{"id":71861,"date":"2025-06-25T08:39:24","date_gmt":"2025-06-25T15:39:24","guid":{"rendered":"https:\/\/www.redfin.com\/blog\/?p=71861"},"modified":"2026-06-23T15:04:49","modified_gmt":"2026-06-23T22:04:49","slug":"what-is-earnest-money","status":"publish","type":"post","link":"https:\/\/www.redfin.com\/blog\/what-is-earnest-money\/","title":{"rendered":"Earnest Money: What Is It and How Much Should You Pay?"},"content":{"rendered":"

Whether you’re buying a <\/span>home in Austin<\/span><\/a> or a <\/span>condo in Miami<\/span><\/a>, you\u2019ve probably come across the term \u201cearnest money\u201d during your home search. It\u2019s a key part of the<\/span> homebuying process<\/span><\/a> \u2013 but one that can feel confusing if you\u2019re not sure how it works. This Redfin article breaks down everything you need to know about earnest money, from how much to pay to when you might get it back (or lose it), so you can move forward with confidence.<\/span><\/p>\n

What is earnest money? Earnest money, also known as a ‘good faith’ deposit, is a form of security deposit paid directly to the seller. It demonstrates your serious intent to buy the property and shows the seller that you are committed to the home purchase. In most cases, the earnest money deposit can also act as a deposit on the property you\u2019re looking to buy. If the deal falls through due to a contingency outlined in the contract, like a failed inspection or financing issue, you usually get the money back. But if you back out for a reason not covered by a contingency, the seller may keep it.<\/span><\/p>\n

\"What<\/p>\n

How much is earnest money?<\/span><\/h2>\n

The buyer and seller can negotiate the earnest money deposit amount, but it typically ranges from 1% to 3% of the sale price, depending on the market. For example, on a $400,000 home, a 2% earnest money deposit would be $8,000. However, if you\u2019re buying a home in a<\/span> seller\u2019s market<\/span><\/a> (when there are more buyers than homes for sale), or bidding on a highly competitive home, you might want to offer more to strengthen your offer.\u00a0<\/span><\/p>\n

Be sure to talk to your <\/span>real estate agent<\/span><\/a> about how much earnest money you should offer in the <\/span>housing market<\/span><\/a> you\u2019re competing in. Opting for a higher deposit can make your offer stand out and show the seller you are serious about the purchase. They can help guide you on how to structure your offer to be most attractive to the seller while protecting your interests.<\/span><\/p>\n

How and when to pay earnest money?\u00a0<\/span><\/h2>\n

Earnest money is usually paid within a few days of the seller accepting your offer. It is typically paid to an escrow account or <\/span>title company<\/span><\/a>, which holds it in an escrow account until the transaction closes. Other trusted third parties can include a real estate attorney. Payment methods include personal checks, cashiers, wire transfers, or money orders, depending on the terms of your contract.\u00a0<\/span><\/p>\n