How Much Earnest Money Do You Need When Buying a Home in Ohio?

If you're planning to buy a home in Columbus or Central Ohio, you've probably heard the term earnest money. But what exactly is it, how much should you offer, and what happens to that money if the deal falls through?

Understanding earnest money is an important part of the homebuying process, especially when you're preparing to submit an offer.

Here's what Ohio homebuyers should know.

What Is Earnest Money?

Earnest money is a deposit a buyer makes after entering into a purchase agreement to demonstrate their commitment to purchasing the property.

The money is typically held by a title company, real estate brokerage, or another designated escrow holder until closing.

It provides the seller with some assurance that the buyer intends to follow through with the transaction.

How Much Earnest Money Is Typical in Ohio?

There is no statewide law requiring a specific earnest money amount for residential purchases in Ohio.

In many Central Ohio transactions, buyers may offer approximately 1% to 2% of the purchase price, although the amount can vary significantly depending on the property, competition, and terms of the offer.

For example:

These are examples, not required amounts. Some transactions involve smaller deposits, while competitive situations may call for larger ones.

Is Earnest Money an Additional Cost?

Generally, no.

If the purchase closes successfully, your earnest money is typically credited toward your down payment or other closing costs.

For example, if you need $20,000 in total funds at closing and have already deposited $4,000 in earnest money, that deposit would generally reduce the remaining amount you need to bring to closing to $16,000.

Your lender and closing company will calculate the final amount based on your specific transaction.

When Do You Pay Earnest Money?

The purchase agreement establishes when and where the deposit must be delivered.

In some transactions, earnest money is due within a few days after the contract is accepted.

It's important to follow the exact deadline in your agreement. Missing a deposit deadline can create contractual problems even if you fully intend to purchase the home.

Can You Get Your Earnest Money Back?

Potentially, yes.

Whether your earnest money is refundable depends on the purchase agreement and the reason the transaction doesn't close.

Common situations where a buyer may be entitled to a refund include:

• Terminating within an applicable inspection contingency

• Being unable to obtain financing under the contract's financing provisions

• Certain title issues that cannot be resolved

• Other termination rights specifically included in the agreement

However, these protections depend on the contract language and applicable deadlines.

Buyers should never assume they can cancel a purchase for any reason and automatically receive their deposit back.

When Could You Lose Your Earnest Money?

A buyer may risk losing earnest money if they breach the purchase agreement without a valid contractual basis for terminating.

For example, deciding not to purchase a home simply because you changed your mind could put your deposit at risk.

The outcome depends on the agreement and the circumstances. In a dispute, the escrow holder may require written instructions from both parties or another legally authorized resolution before releasing the funds.

Does More Earnest Money Make Your Offer Stronger?

It can.

In a competitive housing market, a larger earnest money deposit may signal to the seller that you're financially prepared and serious about purchasing the property.

However, earnest money is only one part of an offer.

Sellers also consider:

• Purchase price

• Financing type

• Down payment

• Inspection terms

• Appraisal-related provisions

• Closing timeline

• Possession date

A strong offer balances attractive terms with appropriate protections for the buyer.

What Happens to Earnest Money at Closing?

Once the transaction reaches closing, the deposit is accounted for on the settlement statement.

It is generally applied toward the buyer's required funds, reducing the remaining amount due.

Make sure you receive documentation showing that your earnest money was properly credited.

A Few Tips for Ohio Homebuyers

Before submitting an offer, make sure you understand how earnest money works.

Always confirm who will hold the funds, when the deposit is due, and what your purchase agreement says about refunds and potential forfeiture.

You should also verify payment instructions directly with the escrow holder using a trusted phone number. Real estate transactions can be targets for wire fraud, so never rely solely on emailed instructions when transferring money.

Final Thoughts

Earnest money is a relatively small part of the overall homebuying process, but it plays an important role in protecting the interests of both buyers and sellers.

Understanding how much to offer, when it's due, and when it may be refundable can help you make more confident decisions.

At Associates Realty, we help buyers throughout Columbus, Dublin, Westerville, Worthington, and Central Ohio understand every step of purchasing a home.

Whether you're buying your first property or preparing to make your next move, our team is here to help you navigate the process with confidence.