Can earnest money be less than 1%?

Yes. No rule sets a minimum percentage, and the amount is whatever the buyer and seller agree to in the contract. In slower markets, or in areas that use flat amounts, deposits under 1% are common. A $2,500 deposit on a $500,000 home is 0.5%.

A small deposit can weaken an offer when other buyers are competing for the same house, because sellers read the deposit as a sign of commitment. In a quiet market with few offers, it may not matter, and keeping the deposit small leaves more cash free for moving costs and repairs.

Some places follow a flat-dollar custom instead of a percentage, so ask your agent what local sellers expect. To compare, see 0.5% earnest money or plug your own numbers into the earnest money calculator.