How much earnest money is typical?

Earnest money is a good-faith deposit you put down when submitting an offer, showing the seller you're a serious buyer. It's commonly discussed as roughly 1–3% of the purchase price, though the actual customary amount varies significantly by local market — and in hot, competitive markets, buyers sometimes offer more to strengthen their offer, while some slower markets simply use a flat dollar amount instead of a percentage at all.

What earnest money is for

Earnest money exists to demonstrate that you're committed to the purchase. It gives the seller some assurance that you won't walk away from the contract without cause, since real money is on the line. It's not an additional cost on top of your purchase price — it's applied toward what you already owe.

How it's held and applied

• Held in escrow: The deposit is typically held by a neutral third party — often a title company or escrow agent — not the seller directly, until closing.
• Applied at closing: At closing, the earnest money is credited toward your closing costs or down payment, so it isn't money spent in addition to your purchase price — it's money you were putting toward the home anyway, just committed earlier.

When it's refundable versus at risk

This is where earnest money gets its teeth, and it's worth understanding clearly before you write an offer:

• Refunded: If you exit the deal within a valid contingency period — for example, an inspection contingency reveals a serious issue, or your financing contingency isn't met — you're generally entitled to your earnest money back, as long as you followed the contract's terms and deadlines.
• At risk / potentially lost: If you back out of the deal for a reason not covered by an active contingency, or after your contingency deadlines have passed, the seller may be entitled to keep the earnest money as compensation for taking the home off the market.

This is exactly why contingencies and their deadlines matter so much — they're what define your protected window to walk away without losing your deposit.

This page is for general educational purposes and describes common practices; it is not legal or contractual advice. Earnest money customs, amounts, and contingency terms vary by market and contract and should be confirmed with a local agent using current data before you submit an offer.