What Is Earnest Money?

An earnest money deposit shows a home seller that you're committed to buying.

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Written by Barbara Marquand
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Earnest money is a good-faith deposit you make on a home to show the seller you're serious about buying. The money is deposited after the seller has accepted your offer and is usually kept in an escrow account. When the sale closes, you can keep the cash or apply the money toward the purchase.

Although it's not required, be prepared to offer earnest money when shopping for a house, especially in a tight housing market. Otherwise, you'll have a hard time competing against other buyers.

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