Money
Earnest Money: What It Is, How Much, and When You Lose It
A plain-English explanation of earnest money, typical amounts, escrow rules, and the 3 situations where you forfeit it.
4 min read · Updated 2026-04-18
Earnest money is the deposit you put down when a seller accepts your offer. It proves you are serious. It is NOT a down payment — it usually gets credited to your down payment at closing, but it is held separately in escrow in the meantime.
How much is normal?
In most markets, earnest money runs **1% of the offer price**, with a $500–$1,000 floor in lower-priced markets. On a hot home, buyers sometimes offer 2–3% to stand out. On a $250,000 home, that means $2,500 typical, up to $7,500 for a competitive offer.
Who holds it?
Never give the check directly to the seller. It goes into an escrow account held by:
Get a receipt. Keep it.
When do you get it back?
Earnest money is refunded to you if you back out for any reason allowed by your contingencies:
When do you LOSE it?
You forfeit earnest money if you back out for a reason NOT in your contingencies:
Read every contingency deadline carefully. Most have 10-, 14-, or 21-day clocks that start ticking the moment the offer is signed.
Bottom line
Earnest money is a tool — it makes your offer stronger without actually costing you anything as long as you hit your contingency deadlines. Offer enough to be taken seriously, but do not stretch beyond what you could lose if the deal falls apart.