What Is Earnest Money?

Short answer

Earnest money is the deposit you make after a seller accepts your offer to show you are committed to buying, and it is credited toward your down payment or closing costs at closing. In Florida it is held by an escrow agent such as a title company, attorney or broker. On the common Florida As-Is contract, if no number of days is filled in, the initial deposit is due 3 days after the effective date (as of October 2026).

Definition

Money the buyer deposits with a neutral escrow agent after the contract is signed. It is applied to the purchase at closing, or refunded or released based on the contract terms.

Worked example

Example only: you buy a $450,000 condo with 10% down ($45,000) and put $20,000 earnest money with the title company. At closing the $20,000 is credited, so you bring the remaining $25,000 of the down payment plus closing costs. If your financing contingency applies and you cancel within its terms, the deposit can come back to you.

Florida deposit rules

Per Florida Realtors' summary of state rules (as of October 2026):

• A sales associate must deliver the deposit to their broker by the end of the next business day
• A broker must deposit it within 3 business days (weekends and holidays excluded)
• If a title company or attorney holds it, the contract must list their name, address and phone
• On the As-Is contract, an additional deposit defaults to 10 days after the effective date if left blank

What your lender needs

When the deposit counts toward your required funds, Fannie Mae requires the lender to verify it came from an acceptable source. Expect to show:

• A copy of the cleared check or wire, or a written statement from the escrow holder
• Bank statements showing the two-month average balance supported the deposit

Do not borrow the deposit or move cash around without telling us first. If family helps, use a gift letter.

In South Florida

Florida regulates how licensees handle deposits under section 475.25(1)(k), Florida Statutes, and FREC rules. In many Florida closings the title or closing agent also serves as escrow agent. Miss the deposit deadline and you may be in default days after signing, so wire it on time and confirm wiring instructions by phone to avoid fraud.