Earnest money
A good-faith deposit — often 1–3% of the price — a buyer puts down with an offer, held in escrow and credited toward the purchase at closing.
What does earnest money mean?
Earnest money signals to a seller that your offer is serious. Held in escrow, it is typically 1–3% of the purchase price and is credited toward your down payment and closing costs when the deal closes. If you back out for a reason covered by a contract contingency — a failed inspection or a low appraisal — you usually get it back; walk away without cause and you may forfeit it to the seller.
Frequently asked
Do I get my earnest money back?
Usually yes if you back out for a reason covered by a contract contingency — a failed inspection, a low appraisal, or financing that falls through. Walk away without a valid contingency and you may forfeit it to the seller.
How much earnest money should I put down?
Commonly 1–3% of the purchase price, though in competitive markets buyers offer more to strengthen an offer. It is credited toward your down payment and closing costs at closing, so it is not an extra cost — just paid earlier.
Put it to use
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