Earnest Money Deposit
Calculator

Earnest money is a deposit made when signing a purchase contract to show the buyer's good faith and commitment to the transaction. It's typically 1% to 3% of the purchase price, though competitive markets can push it higher, and it's held in escrow until closing.

It depends on the reason and the contract's contingencies — if you back out for a reason protected by contingency clauses (financing, inspection, appraisal), you typically get the deposit back. If you cancel for an uncovered reason or miss a contingency deadline, the seller may be entitled to keep it.

No — earnest money is paid at contract signing to demonstrate commitment and is credited toward your down payment or closing costs at closing, while the down payment itself is the larger sum paid at closing to reduce your loan amount. Earnest money essentially becomes part of your total down payment funds.

It's typically held by a neutral third party — a title company, escrow agent, or sometimes the listing broker's trust account — rather than going directly to the seller. This protects both parties until the contingencies are resolved and the deal is ready to close.

Yes, often — a larger deposit signals stronger commitment and financial capability to the seller, which can help an offer stand out in competitive multiple-offer situations. It doesn't change the purchase price, but it does increase the seller's confidence that the deal will close as agreed.