What Is Earnest Money?

Earnest money is a good-faith deposit you give when making an offer on a home. It shows the seller that you’re serious about buying.

How Earnest Money Works

1. You Make an Offer

• Along with your offer, you include an earnest money deposit

2. Money Goes Into Escrow

• The deposit is held by a neutral third party (escrow)

• It’s not given directly to the seller yet

3. Applied to Your Purchase

• If the deal goes through, the earnest money is usually credited toward your down payment or closing costs

How Much Is Earnest Money?

• Typically 1%–3% of the home price

👉 Example:For a ₱3,000,000 home

• Earnest money ≈ ₱30,000–₱90,000

Is Earnest Money Refundable?

✅ Yes (In Many Cases)

You can get it back if:

• The home inspection reveals major issues

• Financing falls through

• Conditions in the contract aren’t met

❌ Not Always

You may lose it if:

• You back out without a valid reason

• You miss agreed deadlines

👉 Always check the contract terms carefully.

Why It Matters

• For sellers → Filters serious buyers from casual ones

• For buyers → Strengthens your offer in competitive markets

Earnest Money vs Down Payment

• Earnest money → Deposit to show commitment

• Down payment → Larger amount paid at closing

👉 Earnest money becomes part of your total payment if the deal closes.

Reality Check

Earnest money isn’t just a formality—it’s a financial commitment. Make sure you understand the conditions before putting it down.