How the Earnest Money Calculator Works

One calculation engine produces every number on this site, from the homepage calculator to the tables on the percent pages and home price pages. This page shows what it does so you can check it.

Deposit and percent

earnest money   = home price x percent / 100
percent         = earnest money / home price x 100

On a $500,000 home, 2% is $10,000, and a $7,500 deposit is 1.5% of the price.

The typical range

low end   = home price x 1%
high end  = home price x 3%

The 1% to 3% range is common practice, not a rule. PNC Bank describes it as what buyers can expect to put down in many markets. Your contract, your market and local custom decide what is normal where you buy. The second tab of the calculator rates a deposit against this range: under 1% is below typical, 1% to 3% is typical, over 3% up to 5% is above typical, and over 5% is well above typical.

Cash due at closing

down payment       = home price x down payment percent
closing costs      = home price x closing cost percent
total needed       = down payment + closing costs
credit             = the smaller of earnest money and total needed
cash still due     = total needed - credit

When a sale closes, the deposit is credited to the buyer, so it reduces the cash still owed. If the deposit is more than the total needed, the difference comes back to the buyer. The calculator does not split the credit between the down payment and closing costs, because on the Closing Disclosure the deposit is one line that lowers the cash to close.

What the calculator assumes

• Closing costs are an estimate you set as a percent of the price. The default is 3%. Your Loan Estimate gives the real figures for your loan.
• The down payment is a percent of the price, chosen from common loan minimums and the 20% that avoids mortgage insurance on most conventional loans.
• No seller credits, lender credits, prepaid interest or escrow deposits for taxes and insurance are included.

What it does not do

It does not tell you whether a deposit is refundable. That depends on your contract, its contingencies and its deadlines. When earnest money is refundable covers how that usually works.