Your offer will be stronger and more competitive with a higher deposit IF your financing is secure and in order. If you don't have a good financial picture to present, deposit money won't matter.
What people here were trying to say is that the good faith deposit is ultimately applied to your required funds to close. In other words, if you'll need $4000 to meet your required 3.5% contribution to the deal, why not put $2000 of that down to show your good faith and investment in this particular property?
Hope that helps!
Do I think you need to put that kind of money up front? No. Unless you're running into competition with the offer, and need to show the seller you're the one that's going through with the transaction.
In today's market, seller's should be happy they've got an offer, so unless earnest money is so low that it won't make it painful for a buyer to walk for no reason, it should never be countered. 1 or 2 thousand for homes under $200K should be good. $5K- $10K up to $500K, and if you're buying higher, use the down payment as a guide.
Not at all, if you are referring to earnest money as good faith money made with purchase offer, some amount offered at the time to let the seller know you are serious. Sometimes no money is presented at the time of offer, it's totally up to the buyer to make that decision. If you are referring to earnest money as a downpayment to the bank for a mortgage you may be short and limited on your choices.
You've been provide with good information. We would like to add that are a variety of programs and rates out there. It would likely be best for you to meet with a couple/several loan specialists to explore programs, rates and options.
There's much more to borrowing than meets the eye. It would be best to start collecting information as soon as possible.
A 1% earnest money deposit is usual in my region. Joan is correct that you probably will need to put more money down for a lender to consider you for financing. An FHA loan only requires 3.5% down if you qualify.
I suggest that you contact a local mortgage broker to learn more about what your financing options are and work with a local experienced real estate agent to guide you through the purchasing process. Usually, there is no fee to work with a real estate agent on the buying side.
Hope this helps.
Prudential Connecticut Realty
If 1% is all you can afford for a downpayment, then it will become a serious issue with lenders and what loans are available to you.