is accepted, while the down payment is the larger amount paid at closing. The earnest money is typically applied toward your down payment at closing.

When is earnest money due?

Earnest money is usually due within 1-3 days after the seller accepts your offer and both parties sign the purchase agreement. The exact timeline should be specified in your contract.

Can I use a personal check for earnest money?

Typically not. Earnest money usually requires a cashier's check, wire transfer, or certified check to ensure the funds are guaranteed. Personal checks are often not accepted for earnest money deposits.

Earnest Money Calculator

Our earnest money calculator helps you determine how much to deposit when making an offer on a home. It factors into your total closing costs and shows the impact on your initial out-of-pocket expenses.

Home Purchase Price ($)

Earnest Money Type

Earnest Money (%)

Earnest Money Amount: $0

Percentage of Price: 0%

Remaining Balance: $0

Due at Closing: $0

Note: Earnest money is typically 1-3% of the home price and shows your serious intent to purchase. It's held in escrow and applied to your down payment at closing.

What This Tool Provides

Estimates the typical earnest money deposit based on common percentage benchmarks and your home’s purchase price.

Allows you to see how different deposit levels can influence the strength of your offer.
Compares minimal, standard, and sizable earnest amounts to support your decision-making.
Serves as a helpful tool for planning your budget and organizing funds ahead of submitting an offer.
Helps clarify how your earnest money choice may affect both your negotiating position and your eligibility for a refund.
Understanding Earnest Money in Real Estate Transactions

Earnest money plays a key role in the home-buying process by showing a seller that you’re a committed and serious buyer. When you submit an offer on a home, this deposit acts as a sign of good faith. The funds are usually held in a neutral escrow account until closing, where they are then applied to your down payment or other closing expenses.

The typical earnest money amount depends on factors like regional real estate practices, current market conditions, and the property itself. In many standard markets, buyers commonly put down 1 to 3 percent of the home’s price. In competitive markets where sellers have the upper hand, offering a larger percentage—around 2 to 3 percent—can help your offer stand out and show strong intent.

A frequent concern among buyers is whether earnest money can be recovered if a deal falls through. This largely depends on the contingencies written into your purchase agreement. If you withdraw from the transaction for reasons covered by your contract—such as an unsatisfactory home inspection, title issues, or trouble securing financing—you’re generally entitled to a refund. However, backing out without a valid contingency may result in the seller keeping the deposit.

The earnest money deposit is separate from your down payment, though the two are connected. Earnest money is paid soon after your offer is accepted, while the down payment is the larger amount due at closing. At that time, the earnest money is credited toward your down payment. Keeping these details straight helps you manage your finances more effectively and avoid unexpected costs.

Using an earnest money calculator takes the guesswork out of deciding on a deposit amount. By entering the purchase price and your preferred percentage, you can quickly see the dollar amount needed and how it fits into your overall closing costs. This insight helps you make more confident choices when shaping your offer and preparing financially for homeownership.