The amount of earnest money youβll need varies significantly based on several factors, but itβs essential to understand the typical ranges.
In average markets, expect to put down 1-3% of the purchase priceβthis means on a $300,000 home, youβre looking at $3,000-9,000 in earnest money. However, in hot markets where competition is fierce, this percentage typically jumps to 3-5% or even higher.
Entry-level homes often work differently. Rather than using percentages, these properties typically require flat amounts ranging from $1,000-5,000, regardless of the exact purchase price. This makes it more manageable for first-time homebuyers while providing sellers adequate protection.
The luxury market plays by its own rules entirely. When dealing with high-end properties, earnest money deposits can reach 10% or higher. For example, a $2 million home might require a $200,000 earnest money deposit to demonstrate serious intent.
Building a savings plan to cover these upfront costs is critical for buyers preparing to enter the market. For insider strategies on how to save effectively, check out my guide, How to save money for your dream house | 4 insider tips.
