What is earnest money in a home purchase?

Earnest money is a deposit made to a seller that signals a buyer's serious intention to purchase. It is typically 1-3% of the purchase price and is paid shortly after the offer is accepted. It is credited toward the down payment or closing costs at settlement.

How large should my down payment be?

A conventional loan typically requires 5-20% down. Putting 20% down avoids Private Mortgage Insurance (PMI). FHA loans allow as little as 3.5% down. VA and USDA loans may require no down payment for eligible buyers.

What happens at closing?

At closing, the buyer pays the remaining balance (down payment minus earnest money + closing costs), the lender funds the loan, the title is transferred, and you receive the keys. Closing costs typically run 2-5% of the loan amount.

🏠Real Estate Payment Schedule Calculator

Enter the home price, contract date, and target closing date to plan your earnest money, down payment, and closing balance timeline.

Home Purchase Price ($)

USD

Contract / Offer Acceptance Date

Target Closing Date

Earnest Money (%)

Down Payment (%)

Planning Your Home Purchase Timeline

Working backward from your target closing date helps you plan when cash needs to be ready. The typical US home purchase involves earnest money at contract, a home inspection within 10 days, and the full down payment plus closing costs at settlement.

Note that the "remaining balance" in this calculator represents the portion financed by your mortgage lender—not another cash payment. Your lender funds that amount at closing, and you repay it through monthly mortgage payments.

Typical US Home Purchase Timeline

Day 0: Offer accepted, earnest money due. Day 1-10: Home inspection. Day 7-21: Loan application and appraisal. Day 30-45: Clear-to-close. Day 45-60: Closing day—sign documents and receive keys.

Frequently Asked Questions

What are closing costs and how much are they?

Closing costs include lender fees, title insurance, appraisal, attorney fees, prepaid taxes and insurance, and more. They typically range from 2-5% of the loan amount. Your lender must provide a Loan Estimate within 3 business days of your application.

Can I get earnest money back if the deal falls through?

It depends on the contingencies in your contract. Standard contingencies (financing, inspection, appraisal) usually allow you to recover your earnest money if you back out within the contingency period. After contingencies are removed, you risk losing your deposit if you walk away.

What is PMI and how do I avoid it?

Private Mortgage Insurance (PMI) is required when your down payment is less than 20%. It protects the lender, not you, and typically costs 0.5-1.5% of the loan amount annually. You can avoid PMI by putting 20% or more down, or by using a piggyback loan.

Planning Your Home Purchase Timeline

Typical US Home Purchase Timeline

Frequently Asked Questions

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