# Earnest money

> A deposit you make when your offer is accepted, to show the seller you're serious. A neutral party holds it, and at closing it goes toward your down payment or closing costs. Walk away for a reason your contract allows, like during due diligence, and you get it back. Walk away for a reason it doesn't, and you can lose it.

By David Knorr, founder of BuyWise Home. Last reviewed October 28, 2026. Web page: https://www.buywisehome.com/guide/glossary/earnest-money

## Why it matters to you

It's usually thousands of dollars, and it's the money at risk if you miss a deadline. Most buyers who lose it don't lose it over the house: they lose it over the calendar.

> "I came within minutes of losing **$20,000 in earnest money** on my first home." (David Knorr, founder of BuyWise Home)

## An example with numbers

**$3,500** on a $350,000 home, at 1%. The amount is set in your offer; 1% to 3% of the price is common.

| Situation | What happens |
|---|---|
| At closing | Credited to you |
| You walk away during due diligence | Back to you |
| Your financing falls through, with a financing contingency | Usually back to you |
| You walk away after due diligence, with no other right in the contract | Usually kept by the seller |

## Earnest money or option money?

In Georgia you often pay both. They do different jobs.

|  | Earnest money | Option money |
|---|---|---|
| **Who gets it** | A neutral holder named in the contract | The seller |
| **How much** | Usually thousands | $10 on the standard form; a seller can ask for more |
| **What it buys** | Shows you're serious | Your right to walk away during due diligence |
| **You walk away in due diligence** | Refunded | The seller keeps it |

## Common questions

**Is earnest money part of my down payment?**
Yes. It isn't an extra cost: at closing it's credited toward your down payment or closing costs.

**Who holds it?**
The holder your contract names, often the listing broker or the closing attorney. It sits in an escrow account until closing.

**When can I lose it?**
When you back out for a reason the contract doesn't give you, most often after due diligence has ended. Know your deadlines: [work out yours](https://www.buywisehome.com/guide/tools/due-diligence-deadline).

## Related

- [Step 5: Make an offer](https://www.buywisehome.com/guide/make-an-offer)
- [Option money](https://www.buywisehome.com/guide/glossary/option-money): A small payment to the seller for the right to walk away during due diligence.
- [Escrow](https://www.buywisehome.com/guide/glossary/escrow): Money held by a neutral party until the deal closes, and later, your tax and insurance account.
- [Contingency](https://www.buywisehome.com/guide/glossary/contingency): A condition that lets you back out without losing your deposit.
- [Binding Agreement Date](https://www.buywisehome.com/guide/glossary/binding-agreement-date): The day the contract becomes final. Most Georgia deadlines count from it.

_General information based on the standard Georgia REALTORS® purchase contract and public guidance. Your own contract decides: read it, and ask your agent or closing attorney about anything that matters. Not legal or financial advice._