Earnest money is a good-faith deposit you make when a seller accepts your offer, usually 1% to 3% of the price (more in some competitive markets). It’s held by a title company, attorney or broker, and applied to your down payment or closing costs at closing. You can usually get it back if you cancel under one of your contract’s contingencies; you may lose it if you back out for another reason.
How it works
- Your offer states the amount and the deadline to deliver it, often within one to three business days of acceptance.
- You send it by wire or certified check to the escrow holder named in the contract, never directly to the seller.
- It sits in an escrow account while you complete inspections, the appraisal and financing.
- At closing it counts toward your down payment and closing costs.
How much to put down
Local custom matters most: in some areas a flat $5,000 to $10,000 is normal; in others 1% to 3% of the price, and in very competitive markets 5% or more. A larger deposit tells the seller you’re serious and can help you win, but it puts more money at risk if something goes wrong. See how it affects your offer with the offer strength score.
When you get it back
Contingencies are what protect your deposit. If your contract includes them and you cancel within their deadlines, you typically get the earnest money back:
- Inspection contingency: serious problems turn up and you can’t agree on repairs.
- Financing contingency: your loan isn’t approved despite good-faith efforts.
- Appraisal contingency: the home appraises below the price and you can’t agree on a fix.
- Sale-of-home contingency: your current home doesn’t sell in time.
- Title problems the seller can’t resolve.
The contingency risk explainer shows what each one protects, and what you risk by waiving it.
When you can lose it
You may forfeit the deposit if you back out for a reason not covered by a contingency, miss a contingency deadline, or fail to close on time without an agreed extension. Track your deadlines carefully and put any extension in writing.
Protect your deposit from fraud
Earnest money wires are a favorite target of scammers who send fake wiring instructions by email. Always call the title company or escrow holder at a phone number you find independently, not one in an email, to confirm the instructions before you send money.
Plan your cash
Earnest money is due within days of acceptance, well before closing, so keep it ready in your account when you start making offers. It’s part of your total cash to close, not an extra cost.
Common questions
How much earnest money is normal?
Usually 1% to 3% of the price, though local custom varies, from flat amounts to 5% or more in competitive markets.
Do I get earnest money back at closing?
It’s applied to your down payment and closing costs, so it reduces the cash you bring.
Can the seller keep my earnest money?
If you back out for a reason not covered by a contingency or miss a deadline, the seller may be entitled to keep it under the contract.
Updated October 2026. Educational content. OfferBacked is not currently a lender and doesn’t issue pre-approvals or loans.