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Yvonne Argue…, Home Buyer in Greeley, CO

If the earnest money needed down is more then the 3.5 percent down payment do I have to pay the earnest money and the 3.5 percent down ?

Asked by Yvonne Arguello, Greeley, CO Fri Apr 20, 2012

Or is the earnest money applied DIRECTLY towards the down payment?

Help the community by answering this question:


The previous responses are correct, talk to your lender, and the money you put down is credited towards your total down-payment (usually, this is completely refunded to you).
0 votes Thank Flag Link Sun Sep 1, 2013
Ask your lender for confirmation, you are on the right track.
0 votes Thank Flag Link Sun Sep 1, 2013
Your earnest money will be put towards the down payment.
0 votes Thank Flag Link Sun Sep 1, 2013
Yes the Earnest money can be applied directly towards the down payment at closing.
0 votes Thank Flag Link Mon Apr 23, 2012
The earnest money is held by the title company or the real estate firm in an escrow account until closing. At closing, it is credited to the 3.5% and other closing costs. Ask your lender what the estimated costs will be so that you can be prepared.

Best wishes,

Sue Priest
Avalanche Real Estate
303 548-0643
0 votes Thank Flag Link Mon Apr 23, 2012
The earnest money is credited towards closing so you don't have to pay more towards the 3.5% down. However, you will have closing costs so more cash could be required at closing. You should check with your lender to determined how much total cash they estimate you will need at closing. Lenders are required to provide that information as part of the loan process.
0 votes Thank Flag Link Sat Apr 21, 2012
Earnest money is just Typically 1% of the purchase price. That will be credited towards your 3.5% down payment at closing. The 3.5% down will be needed at closing.
Please let me know if you have any more questions.
Thank You,
Ryan Andre
Sears Real Estate
0 votes Thank Flag Link Sat Apr 21, 2012
Reasonable answers from the others here.

However: Don't pay more than 3.5% in earnest money. That's not wise.

As already noted, the amount of earnest money is negotiable. On top of that, the customary percentage varies geographically. In some cases, it's more likely to be a set figure, like $2,000. Other times, it's more likely to be a percentage of the purchase price, such as 1%. The whole idea of an earnest money deposit is to show that you're serious, and to put that money at risk if you don't perform according to the agreement. But you ought to be looking at something roughly in those ranges . . . not 4%, 5%, or more.

Talk to YOUR Realtor (not the listing agent) and determine what a reasonable earnest money deposit would be for your area. Then offer that. If the seller wants a lot more (like 4%-5%), ask yourself if you really want all that risk.

Hope that helps.
0 votes Thank Flag Link Sat Apr 21, 2012
Don Tepper, Real Estate Pro in Fairfax, VA
As other agents have said, your earnest money gets applied toward your down payment and/or closing costs. It's NOT something on top of those expenses. Earnest money is negotiable. This is something your agent should have explained to you. Hopefully you're working with a Realtor as a Buyer's Agent. If not, you should! You need someone walking you through the process and looking out for your best in interests. Plus, a Buyer's Agent doesn't cost you anything -- we get paid by the seller through the listing brokerage firm.
0 votes Thank Flag Link Sat Apr 21, 2012
Your earnest money is held in escrow and the day of closing is given to you as a credit. That credit can be applied to the 3.5% down.
0 votes Thank Flag Link Fri Apr 20, 2012
Earnest money amounts are negotiable in most cases. If you are buying new construction, they may require additional deposits for upgrades or changes to the plan for a home currently under construction.
If your earnest money is greater than the down payment required, and you have the funds available to use, anything above the down payment could be applied toward closing costs, prepaids or refunded to you. You are also able to use more than 3.5% down payment if you choose, that is just the minimum required, not the maximum.
0 votes Thank Flag Link Fri Apr 20, 2012
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