How much earnest money do I need when buying a home in Texas?
Reviewed August 2026 by Shannon Miles Group
There is no set amount of earnest money required in Texas. The amount is negotiated between buyer and seller and written into the contract. Earnest money is a deposit made after the contract is accepted to show the seller you are serious about the purchase. The money is applied to your down payment or closing costs at closing. It is held in a trust account and is refundable under the terms of the contract. Earnest money is not the same as the option fee, which is paid separately to the seller for the right to terminate the contract during the option period.
Understanding earnest money in Texas.
Earnest money is one of the first financial commitments you make in a Texas real estate transaction after your offer is accepted. Understanding how it works helps you enter the process with confidence.
What is earnest money?
Earnest money is a good-faith deposit that tells the seller you are serious about buying their home. By putting money into a third-party trust account, you demonstrate that you intend to follow through on the contract. The amount is negotiated as part of your offer and is specified in the contract.
How much is typical?
There is no standard percentage. The right amount depends on the purchase price, the local market, and what feels reasonable to both parties. In a competitive situation, more earnest money can strengthen your offer. In a less competitive market, a smaller deposit may be fine. Your agent can advise you on what amount is appropriate for your specific situation.
What matters is that the amount is meaningful enough to show good faith. A nominal deposit may not be viewed seriously by the seller.
How earnest money is handled
- The earnest money is deposited with a title company, escrow agent, or the listing broker's trust account within a few days of the contract being executed (accepted by both parties).
- The funds are held in trust and are not released to either party without a signed agreement or a court order.
- At closing, the earnest money is credited toward your down payment or closing costs. You do not get a separate check. It reduces what you need to bring to closing.
- If the transaction does not close, the earnest money is disbursed according to the terms of the contract. In many cases, the buyer receives the earnest money back if the termination is within the option period or under a valid contingency.
Earnest money vs. option fee
These two terms are often confused, but they serve different purposes. The earnest money is a deposit held in trust that secures the contract. The option fee is a separate, nonrefundable payment made directly to the seller in exchange for the right to terminate the contract for any reason during the option period. The option fee is typically much smaller than the earnest money and is not applied to the purchase price. If you terminate during the option period, you lose the option fee but get your earnest money back.
What happens if the deal falls through?
If the contract is terminated during the option period (and you paid the option fee), you receive your earnest money back. If the contract falls through because a contingency was not met (such as the appraisal or financing), you generally receive your earnest money back as well. If you default on the contract without a valid reason, the seller may be entitled to keep the earnest money as liquidated damages. This is a contract matter and the specific terms of your contract control the outcome.
Key points about earnest money.
- Negotiate the amount. The earnest money amount is part of your offer. There is no set rule. Discuss with your agent what feels appropriate for your situation.
- Do not confuse earnest money with the option fee. The option fee goes to the seller and is nonrefundable. Earnest money is held in trust and refundable under the contract terms. They are separate obligations in the contract.
- Understand the deadlines. Your contract will specify a date by which the earnest money must be deposited. Missing this deadline can put your contract in default. Work with your agent to ensure timely delivery.
- Know your contract's default provisions. Read the paragraph about default and liquidated damages. If you fail to perform under the contract, the seller may be entitled to keep the earnest money as their sole remedy.
- Keep records. Save your earnest money receipt and any documentation from the title company or escrow agent. You will need it at closing.
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