Earnest Money in Texas
What every El Paso buyer needs to know about earnest money — how much to deposit, when it is refundable, and how it protects both sides of the transaction.
Talk to a Licensed BrokerAt a Glance
Earnest money basics
Typical Amount
1% – 2%
of the purchase price. On a $250,000 El Paso home, that is $2,500 to $5,000.
Held By
Title Company
Earnest money is deposited into an escrow account at the title company, not given to the seller.
Deposit Deadline
Within 3 days
The standard TREC contract requires the buyer to deposit earnest money within 3 days of the executed contract.
Applied At Closing
Credit to buyer
Your earnest money is applied toward your down payment or closing costs at the closing table.
Refundable or Not?
When you get your earnest money back
During the Option Period
RefundableIf you terminate during the option period (typically 7 to 10 days), you receive your full earnest money back minus the non-refundable option fee. This is the safest exit window.
Financing Contingency
RefundableIf your loan is denied and you have a financing contingency in the contract, you can terminate and receive your earnest money back. The TREC contract includes this protection by default.
Title Objections
RefundableIf the title company discovers liens, encumbrances, or other title defects that the seller cannot cure, you may be entitled to terminate and receive your earnest money back.
Seller Fails to Perform
RefundableIf the seller breaches the contract — for example, by refusing to close or failing to make agreed-upon repairs — you are entitled to your earnest money plus potential damages.
Buyer Backs Out After Option Period (No Contingency)
At RiskIf you simply change your mind after the option period expires and there is no applicable contingency, the seller is entitled to keep your earnest money as liquidated damages.
Buyer Fails to Close on Time
At RiskIf you cannot close by the agreed date and the seller does not agree to an extension, you risk forfeiting your earnest money. Always communicate financing delays immediately.
Protect Your Deposit
Smart earnest money tips
Deposit Promptly
The TREC contract requires deposit within 3 days. Late deposits can be considered a breach and put your earnest money — and the entire deal — at risk.
Use a Reputable Title Company
Your earnest money should go to a licensed Texas title company or attorney. Never wire funds to an individual or unverified account. Title companies in El Paso include Stewart Title, Fidelity National, and First American.
Understand the Option Period Tie-In
The option period and earnest money work together. The option fee (typically $100 to $500) is your right to terminate for any reason during the option period. Your earnest money stays protected as long as you terminate before the option period expires.
Higher Earnest Money Strengthens Your Offer
In a competitive El Paso market, offering 2% instead of 1% signals to the seller that you are committed. It does not increase your total cost — it simply shifts money from closing day to the contract date.
FAQ
Earnest money questions
How much earnest money should I put down in El Paso?
The standard range in El Paso is 1% to 2% of the purchase price. On a $250,000 home, that means $2,500 to $5,000. In competitive situations, offering closer to 2% can make your offer stand out. Your ProGen broker will advise on the right amount for your specific situation.
Is the earnest money deposit the same as the down payment?
No, but it counts toward it. Earnest money is a good-faith deposit made when you sign the contract. At closing, it is credited toward your down payment and closing costs. If you are putting 5% down on a $250,000 home ($12,500), and your earnest money was $2,500, you would owe $10,000 at closing for the remaining down payment.
What is the difference between earnest money and the option fee?
The option fee (typically $100 to $500) buys you the right to terminate the contract for any reason during the option period. It is paid directly to the seller and is usually non-refundable, but it is credited toward the purchase price at closing. Earnest money is a larger deposit held in escrow that is refundable under specific conditions outlined in the contract.
Can the seller keep my earnest money if the appraisal comes in low?
Not necessarily. If the appraisal comes in below the purchase price, you can negotiate with the seller, make up the difference, or terminate under certain conditions. If you terminate within the option period, your earnest money is protected. After the option period, it depends on the specific terms of your contract.
Buy With Confidence
Protect your money. Close the deal.
ProGen Real Estate guides El Paso buyers through every financial detail — from earnest money to closing day.
Get Started TodayProGen Real Estate — Josue R. Jimenez, Licensed Texas Broker — TREC #619091 — (915) 691-1082