Earnest Money Calculator
Calculate earnest money deposit amount for real estate purchases and home buying
Calculate Earnest Money
The total purchase price of the property
Typical range: 1-3% (up to 5-10% in hot markets)
Earnest Money Results
Formula: Earnest Money = Property Price × Percentage
Calculation: $0 × 2.00% = $0
Example Calculation
Home Purchase Example
Property Price: $500,000 single-family home
Market Conditions: Competitive market
Earnest Money Percentage: 3%
Loan Type: Conventional with 20% down
Calculation
1. Earnest Money = $500,000 × 3% = $15,000
2. Total Down Payment = $500,000 × 20% = $100,000
3. Earnest Money Coverage = $15,000 ÷ $100,000 = 15%
4. Remaining Down Payment Needed = $100,000 - $15,000 = $85,000
Typical Earnest Money
Percentages vary by location and market conditions
Key Points
Shows good faith to the seller
Counts toward down payment
Held in escrow until closing
May be forfeited if you back out
When It's Refundable
Understanding Earnest Money
What is Earnest Money?
Earnest money is a deposit made by homebuyers to demonstrate serious intent to purchase a property. It shows the seller that you're committed to the transaction and helps secure the property while you complete due diligence and financing.
Purpose & Benefits
- •Demonstrates serious buying intent
- •Protects seller from frivolous offers
- •Secures the property during due diligence
- •Counts toward your down payment
Calculation Formula
Earnest Money = Property Price × Percentage
Typical range: 1-3% in normal markets, up to 5-10% in hot markets
Market Factors
Normal Market: 1-3% is typically acceptable
Competitive Market: 3-5% may be needed to compete
Hot Market: 5-10% or more may be required
Luxury Properties: Often require higher percentages
Important: Earnest money is typically held in an escrow account and applied to your down payment or closing costs at settlement.