Earnest Money in San Jose: How Much and When It's Due

Buying in Silicon Valley moves fast. When you find the right home, you need to show the seller you are serious and ready to perform. That is where earnest money comes in. If you are a first-time buyer or a busy tech professional, you want clear guidance on how much to put down, when it is due, and how to protect your deposit.

In this guide, you will learn exactly what earnest money is, typical amounts in San Jose and nearby Oakland submarkets, key timelines, and how contingencies keep your funds safe. You will also see real-world offer scenarios and a simple checklist to stay on track. Let’s dive in.

What earnest money is

Earnest money, often called an EMD, is a good-faith deposit you deliver after your offer is accepted. It signals commitment to the seller and provides funds if the buyer breaches the contract. It is not an extra fee. If the sale closes, your deposit is applied to your down payment or closing costs.

In most Bay Area transactions, an escrow or title company holds your deposit in a trust account. A broker trust account can also hold it until escrow opens. Standard California purchase agreements include spaces for an initial deposit and any additional deposits, plus an optional liquidated damages clause that can limit seller recovery if a buyer defaults.

Escrow will not release the funds without written instructions signed by both buyer and seller or a court order. If there is a dispute, escrow can hold the money until the issue is resolved.

How much in San Jose

In San Jose and across Santa Clara County, typical earnest money deposits are often in the 1 to 3 percent range of the purchase price. In competitive situations, buyers commonly offer 3 percent or more to stand out. For very aggressive or cash offers, some buyers deposit 5 percent or higher to signal strength.

Because local prices are high, those percentages translate into large dollar amounts. Expect higher absolute deposits in Santa Clara County compared with lower-priced submarkets. In parts of Oakland and Alameda County, percentage norms are similar, but the dollar totals may be smaller in lower-price neighborhoods. In some Oakland areas, 1 to 2 percent can be typical unless bidding is intense.

Quick dollar examples

• 1 percent of a 1,200,000 dollar home: 12,000 dollars
• 2 percent of a 1,200,000 dollar home: 24,000 dollars
• 3 percent of a 1,200,000 dollar home: 36,000 dollars
• 5 percent of a 1,200,000 dollar home: 60,000 dollars

Factors that influence amount

• Market heat: Multiple offers and tight supply push deposits higher.
• Buyer profile: Cash buyers or large down payments can sometimes offer less.
• Loan type: Some FHA or VA buyers use smaller deposits when other protections are strong.
• Contingencies: Shorter or waived contingencies are often paired with higher deposits.
• Seller preferences: Some sellers want a quick, sizable deposit to feel secure.

When your deposit is due

Your deposit timing is set by the contract and starts when your offer is accepted. In practice, you usually deliver the initial deposit within 1 to 3 business days. In very competitive cases, a seller may ask for same-day or next-day delivery.

Contracts can also call for additional deposits later, such as within 7 to 10 days after acceptance. If your offer includes a second deposit, make sure those funds are available and plan the transfer date in advance.

You can fund the deposit by cashier’s check, wire transfer, or personal check, depending on escrow policy. For larger deposits, wires are common. Always follow escrow’s written wiring instructions to avoid fraud. Escrow will issue a receipt after funds clear. Keep your proof of deposit.

How your deposit is protected

Your contract contingencies are what keep your deposit refundable if something goes wrong within the agreed timeframes.

• Inspection contingency: If you cancel within your inspection period, your deposit is typically refundable per the contract.
• Loan contingency: If you cannot obtain financing within the loan contingency period and you cancel properly, the deposit is refundable.
• Appraisal contingency: If the home appraises below the price and you terminate per the contract, your deposit is refundable. Some buyers instead negotiate appraisal gap coverage or waive this contingency.
• Title and HOA contingencies: If the contract includes them, you can cancel for covered issues within the timelines.

