During the home buying process you may be asked to provide an earnest money deposit. But what is an earnest money deposit exactly? After an offer has been made on the house and when buyers execute a purchase contract, the contract specifies how much money the buyer is initially putting up to secure the contract. It's a basically a good faith deposit, to show "good faith" and that you are serious in purchasing the house. It is money that you give to the home owner to insure an offer to buy the home. The earnest money will be applied to the final price of the house, but can be forfeited if you back out without legal cause. Earnest money deposits however should not to be confused with a down payment . How much earnest money do I need to deposit? The amount of the good faith deposit is usually dependent upon the agreed sale price of the real estate. Typically there is no set amount but deposits vary and typically can range anywhere from 1 to 3 percent of the sales price....