Earnest money is a good-faith deposit a buyer puts down when an offer is accepted. Here is how much it is, who holds it, when you get it back, and where it goes at closing.
Earnest money is a good-faith deposit a buyer submits once a seller accepts their offer. It signals the offer is serious enough for the seller to stop marketing the home, and it is held by a neutral third party until closing, when it gets credited back to the buyer.
The amount is whatever the purchase contract says it is. There is no law setting it. In practice it commonly lands somewhere between one and three percent of the purchase price, and it moves with how competitive the local market is. In a market where sellers are fielding several offers, deposits tend to run higher, because a larger deposit reads as a more committed buyer.
Here is what the range looks like in dollars:
| Purchase price | 1% deposit | 2% deposit | 3% deposit |
|---|---|---|---|
| $300,000 | $3,000 | $6,000 | $9,000 |
| $400,000 | $4,000 | $8,000 | $12,000 |
| $500,000 | $5,000 | $10,000 | $15,000 |
A larger deposit is not automatically the right move, and a smaller one is not automatically a weak offer. What matters is what the contract obligates you to, and what conditions let you recover the money. That is a contract question, which is why it belongs in front of the licensed closing attorney handling your transaction rather than being decided off a rule of thumb.
Not the seller. That is the part people most often get wrong.
The deposit goes to a neutral third party who holds it in an escrow account, which is a separate account that exists specifically so neither side can touch the funds on their own. Depending on your state and your transaction, that holder is usually a closing attorney, a title company, or a real estate brokerage.
The escrow holder is bound by the contract. They release the money according to what the contract says, not according to who asks louder. If the sale closes normally, the funds move to the settlement statement as a credit to the buyer. If the deal falls apart, the contract determines who gets the money, and if both parties claim it, the funds stay in escrow until the dispute resolves.
This is also why the deposit is written into the contract rather than handled casually. The document is what governs the money.
Earnest money is refundable when the buyer backs out using a contingency the contract already contains, and does it before that contingency's deadline expires. Contingencies are the escape hatches written into the agreement. The common ones:
Two things decide the outcome, and both are about the contract rather than about fairness. First, does the contract actually contain the contingency you want to use. An offer that waived the inspection contingency has no inspection escape hatch, regardless of what the inspection found. Second, are you still inside the deadline. Contingencies expire on specific dates, and one that has passed its deadline no longer protects the deposit.
The deposit is generally at risk when a buyer walks away for a reason the contract does not cover, or walks away after the relevant deadlines have already passed. That is the scenario the deposit exists to protect the seller against, since the seller took the home off the market on the strength of the offer.
Because the answer always traces back to the specific language and the specific dates in your contract, this is a question for the attorney handling your closing, not something to settle from a general article.
These three get conflated constantly, and the confusion usually causes buyers to over-estimate how much cash they need. They are different things that arrive at different times.
| Earnest money | Down payment | Closing costs | |
|---|---|---|---|
| When it is paid | At contract signing, early | At closing | At closing |
| Who holds it | Neutral escrow holder | Paid at settlement | Paid at settlement |
| Typical size | Around 1% to 3% of price | Varies by loan program | Varies by transaction |
| Is it extra money? | No, it is credited back | No, it becomes your equity | Yes, these are fees |
| Can you get it back? | Yes, under a valid contingency | Not applicable | Not applicable |
The key line in that table is the fourth one. Earnest money is not an additional cost stacked on top of everything else. It is an early installment on money you were already going to bring. If you put down $5,000 in earnest money on a $500,000 home, that $5,000 shows up as a credit on your settlement statement and reduces the cash you wire at closing by the same amount.
For the full picture of what buyers actually pay at settlement, see our breakdown of what buyers pay to close on a home. If you want to see where the deposit falls in the overall sequence, the complete homebuying timeline lays out the order of events from pre-approval to keys.
VroomBrick is a technology platform, not a brokerage, so it does not hold your deposit and it does not negotiate your contract terms. What it does is connect you with the licensed professionals who handle both.
The licensed closing attorney connected through the platform reviews the purchase contract, including the deposit amount, which contingencies are in it, and what the deadlines are. That is the person whose job is to tell you what the document actually obligates you to. Independent showing agents provide property access, and lender partners handle financing. Your transaction dashboard tracks where each piece stands, so contingency deadlines stay visible instead of buried in a PDF someone emailed three weeks ago.
On the seller side, the same structure is what produces the savings. On a $400,000 home, a 1% technology fee is $4,000. If a seller's agent charged 3%, that would be $12,000, a difference of $8,000. Commissions are negotiable, so your number depends on what you'd have paid. The buyer's agent commission is a separate matter, negotiated directly between a buyer and the agent they choose.
If you are early enough that contract deadlines are not yet the immediate question, the free Homebuying Roadmap maps out where you stand and what comes next. If you are closer to a transaction and want dollar figures, the agent commission cost calculator shows the difference between a percentage commission and a 1% technology fee on a specific home value, and the buy page covers how the platform works on the purchase side.
To see where earnest money sits alongside price, contingencies, and closing timeline, walk through the offer simulator.
About VroomBrick: VroomBrick is a real estate technology platform, not a licensed real estate brokerage. VroomBrick does not provide brokerage services, represent buyers or sellers, or hold real estate licenses. VroomBrick charges a 1% technology fee for the platform, paid by the seller at closing. You don't pay an agent commission on the side VroomBrick works with. Closing attorneys, showing agents, and lender partners are independent licensed professionals. Commissions are not set by law and are fully negotiable. Savings examples are illustrative; actual savings vary by transaction.
Earnest money is a deposit a buyer submits after a seller accepts their offer, showing the seller the offer is serious enough to take the home off the market. It is held by a neutral third party and applied toward the buyer's costs at closing rather than being an extra expense.
Earnest money commonly falls somewhere between one and three percent of the purchase price, though the amount is set by the contract and varies by market and by how competitive the offer situation is. On a 400,000 dollar home, one percent would be 4,000 dollars.
A neutral third party holds it in an escrow account, never the seller directly. Depending on the state and the transaction, that holder is typically a closing attorney, a title company, or a brokerage. The holder releases the funds only according to the terms of the contract.
It is refundable when a buyer exercises a contingency written into the contract, such as financing, inspection, or appraisal, and does so before that contingency's deadline passes. It is generally at risk when a buyer walks away for a reason the contract does not cover, or after the deadlines have expired.
Earnest money is a deposit made when the offer is accepted, early in the process. The down payment is the larger sum paid at closing. Earnest money is not additional money on top of the down payment, it is credited toward the buyer's closing costs and down payment at settlement.
You do not receive it back as a separate check in a normal closing. It is credited to you on the settlement statement and applied against your down payment and closing costs, which reduces the amount of cash you need to bring to the closing table.
About the Author
MBA · Army Veteran
Head of Partnerships at VroomBrick. Writes about how homeowners can keep more of their equity, what the post-NAR-settlement market actually looks like, and how buying or selling works with a 1% technology fee.
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