Buying
What Is Earnest Money When Buying a House?
By David Golovin · September 29, 2026 · 2 min read
Earnest money is a deposit paid when your offer is accepted. It shows the seller you are serious, and it applies toward your downpayment at closing.
Step 1
Offer accepted
Both parties sign
Step 2
Deposit to escrow
Typically 1 - 3 business days
Step 3
Contingency period
Inspection / financing / appraisal
Step 4
Closing
Applied to downpayment or costs
How much is typical
Typical deposits run 1 to 3% of the purchase price. On a $400,000 home, that is $4,000 to $12,000. The money goes into escrow with a title company until closing.
Source: National Association of Realtors, Profile of Home Buyers and Sellers
When you can get it back
You can get it back if the deal falls apart for a reason covered by a contingency: financing, inspection, or appraisal. Waiving contingencies puts it at risk.
FAQ
Do you get earnest money back if a deal falls through?
It depends on why the deal fell apart. If the deal falls through for a reason covered by a contingency (financing, inspection, appraisal), the deposit is typically returned. If you back out without a contingency covering your reason, the seller may keep it.
How much earnest money should you put down?
Typical deposits are 1 to 3% of the purchase price, though competitive markets sometimes see more. A higher deposit can strengthen your offer but increases what you risk if you need to walk away.
Is earnest money the same as a downpayment?
No, but it applies toward your downpayment at closing. Your earnest money deposit is credited against the total cash you owe at closing, so you do not pay it twice.