Earnest money is a deposit a buyer pays after a seller has accepted his offer on a home. It’s typically between 1 to 3 percent of the contract price and is held by the escrow company. It is designed to protect the seller if the buyer walks away after the parties have gone into contract. However, buyers can get their earnest money back if a contingency allows them to cancel the contract. If the sale goes through, the earnest money is generally applied to the buyer’s down payment for the home.
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