Earnest money is usually due right after offer acceptance, and buyers often put down 1% to 3% of the purchase price, though hot markets can run higher. It shows commitment and is typically held in escrow, not handed directly to the seller.
The down payment is paid at closing and is often 3% to 20% depending on the loan type and the buyer’s profile. It is the buyer’s equity in the home, and it is separate from closing costs.
A few lesser-known points: earnest money is often credited toward the buyer’s total cash to close, and some contracts allow it to be refundable only if the buyer follows the exact contingency timelines. Also, large earnest money deposits can sometimes make an offer look stronger without increasing the loan amount.
Buyers should use earnest money when they want to strengthen an offer, and they should plan the down payment when they are budgeting for the actual purchase. Different stage. Different purpose. Different risk.
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