Earnest Money Deposits — What Buyers Need to Know

Your Guide to Protecting Your Earnest Money When Buying a Home

If you’re planning to buy a home, you’ve probably heard of an earnest money deposit (EMD)—but do you know what it is and how to protect it?

An earnest money deposit is a good faith deposit that shows the seller you’re serious about buying their home. Typically, this amount is 1-3% of the home’s purchase price and is held in escrow until closing. If the deal goes through, it gets applied to your down payment or closing costs.

Can You Lose Your Earnest Money?

Yes—if you back out of the contract without a valid reason. That’s why it’s critical to have the right contingencies in place.

How to Protect Your EMD:

• Negotiate strong contingencies. Work with an agent to ensure you have financing, home inspection, and appraisal contingencies in your contract.
• Stick to your timeline. Missing key deadlines (like inspection periods) could mean losing your deposit.
• Use secure payment methods. Most escrow companies accept wire transfers or cashier’s checks—but not cash or credit cards.

Buying a home is exciting, but you don’t want to lose money due to a small mistake! Let’s chat about how to protect your deposit and navigate the home-buying process with confidence. Reach out today!