Earnest Money Deposits in San Diego: How Much and What Happens to It
Quick answer: Earnest money is a good-faith deposit you put down when your offer is accepted. In San Diego it often ranges from about 1% to 3% of the purchase price, held in escrow. You can usually get it back if you cancel within contingency periods. After contingencies are removed, the deposit is more at risk if you walk away without a contract reason.
When you write an offer in San Diego, the earnest money deposit is one of the first real dollars that leave your account. It shows the seller you are serious. It is not the same thing as your down payment, though it is usually credited toward your costs at closing.
How much earnest money is common
There is no single statewide rule. Many San Diego offers land in the 1% to 3% range of the purchase price, with competitive situations sometimes pushing higher. Your agent will help set an amount that is strong enough without tying up more cash than you need.
Where the money goes
The deposit is typically wired to escrow after acceptance. It sits there until closing or cancellation under the contract. It should not go directly to the seller.
When you can get it back
If you cancel within agreed contingency periods, such as loan, appraisal, or inspection timelines, you can often recover the deposit. Once contingencies are removed, walking away without a valid contract basis can put that money at risk.
Mortgage angle
Your lender will want to see the source of the earnest money on your asset statements. Large recent transfers need a clear paper trail, the same way gift funds do.
Frequently asked questions
It is usually credited toward your down payment or closing costs at closing, but it is paid earlier as a separate deposit into escrow.
If you cancel outside your contingency rights without a contract basis, the seller may have a claim to the deposit. Follow your contract and talk with your agent and escrow officer.
Yes. Underwriters verify where the funds came from, especially if the money was recently deposited into your account.
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