How Much Earnest Money Texas: What It Is, How Much You Need, and More

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If you’re considering buying a house in Texas, you’ll want to know about earnest money. This is a deposit that shows the seller that you’re serious about wanting to buy the property. But how much earnest money do you need to put down and when is it due? Who gets it if the deal falls through?

In this article, we’ll tell you how much earnest money Texas requires, when it’s due, and more. We’ll also answer some common questions about earnest money deposits in Texas. So whether you’re a buyer or seller, read on for all the information you need!

What Is Earnest Money When Buying A House Texas?

Earnest money is a deposit made by a buyer towards the purchase of a home. The amount of earnest money required will vary depending on factors such as the purchase price of the home and whether you’re working with a real estate agent. 

There are cases when earnest money is held in an escrow account until closing by the title company or real estate agent. At that time, it will be applied towards your down payment and closing costs. 


If you have any further questions about how much earnest money is required in Texas or when it’s due, be sure to consult with a qualified real estate professional. 

Tell Me the Value of Earnest Money?

The amount of earnest money you’ll need to put down depends on the purchase price of the home. For example, if you’re buying a $200,000 house, your earnest money deposit could be anywhere from $500 to $2000. But keep in mind that this is just a deposit. It’s not the same as a down payment, which is what you’ll pay at closing.

Moreover, the earnest money you put down isn’t necessarily the same amount that you’ll pay at closing. If your offer is accepted, the earnest money goes towards your down payment. So if you put down $2000 in earnest money and your down payment is $20,000, then $18,000 of the earnest money will go towards the down payment and the remaining $2000 will be credited back to you at closing.

How Much Earnest Money Texas Requires

In Texas, how much earnest money you’ll need to put down depends on the purchase price of the home. There are a few things you need to consider:

  1. If the purchase price is less than $500,000, you’ll need to put down at least $500 in earnest money.
  2. If the purchase price is between $500,000 and $999,999, you’ll need to put down at least 0.50% of the purchase price. So if you’re buying a $700,000 house, your earnest money deposit would be at least $3500.
  3. If the purchase price is $1000,000 or more, you’ll need to put down at least $5000 in earnest money.

When Is Earnest Money Due in Texas?

In Texas, the earnest money is typically due within 48 hours of an offer being accepted. This means that you’ll need to have the funds available as soon as your offer is accepted in order to avoid losing the home to another buyer. 

If you’re unable to come up with the earnest money right away, you may be able to include a contingency in your contract that allows you more time to get the funds together. However, keep in mind that adding contingencies can make your offer less attractive to sellers since it adds more risks for them.

What is the Difference Between Earnest Money and Down Payment?

The main difference between earnest money and down payment is that earnest money is considered a good faith deposit, while the down payment is the final payment made at closing.

Earnest money shows that you’re serious about buying the property, while the down payment is used to cover the remaining balance of the purchase price. So if you have any questions about earnest money or down payments, be sure to ask your real estate agent or attorney before signing a contract. You can also check out trusted sites like https://homesbyardor.com/earnest-in-texas/ and learn as much as you can about earnest money.

Another difference is that earnest money may be refundable in certain situations while a down payment is not. For example, if you’re unable to get financing or if there are material defects with the property, you may be able to get your earnest money back but you would still owe the down payment. 

Does Texas Require Earnest Money Deposit?

Yes, in Texas earnest money deposits are typically required in order to show that buyers are serious about wanting to purchase a property. The amount of the deposit will depend on the purchase price of the home as well as any contingencies that are included in the contract. 

Taxes, title insurance, and other expenses may also be required in addition to the earnest money deposit. The amount of earnest money you’ll need to put down will depend on the purchase price of the home.

Is Earnest Money Refundable in Texas?

In general, earnest money is refundable if the deal falls through or if the buyer backs out for a reason that’s allowed in their contract. For example, if the buyer cannot obtain financing or if there are problems with the home that were not disclosed by the seller, then the buyer may be able to get their earnest money back. 

However, if the buyer backs out for a reason that’s not allowed in their contract, then they may forfeit their earnest money. Reading your contract and understanding all terms before signing is a good start.

How to Compute Earnest Money Texas Percentage?

The amount of earnest money you’ll need to put down will depend on the purchase price of the home. If you’re a new homeowner, you will most likely be expected to put down between 0.25% to 0.50% of the home’s value as an earnest money Texas percentage deposit.

If you’re buying a home in Texas, the seller may request that you put down an earnest money deposit. But if you don’t want to put down a deposit, you can try negotiating for a lower deposit or even ask the seller to pay your earnest money deposit.

If you have already owned a home in Texas within the past 12 months, you may only need to put down 0.125% of the home’s value. In this case, if you are buying a $200,000 house, your earnest money deposit would be $250. 

Moreover, remember that earnest money is used to show that you’re serious about buying a property and it also provides protection for both buyers and sellers.

What Happens to Earnest Money?

In most cases, earnest money is held in escrow by the title company or real estate agent until closing. This money is then applied to your down payment and closing costs. But in some cases, earnest money may be non-refundable. So it’s important to read your contract carefully and make sure you understand all of the terms before signing. 

If the deal falls through for any reason that isn’t due to you, such as the seller being unable to provide clear title to the property, you may be entitled to a refund of your earnest money deposit.

Rules for Release of Earnest Money in Texas

There are specific rules that must be followed in order for earnest money in Texas to be released. For example, if the buyer backs out of the deal without a valid reason, the seller is entitled to keep the earnest money deposit. 

Some common reasons for earnest money to be forfeited include the buyer not being able to get financing, not being able to sell their current home, or changing their mind about buying the property. So it’s important to make sure you’re 100% sure you want to buy the property before signing a contract and putting down an earnest money deposit. 

Who Gets Earnest Money If Deal Falls Through in Texas?

If the deal falls through for any reason that isn’t due to you, such as the seller being unable to provide clear title to the property, you may be entitled to a refund of your earnest money deposit.

However, if the deal falls through because of something you did, such as not being able to get financing or changing your mind about buying the property, then the seller may keep your earnest money deposit. So it’s important to be absolutely certain you want to buy the property before signing a contract and putting down an earnest money deposit. 

Who Gets Earnest Money When Buyers Back Out?

When buyers back out, the earnest money may be forfeited to the seller or, depending on the situation, it may be refunded to the buyer. For example, if the buyers back out because they’re unable to get financing, then the earnest money would most likely be forfeited to the seller. 

However, if there are material defects with the property that were not disclosed upfront, then the buyer may be entitled to a refund of their earnest money deposit. 

To Sum it Up

Earnest money is an important part of the home-buying process and it’s important to consult with a qualified real estate professional if you have any questions about how much earnest money Texas requires from home buyers or when it’s due. 

If you’re ready to start the home-buying process, contact a qualified real estate agent today. They can help you navigate the earnest money process and make sure you’re getting the best deal possible on your new home.