What is Earnest Money Deposit?
An earnest money deposit is a good-faith sum the buyer puts up shortly after an offer is accepted to show they are serious. It is held by escrow and later applied toward the down payment or closing costs. If the buyer cancels for a reason allowed by their contingencies, it is typically refundable; if they walk away without a valid reason, they may lose it.
Example: On a $600,000 offer, the buyer deposits $18,000 in earnest money into escrow, and at closing that amount is credited toward their down payment.