What Is Earnest Money and How Much Do I Need?

Earnest money is a deposit you make when submitting an offer to show the seller that you’re serious about buying. It’s typically 1–3% of the purchase price, held in escrow until closing. If the deal goes through, it’s applied toward your down payment or closing costs.

In my experience, earnest money helps strengthen your offer in a competitive market. It signals commitment, but it’s also protected by contingencies — if you withdraw for a valid reason (like inspection or financing issues), you can often recover the funds.