{"id":5530,"date":"2026-03-11T02:00:46","date_gmt":"2026-03-11T09:00:46","guid":{"rendered":"https:\/\/www.homelight.com\/blog\/?p=5530"},"modified":"2026-03-11T18:55:19","modified_gmt":"2026-03-12T01:55:19","slug":"earnest-money-deposit","status":"publish","type":"post","link":"https:\/\/www.homelight.com\/blog\/earnest-money-deposit\/","title":{"rendered":"Who Keeps the Earnest Money Deposit if a Home Sale Falls Through?"},"content":{"rendered":"

According to transaction data, home sales are falling through at a higher rate<\/a> than in recent years. When a sale falls apart, one of the first questions sellers and buyers ask is: Who keeps the earnest money deposit?<\/p>\n

The answer depends on why the deal fell through and what the purchase agreement<\/a> says. If the buyer backs out for a reason protected by a contract contingency, they usually receive their earnest money back. If the buyer cancels without a valid contingency, the seller may be entitled to keep the deposit.<\/p>\n

In this guide, we\u2019ll explain how earnest money works, when buyers get it back, and when sellers may legally keep it.<\/p>\n

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What is an earnest money deposit?<\/h2>\n

Earnest money<\/a> is a good-faith payment that shows the buyer is serious about purchasing your home. Buyers typically submit these funds shortly after their offer is accepted. The money is then held by a neutral third party until the transaction closes or the contract is canceled.<\/p>\n

The deposit provides the seller with financial protection if the buyer backs out without justification.<\/p>\n

If the transaction closes successfully, the earnest money is credited toward the buyer\u2019s down payment<\/a> or closing costs.<\/p>\n

Linda Quinn<\/a>, a top real estate agent in Portland, Oregon, with 50 years of experience, explains that the earnest money deposit is often considered an important element reinforcing a legally binding home purchase agreement.<\/p>\n

\u201cThere are four necessary things to actually have a legal contract: the start and stop dates, the parties to the transaction, and then the compensation,\u201d she says. \u201cWithout the deposit, it is unlikely that it would have the legal definition of a contract between a buyer and a seller.\u201d<\/p>\n

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How much is a typical earnest money deposit?<\/h2>\n

The amount of earnest money your buyer offers will vary depending on the market and the price of your home. Common ranges include:<\/p>\n

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  • 1% to 3% of the purchase price in many markets<\/li>\n
  • Higher deposits in competitive markets to strengthen an offer<\/li>\n
  • Smaller deposits, such as $1,000\u2013$2,000, in slower markets or lower-priced transactions<\/li>\n<\/ul>\n

    For example, on a $500,000 home, a typical deposit might range from $5,000 to $15,000.<\/p>\n

    Try our earnest money calculator<\/h3>\n

    To get an idea of what you can expect, check out the earnest money calculator below:<\/p>\n