The amount of earnest money you’ll need varies greatly based on several factors, but it’s important to understand the general range.
In the middle marketsexpect to put down 1-3% of the purchase price–this means that on a $300,000 home, you’re looking at $3,000-9,000 in equity. However, in hot markets when competition is intense, this percentage often jumps to 3-5% or more.
Entry level housing usually working differently. Rather than using percentages, these properties typically require down payments ranging from $1,000-5,000, regardless of the purchase price. This makes it more manageable for first-time home buyers while providing sellers with adequate protection.
I luxury market it plays by its own rules entirely. When dealing with high-end properties, earnest money deposits can be as high as 10% or more. For example, a $2 million home may require a $200,000 earnest money deposit to show serious intent.
Creating a savings plan to cover these upfront costs is important for buyers preparing to enter the market. For insider tips on how to save successfully, check out my guide, How to save money for your dream home | 4 inside tips.