How Much Is Earnest Money on a House?
Published by Cash Flow Deals · Last updated 2026-08-05 · Published and reviewed for compliance by Camilo Palacio, a Florida Licensed Realtor
Earnest money is commonly 1% to 3% of the purchase price, though it can run higher in competitive markets. It's a good-faith deposit held by a neutral third party, credited toward the buyer's down payment or closing costs at closing, and it can be forfeited if the buyer breaches the contract outside of an agreed contingency.
| Factor | Traditional Route | Cash Flow Deals |
|---|---|---|
| Buyer Commitment Signal | Earnest money deposit, typically 1% to 3% of price, held in escrow | Contract terms are set directly with the company, no separate earnest money process |
| Risk of Buyer Walking | Buyer can often exit under inspection, financing, or appraisal contingencies and recover the deposit | Fewer contingencies tied to a buyer's own mortgage financing or appraisal |
| Dispute Risk | Disagreement over who keeps the deposit is a common source of closing delays | No earnest money dispute process at all |
What Earnest Money Actually Is
It's a good-faith deposit a buyer puts down when a purchase contract is signed, showing they're serious about the deal. It isn't a separate cost, it's later credited toward the buyer's down payment or closing costs.
Typical Earnest Money Amounts
Most contracts land in the 1% to 3% range of the purchase price. Competitive markets or unique properties can push that higher, sometimes into the mid single digits.
Who Holds It, and Where It Goes
The deposit typically sits with a neutral third party, a title company, an escrow company, or a broker's trust account, not the seller directly. That protects both sides until closing.
When a Buyer Can Get It Back
Purchase contracts usually include contingencies, inspection, financing, appraisal, that let the buyer cancel within a set window and recover the deposit in full.
When a Seller Can Keep It
If a buyer breaches the contract outside of an agreed contingency, walking away for no covered reason, the seller can typically keep the deposit as compensation for the time the house was off the market.
Common questions
Is earnest money the same as a down payment?
No. Earnest money is a good-faith deposit paid at contract signing, later credited toward the down payment and closing costs, not separate from it.
Who holds earnest money?
Typically a neutral third party, an escrow or title company, or a broker's trust account, not the seller.
Can a buyer get earnest money back?
Generally yes, if they cancel within an inspection, financing, or appraisal contingency window as written in the contract.
What happens to earnest money if the seller breaches the contract?
It's typically returned to the buyer in full.
Keep reading
What this means for your options
Understanding the sale process before you commit to a timeline protects your leverage. Our novation structure keeps the process short and the terms clear from the first conversation.
Wait and see
Keep the property as-is and hope conditions improve. The mortgage, insurance, and upkeep keep costing money while you wait, with no set date for things to turn around.
List with a traditional agent
Standard MLS listing, typically 5-6% in commission, and a financed buyer whose deal depends on appraisal, inspection, and lender approval — any of which can fall through after weeks on market.
Sell to Cash Flow Deals
No repairs, no showings, no financing contingency on your side — our novation structure connects you with a bank-financed buyer at a price locked at signing. Usually within one business day.
See your selling options before you decide anything.