A seller may claim your deposit if you breach after removing contingencies or if you fail to perform by the deadlines. Many California contracts include an optional liquidated damages clause that, when agreed to by both parties, allows the seller to keep the deposit as the remedy for buyer default, commonly referenced as up to 3 percent of the purchase price. If there is a dispute about releasing the deposit, escrow will usually hold the funds until both parties sign instructions or a court order is issued. Mediation or arbitration clauses are often used to speed resolution.

Bay Area offer scenarios

Here are realistic buyer profiles and how the deposit plays into each offer.

• Conservative buyer with contingencies: You offer about 1 percent earnest money and keep the standard inspection and loan contingencies. You might have 10 to 17 days for inspections and 17 to 21 days for the loan. If you cancel within those periods per the contract, your deposit is refundable.
• Competitive San Jose condo buyer: You offer 3 percent earnest money, limit repair requests, and keep a loan contingency with shorter timelines. You provide full pre-approval and proof of funds to strengthen your offer while balancing risk.
• Cash buyer going all in: You offer 5 percent earnest money and waive loan and appraisal contingencies. This sends a strong signal to the seller. It also increases your risk if an issue arises because your paths to a refund are narrower.
• Buyer using staged deposits: You start with a modest initial deposit, then agree to a larger additional deposit a few days after acceptance. This can make your offer more competitive while giving you time to move funds.

Common mistakes to avoid

• Missing deposit deadlines: Read your contract and set reminders. Late funds can be a breach.
• Wiring without verification: Always verify escrow instructions to avoid fraud.
• Assuming automatic refunds: Refundability depends on your contingencies and timing.
• Relying on verbal agreements: Get all extensions, changes, and releases in writing.

Buyer checklist

Use this quick checklist to stay organized from acceptance to closing.

• Confirm your earnest money amount and every deposit deadline in the signed contract.
• Deliver funds to escrow with verified wiring instructions. Keep your receipt.
• Track inspection, appraisal, and loan timelines. Send any cancellation or contingency notices in writing before deadlines.
• Ask escrow to confirm deposit receipt and verify it appears on the escrow cover sheet.
• Discuss the liquidated damages clause with your agent or attorney if you have concerns about forfeiture risk.

Local notes for Santa Clara and Alameda

San Jose and Santa Clara County have higher median prices, so deposits in dollars are larger even when the percentage matches the broader norm. In some Oakland and Alameda County submarkets, 1 to 2 percent is common unless competition is intense. Percentages can look similar across counties, but neighborhood-level pricing drives the dollar amount.

Market conditions change quickly. In a hot week, sellers may expect faster deposits and shorter timelines. In a cooler stretch, you may have more flexibility with amount and contingencies. Align your deposit strategy with the current micro-market, whether you are shopping in Downtown San Jose, Almaden, Willow Glen, or across the Oakland, Hayward, and Berkeley corridor.

Plan your offer with confidence

Your earnest money is a key part of a strong, safe offer. By choosing the right amount, hitting every deadline, and using contingencies wisely, you can compete in Silicon Valley while protecting your funds. If you want local, data-informed guidance in English, Cantonese, or Mandarin, connect with boutique, owner-led support from Tony Ngai. Request your free neighborhood market report and home valuation, and plan your next move with clarity.

FAQs

What is earnest money in California home buying?

• It is a good-faith deposit you pay after acceptance that shows commitment, is held by escrow or a broker trust account, and is applied to closing if the sale completes.

How much earnest money should I put down in San Jose?

• Typical deposits are 1 to 3 percent of the price, with 3 percent or more common in competitive offers and 5 percent or higher for very aggressive or cash offers.

When is earnest money due after my offer is accepted?

• Most contracts call for delivery within 1 to 3 business days of acceptance, and some sellers expect faster. Your contract controls the exact timing.

Is earnest money refundable if my loan falls through?

• Yes, if your contract includes a loan contingency and you cancel within the agreed timeline following the contract procedures.

Who holds my deposit in a Bay Area transaction?

• An escrow or title company typically holds your funds in a trust account. Escrow does not release money without written instructions from both parties or a court order.

What happens to my earnest money at closing?

• It is credited toward your down payment or closing costs on the settlement statement.