Mortgage Financing - The Earnest Money Deposit

Your Earnest Money Deposit

An earnest money deposit is money put down to demonstrate your seriousness about buying a home. The amount must be substantial enough to demonstrate good faith and is usually between 1-5% of the purchase price (though the amount can vary with local customs and conditions). If your offer is accepted, the earnest money becomes part of your down payment or closing costs. If the offer is rejected, your money is returned to you. If you back out of the deal for reasons other than those outlined in your contract then you will have to forfeit your entire earnest money deposit. It is also sometimes customary to bump up the amount of your earnest money deposit once all contingencies have been met.