Foundations
Earnest Money & Contingencies
The deposit that shows you are serious — and the protections that keep it safe.
When you make an offer, you put down earnest money — a good-faith deposit that tells the seller you are serious. It is held by a neutral party and, at closing, applied to your down payment or costs. Understanding how it is protected keeps it from ever being at risk.
What protects your deposit: contingencies
A well-written offer includes contingencies — conditions that must be met or you can withdraw and keep your earnest money. The common ones:
- Financing contingency — protects you if your loan does not come through.
- Appraisal contingency — protects you if the home appraises below the price.
- Inspection contingency — lets you renegotiate or exit based on the home’s condition.
- Title contingency — protects you if the title is not clean.
Contingencies are your safety net. Waiving them can make an offer more competitive, but it puts your deposit — and more — at risk. Never waive a contingency without understanding exactly what you are giving up.
Pro tip
A strong pre-approval lets you write a confident financing contingency and sometimes a shorter one, which sellers love — without recklessly waiving your protection. Strength and safety are not opposites when your financing is solid.
Common questions
Do I lose my earnest money if the deal falls through?
Not if a contingency protects you. If your financing, appraisal, inspection or title contingency is not satisfied and you withdraw within its terms, you generally get your deposit back. Waiving contingencies is what puts it at risk.
How much earnest money is normal?
It varies by market and price, commonly a small percentage of the purchase price. A larger deposit can strengthen your offer, but it should always be protected by sensible contingencies.