Have you found the perfect place to settle down? Are you now looking for how much earnest money Texas requires for your dream property?

While most people think that an offer ends at showing how much money you can pay after the deal, let us dive into the concept of earnest money, which is a sizable chunk of your deposit that shows how committed you are to the property.

It is more attractive to sellers with multiple buyers, and who knows? You might get your dream property with the best strategy! Read on to learn more.

Earnest Money in Real Estate

Learning more about what is earnest money in Texas real estate is one step closer to getting approved by the seller for your dream property. It is imperative to research this topic as it is possible to lose thousands if not hundreds of dollars with the slightest mistake.

Earnest money is also known as a good faith deposit. The money you give before closing on a house deal shows how serious you are about purchasing and acquiring the property.

A deposit of Earnest money is crucial, especially during these trying times, when the housing market is continuously getting competitive due to the number of potential buyers looking for a property.

If you find yourself in love with a property with multiple buyers, the last thing you want to do is not offer earnest money.

Many countries and states have different guidelines for earnest money, but note that there are no laws governing this. It is entirely up to the buyer to pay for an earnest money pay out

Since this is more of a local custom and tradition, your competitors who are also eyeing the same property might win just because they offered a higher price for earnest money.

For example, a house worth $250,000 with three buyers will probably select someone who can offer something on the table in advance. Buyer A might offer $500, buyer B with $750, and you with nothing.

Most likely, the seller will choose buyer B as their earnest money shows how much they are willing to lose their money for the property, thereby not backing out of the agreement without any reasonable and justifiable cause. It makes the seller feel more secure.

VA Loans and Earnest Money

Some buyers may apply for VA loans, but note that earnest money is also not required here, but they can improve your chances of securing a loan to pay some of your closing costs.

Presence of earnest money show you as a strong contender that values loyalty and commitment. This strong negotiation strategy will build a strong relationship with the seller.

Your good faith deposit reflects your sincere commitment and is attractive to sellers and lenders.

Computing Your Earnest Money Deposit

When computing the needed earnest money, Texas’ percentage is almost the same as other nearby states.

A 1 to 2 percent deposit from the purchase price is a good amount that can go higher or lower depending on your financial capability and agreement with the seller.

For example, if the purchase price is $250,000, the typical earnest money Texas encourages is between $2,500 and $5,000. Of course, you are allowed to go as high as $6,000, but it will depend on your agreement with the seller.

You must also chat with your real estate agent since they are familiar with the price typically given in the local market. For example, in Texas, this would be the average price.

In other countries, an average of 3 percent as earnest money is what people usually go for as most buyers start at this percentage. In some markets, they prefer to have a standard and fixed amount instead of a share.

The latter can be disadvantageous to sellers as purchase price varies per property, and having a fixed amount from $500 to $1000 is not attractive. It is why they follow the percentage style of computing for earnest money in Texas.

To accurately know how much earnest money (Texas) you need to prepare for your offer, there are earnest money calculators online which are free of use for the public.

Just input the purchase price of the property and the percentage; you will get the amount you need to prepare in advance and pay afterward.

When it comes to when you need to pay earnest money, the answer is “when your seller has accepted the offer.” You and your seller are not allowed to hold on to your paid earnest money while the transaction is not in its closing phase.

To understand how much earnest money Texas comprehensively requires and what specific requirements you must prepare, you can speak with your agent or visit our page!

Mistake when Offering Your Earnest Money Deposit

As much as we love to settle down in our dream homes, we should also be careful when choosing one and offer our earnest money payouts that mirrors our seriousness in this business transaction.

In Texas, real estate earnest money should not be taken lightly as a small mistake can create a domino effect that might result in a negative thousand dollars on your end.

It is a pretty serious discussion, and if this scares you, read on to learn how you can improve.

Mistake 1: Too Little Earnest Money Deposit

As the world evolves, we encounter fluctuations in the market caused by inflation and deflation. And because we are doing our best to invest and save as much as possible, we cannot deny that we always look for deals that cost us as little as possible.

For many people, the most excellent possible bargain is one in which they have to pay the least amount of money, or perhaps none.

However, when it pertains to investing in property, the majority of the competition comes not only from the amount of money the seller wants to get for the property as a purchase price but also from other buyers who are eyeing the exact property you.

One of the common blunders that prospective purchasers make is making an offer with insufficient earnest money. Buyers should constantly verify their financial capabilities and the financial capability of their competition.

For example, when eyeing a $500,000 house, a competitive earnest money is between $20,000 and $25,000, equivalent to 4 and 5 percent of the purchase price.

You should note that competing offers should also be considered as some suggestions might go up even until 6 or 7 percent, especially when the property is of enormous value.

The bottom line is that buyers evaluate the weight of losing the property against losing the earnest money you paid.

Having a higher earnest money might be scary but think about how it can benefit you in the long run. Down payment and closing costs must be paid only 30 to 45 days after making an offer.

If you make a more significant earnest money, your down payment and closing fees will be smaller and fewer.

Mistake 2: Ignoring Your Contract Timelines

In any contract and agreement, timelines and deadlines are crucial to ensure that no party is aggrieved. In real estate, sellers include a timeliness clause indicating the hard closing date.

And just like any other contract, the money paid will become non-refundable. In other cases, when you forget to pay for the earnest money, your agreement will not be breached, which allows the seller to look for another buyer.

Contract timelines help all parties be more responsible, and ignoring this just means that you are not worthy of the property nor can fulfill your future financial obligations.

Mistake 3: Involving Personal Problems

There are cases when buyers bring their problems to the agreement for the property. For example, one buyer just broke up with his fiance and was suddenly willing to give up the $10,000 earnest money he gave to the seller.

It may be severe to you and cause many mental health issues, but this is never a valid reason to back out or cancel your property purchase. It is better to have multiple plans before showing your offer to the seller.

Although it is not ethical, think about different scenarios that might happen and create other plans to make sure that it is not you who will lose in this transaction.

Mistake 4: Impulsive Buying

Many people dream of a house that fits their personalities. When we see massive places with excellent features, we become excited. We become impulsive buyers who do not even check if those features are working and functional.

In Texas, earnest money is a big thing, and blindly signing the contract just because the design and interior of the property are excellent and attractive might put you at much more considerable risk.


In Texas, real estate earnest money plays a massive role in conditioning the market to offer the best options for both the seller and buyer. It is crucial, as buyers, that we conduct research as early as possible.

We need to prepare earnest money because the goal is to show how serious we are about purchasing the property. We should also check how our competitors are crafting their earnest money.

To know how much earnest money Texas encourages you to prepare, speak with your agent or contact us here at Homes by Ardor.

Ellie Chen

Ellie Chen is a graduate of New York University with a Master’s in Real Estate who has been an expert in property market trends and real estate investment for over 12 years. Her previous roles include working in real estate brokerage and as a property analyst. She has provided insights into real estate marketing, property management, and investment strategies. Her background includes roles in real estate development firms and as an agent. Beyond work, she is a great hiker and a volunteer in housing affordability programs. She is also a passionate urban cyclist and enjoys participating in community development initiatives.

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