Earnest Money vs Down Payment

coins going into a piggy bank symbolizing saving money for a home

Earnest money vs down payment – Cash needed to buy a home

Homebuyers are often confused by the terms earnest money vs down payment. Both are cash amounts needed to buy a home, but they are due from the buyer at different times.

Quick explanation in this video EM vs Down Pmt

$1 dollar bills symbolizing the earnest money

What is Earnest Money

Earnest money is cash which the seller can keep if the buyer defaults on the contract. This money is due as soon as the offer is accepted and is held by a third party, usually escrow, until closing. This money is at risk so buyers need to be aware they could lose this money. There are usually several contingencies in the contract however, which will let a buyer get the earnest money back.

More on earnest money in this video EM

person holding cash symbolizing the down paymentWhat is the Down Payment

The down payment is the difference between the loan amount and the purchase price. With their lender the buyer determines how much they will put down (down payment) on the house at closing, with the remainder as a loan – the mortgage. The down payment is due at closing. Lenders have all sorts of rules about the down payment. Talk to the lender about the source of the down payment, and when it needs to arrive in the buyer’s bank account.

More about the down payment in this video Down Pmt

What Other Cash Might Be Needed?

Along with the earnest money and down payment there may be more cash needed to buy a home. Buyers should do a home inspection! The home inspector is paid at the time of the inspection. There will also be an appraisal. Sometimes the cost of the appraisal is rolled into the loan amount. Talk to the lender about appraisal costs. Here is a previous post on the difference between home inspection vs appraisal. There may be other closing costs, again talk to the lender.

person holding coins symbolizing a gift of money to help buy a homeDown Payment Assistance

What if a buyer just has not been able to save enough for a down payment but they have great credit and are ready to be a homeowner? There are down payment assistance programs. Some are local and are usually need-based. One of the most used programs in the Tri-Cities is the Washington State Housing Finance Commission’s down payment assistance programs. Contact me for more on this program, I am an instructor for the program and many of my clients have used the WSHFC programs.

Buying a Home

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Kay Lehmann


Kay Lehmann



Kennewick- HomeSmart Elite Brokers

7411 W. Clearwater #A
Kennewick, WA 99336

Business Hours: 8a-6:30p M-F, 9a-2p S-S

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