Earnest money deposit, also known as a good faith deposit, is a sum of money put down by the buyer to demonstrate seriousness about buying a home. Earnest money serves as a deposit on the property the buyer is looking to purchase.

Earnest money is a deposit (usually 1-2% of the home’s total purchase price) made by a homebuyer at the time they enter into a contract with a seller. Earnest money demonstrates the buyer’s interest in the property and is generally deducted from your total down payment and closing costs.