What Is Earnest Money and How Much Is Normal in San Jose? (2026 Guide)

What Is Earnest Money and How Much Is Normal in San Jose? A 2026 Buyer Guide

Once buyers decide how much to offer on a home, the next question almost always comes up:

• “What is earnest money?”

• “How much do I need to put down?”

• “Is it refundable?”

• “What happens if something goes wrong?”

In San Jose, earnest money plays an important role in making your offer competitive — but it’s also one of the most misunderstood parts of the buying process.

This guide explains what earnest money is, how much is normal in San Jose, and how buyers protect it, so you can move forward confidently in 2026.

For a full overview of the buying process, start here:
👉 https://re38.com/san-jose-home-buying-process-guide

What Is Earnest Money?

Earnest money is a good-faith deposit a buyer provides after an offer is accepted.

It shows the seller that you’re serious about moving forward and willing to put money at risk — within the protections of your contract.

Earnest money is:

• deposited into escrow

• held by a neutral third party

• credited toward your purchase at closing

It is not an extra fee — it becomes part of your down payment and closing funds.

How Much Earnest Money Is Normal in San Jose?

In San Jose, earnest money is typically:

• 1%–3% of the purchase price

For example:

• $1,200,000 purchase → $12,000–$36,000 earnest money

The exact amount depends on:

• market conditions

• offer competitiveness

• price point

• buyer comfort level

Higher earnest money can strengthen an offer, but it should always be balanced with risk protection.

For offer-strategy context, review:
👉 https://re38.com/blog/how-much-should-i-offer-on-a-house-san-jose

When Is Earnest Money Due?

In most San Jose transactions:

• earnest money is due within 1–3 business days after offer acceptance

• funds are typically wired to escrow

Timely delivery is important — delays can raise red flags or create contract issues.

Is Earnest Money Refundable?

Yes — as long as contingencies are still in place.

Earnest money is generally refundable if you cancel the contract under a valid contingency, such as:

• inspection contingency

• appraisal contingency

• financing contingency

Once contingencies are removed, earnest money typically becomes non-refundable.

Understanding when and how contingencies protect you is critical.

For a deeper breakdown, see:
👉 https://re38.com/blog/how-do-contingencies-work-inspection-appraisal-financing

What Happens to Earnest Money During Escrow?

Earnest money remains in escrow while:

• inspections are completed

• the appraisal is ordered

• the loan is finalized

At closing:

• it is applied toward your purchase

• it reduces the amount you need to bring to closing

If the transaction does not close and contingencies were properly used, earnest money is returned to the buyer.

To understand the full escrow timeline, review:
👉 https://re38.com/blog/what-happens-after-my-offer-is-accepted-san-jose

How Earnest Money Affects Offer Strength

In competitive situations, earnest money can:

• signal buyer confidence

• reassure sellers

• support stronger terms

However, more is not always better.

The goal is to:

• remain competitive

• protect your funds

• avoid unnecessary risk

Earnest money should support your offer — not create anxiety.

Common Earnest Money Mistakes Buyers Make

Some common issues I see:

• assuming earnest money is non-refundable immediately

• putting more down than they’re comfortable risking

• removing contingencies too quickly

• not fully understanding contract timelines

Most problems can be avoided with proper guidance and planning.

What You Should Do Next

Before deciding how much earnest money to put down, it’s important to:

• understand your contingencies

• know your comfort level

• align with current market conditions

• coordinate with your lender and escrow timeline

I help buyers structure offers that are:

• competitive

• protected

• aligned with their goals

👉 If you want help preparing a strong, safe offer, reach out here:
https://re38.com/contact

📞 Questions About Earnest Money? Let’s Talk

Earnest money doesn’t have to be confusing or stressful.

A short conversation can help you understand how much makes sense — and how to protect yourself throughout the process.

Zaid Hanna
408-515-1613
www.re38.com