Not sure how earnest money is different from your down payment? You are not alone. When you write an offer in Marietta, both numbers matter, but they work at different times and for different reasons. In this guide, you will learn what each one does, when you pay it, and how to protect your money under Georgia contracts. You will also see common refund scenarios and local timelines so you can move forward with confidence. Let’s dive in.
Earnest money vs down payment: quick snapshot
What earnest money is
Earnest money is a deposit you pay shortly after your offer is accepted to show good faith. It is held in a trust or escrow account by a broker, closing attorney, or title company named in the contract. In Cobb County, you often see flat deposits around 1,000 to 5,000 dollars or a percentage such as 1 to 2 percent of the price in typical markets. In multiple-offer situations, buyers sometimes choose larger deposits to improve their offer.
Your earnest money is not an extra fee. If you close, it becomes a credit toward your funds at closing. If you cancel for a reason allowed in the contract and meet the deadlines, it is generally refundable.
What down payment is
Your down payment is the portion of the purchase price you bring at closing. It reduces your loan amount and affects your monthly payment and mortgage insurance. Down payment amounts vary by loan program. Some programs allow as little as zero down for eligible buyers. Others require 3 to 20 percent or more.
How they work together at closing
At closing, your earnest money credit reduces what you need to bring to the table. For example, if your total cash to close is 40,000 dollars and you already paid 5,000 dollars in earnest money, you would bring 35,000 dollars to closing. Your lender will still document where both the earnest money and the down payment came from.
How Georgia contracts handle earnest money
Who holds your deposit
In Georgia, the contract will name an escrow holder, often the listing broker’s trust account, a closing attorney, or a title company. Brokers must handle client funds in a trust account and follow accounting rules set by the Georgia Real Estate Commission. You can review the Commission’s rules and guidance on trust accounts on the Georgia Real Estate Commission rules and regulations page.
When you pay it in Marietta
Local practice often calls for earnest money to be delivered within 1 to 3 business days after the contract is signed. The exact deadline is written in your contract and can be negotiated with your offer. In a hot market, sellers may prefer a faster deposit.
What happens at closing
If the transaction closes, the escrow holder sends your earnest money to the closing attorney, who applies it as a credit toward your cash to close. If the deal does not close, the release of funds depends on your contract rights, timing, and any agreed dispute process.
Contingencies and your refund rights
Common timelines in Cobb County
- Earnest money deposit: usually within 1 to 3 business days after binding agreement date.
- Inspection or option period: often 7 to 14 days. This is your window to inspect and negotiate repairs or cancel per the contract.
- Financing or loan commitment: typically 21 to 45 days, depending on the loan and your preapproval strength.
- Appraisal: usually ordered soon after contract and often completed within 7 to 14 days.
- Closing: commonly around 30 days, but negotiable.
When earnest money is refundable
If you cancel within a written contingency window and follow the notice rules in the contract, your deposit is generally refundable. The most common protections are inspection, appraisal, and financing contingencies. Be sure to give written notice before the deadline and keep copies.
When you could lose it
If you cancel outside a contingency or miss a deadline, you may be in default. Many Georgia Association of REALTORS forms allow the seller to keep your earnest money as liquidated damages if you breach the contract. Always check your specific form and deadlines.
Real-life scenarios buyers face
Inspection contingency: canceling during the period
- Likely outcome: refund of your earnest money if you cancel within the inspection window and give proper written notice.
- Tip: schedule your inspections quickly so you have time to review results and negotiate before the deadline.
Financing contingency: lender denies the loan
- Likely outcome: refund if you notify the seller before the financing deadline and provide any required denial letter.
- Tip: start underwriting fast and respond to lender document requests quickly to avoid delays.
Appraisal contingency: value comes in low
- Options: renegotiate price, add cash to cover the gap, or cancel if your appraisal clause allows.
- Likely outcome: if you cancel within the appraisal timeline, your earnest money is generally refundable.
Buyer breach: canceling without a contract reason
- Likely outcome: seller may keep your earnest money as liquidated damages if the form allows. Some contracts permit other remedies.
- Tip: do not assume you can walk away without risk. Talk to your agent before making a move.
Seller default: seller fails to perform
- Likely outcome: earnest money returned to you. You may also have additional remedies under the contract.
- Tip: your closing attorney and agent can help document the default and guide next steps.
