When you’re buying a house, earnest money is one of those terms that can raise a lot of questions. How much should you expect to put down? Is it refundable? And what role does it play in making your offer stronger?
Use our Earnest Money Calculator above to help you estimate a ballpark figure so you know what to expect before making an offer.
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How Much Earnest Money Is Typical?
Across most markets, buyers put down 1% to 3% of the purchase price as earnest money. For example, on a $400,000 home, that’s anywhere from $4,000 to $12,000.
In more competitive markets, some buyers put down closer to 5% as a way to stand out. While that’s not always necessary, a higher deposit can give a seller more confidence in your offer — especially if you’re competing against multiple buyers.
Why Do Sellers Want Earnest Money?
Earnest money helps reassure the seller that you’re committed to the purchase. By putting down a deposit, you’re signaling that you don’t plan to walk away casually.
If you back out of the deal for a reason not covered by a contingency in your contract, the seller may keep your deposit. This protection makes sellers more comfortable accepting your offer, since it shows you have “skin in the game.”
What Happens to Your Earnest Money?
Once paid, earnest money usually goes into an escrow account managed by a neutral third party, such as a title company or escrow agent. If the sale goes through, the deposit is applied toward your down payment or closing costs.
If you withdraw due to a valid contingency — like the home inspection or financing falling through — you can typically get your earnest money refunded. But if you walk away without one of those protections, you risk forfeiting the deposit.
Tips for Buyers
If you’re deciding how much earnest money to offer, consider these factors:
- Market Conditions: In slower markets, 1% may be sufficient. In hot markets with multiple offers, 3%–5% can make your bid stand out.
- Your Budget: Remember that earnest money ties up cash until closing. Make sure you’ll still have enough funds available for your down payment and closing costs.
- Local Norms: Practices vary by location. A trusted real estate agent can advise you on what’s customary in your area so your offer feels competitive without being excessive.
Earnest money may feel like another hurdle, but it’s a standard part of buying a home — and a way to show sellers you’re serious. The key is to put down an amount that balances your financial comfort with the realities of your market and your expected mortgage payment.
Protect Your Earnest Money: Partner With a Top Agent
Ready to take the next step? Use our Earnest Money Calculator to run the numbers, then connect with a top local agent through HomeLight who can guide you on the right offer strategy for your market. Our free Agent Match tool analyzes over 27 million transactions and thousands of reviews to determine which agent is best for you based on your needs.
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