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Mortgage Glossary

Earnest Money

Mike Starr·Reviewed August 2026

Earnest money is a good-faith deposit made by a buyer when submitting an offer on a home. It demonstrates serious intent to purchase and is typically 1–3% of the purchase price. The deposit is held in escrow and applied toward the down payment or closing costs at closing. If the buyer backs out without a valid contingency, the seller may keep the earnest money.