Earnest money dispute: no mutual release
- Likely outcome: funds remain in escrow until the parties agree or the dispute is resolved per the contract process. Many contracts describe mediation, arbitration, or court options.
- Tip: keep thorough records of notices, inspection reports, and lender communications to support your position.
Down payment basics and loan programs
Typical down payments by loan type
Down payment minimums depend on the loan program and your eligibility:
- FHA loans: minimum 3.5 percent down for eligible buyers. Review homebuying resources on the U.S. Department of Housing and Urban Development’s homebuying page.
- Conventional loans: some programs allow as little as 3 percent down for qualified buyers. Learn more about low down payment options like Fannie Mae’s HomeReady mortgage and Freddie Mac’s Home Possible.
- VA loans: eligible service members and veterans may have no down payment requirement. See details on VA home loan benefits and eligibility.
- USDA loans: eligible rural buyers may have no down payment. See the USDA Single Family Housing Guaranteed Loan Program.
Your down payment choice affects your monthly payment and whether you need mortgage insurance. Ask your lender to model options so you can compare total cost.
Documenting your funds
Lenders verify where your earnest money and down payment come from. Expect to provide bank statements, proof of wire or check, gift letters for gifted funds, and documentation for retirement withdrawals if used. Many lenders look for funds to be on deposit for a set period or require explanations for large deposits. Ask your lender how they want you to document your earnest money deposit and whether they need anything from the escrow holder.
Local tips for Marietta buyers
- Confirm the amount and timing. Ask upfront what earnest money amount the seller expects and when it is due. In Marietta, 1 to 3 business days is common.
- Name the escrow holder. Make sure the contract clearly states who holds the deposit and where it will be held.
- Move fast on inspections. Book inspectors immediately so you can act within your 7 to 14 day window.
- Keep everything documented. Save inspection reports, repair requests, lender letters, and copies of every notice you send.
- Protect your funds from fraud. Wire fraud is a real risk. Verify wiring instructions by calling a trusted phone number you already have. Learn more about online crime reporting and warnings from the FBI’s Internet Crime Complaint Center.
- Align timelines with your lender. Choose financing and appraisal deadlines that match your lender’s capacity and your closing date.
- Understand the risk of waivers. Waiving inspection or appraisal can strengthen an offer but raises your earnest money risk if you later need to cancel.
How Georgia forms support the process
Many local deals use Georgia Association of REALTORS purchase and sale forms, which outline earnest money handling, contingency periods, and dispute procedures. You can read about the forms framework on the Georgia Association of REALTORS forms page. Your agent will help you follow the exact notice steps required.
Key takeaways
- Earnest money is an early deposit that shows commitment and is usually refundable if you cancel within your contract protections.
- Your down payment is paid at closing, reduces your loan amount, and follows your loan program’s rules.
- In Cobb County, deposits often range from 1,000 to 5,000 dollars or about 1 to 2 percent of price, with faster timelines in competitive situations.
- Protect your deposit by meeting every deadline, sending proper notices, and verifying any wire instructions by phone.
- Ask your lender exactly how to document your earnest money and down payment so your underwriting stays on track.
Ready to write a strong offer in Marietta with confidence about your deposit and timelines? Reach out for calm, step-by-step guidance tailored to Cobb County. Get started today with [Unknown Company].
FAQs
What is the difference between earnest money and a down payment in Georgia?
- Earnest money is an early good-faith deposit held in escrow, while the down payment is paid at closing to reduce your loan amount.
How much earnest money is typical in Marietta, Georgia?
- You often see 1,000 to 5,000 dollars or about 1 to 2 percent of the purchase price, with higher amounts in competitive situations.
When do I pay earnest money in a Cobb County home purchase?
- Many contracts require delivery within 1 to 3 business days after the offer is fully signed. Your exact deadline is in the contract.
Can I get my earnest money back if I cancel after an inspection?
- Generally yes, if you cancel within the inspection window and provide proper written notice per your contract.
What happens to my earnest money if the appraisal comes in low?
- Your options depend on your appraisal clause. You may renegotiate, add cash, or cancel within the appraisal timeline to preserve a refund.
Who holds earnest money in Georgia real estate transactions?
- The contract names the holder, often a broker’s trust account, a closing attorney, or a title company. Georgia requires proper handling of trust funds by licensed brokers.
