Buying in Bellevue comes with a lot of moving parts. One of the first questions buyers ask is, “What’s the difference between earnest money and a down payment?” It is a smart question, because the two play very different roles in your offer and at closing. Understanding both can help you write a stronger offer, protect your cash, and move to the finish line with confidence.
In this guide, you will learn what each term means, how funds are handled in King County, what happens if a deal falls through, and practical strategies used in Bellevue offers. Let’s dive in.
Earnest money vs. down payment
Earnest money is a good‑faith deposit that shows a seller you are serious. You typically deliver it within a few business days after mutual acceptance, and it is held by an impartial escrow or title company. If you close, it is credited toward your cash to close.
Down payment is your equity contribution at closing. It reduces the size of your loan and varies by loan program and your goals. Your earnest deposit is applied toward this amount when you close.
Key differences:
- Purpose: Earnest money secures the contract. Down payment funds the purchase at closing.
- Timing: Earnest money is due soon after mutual acceptance. Down payment is due at closing.
- Refundability: Earnest money may be refundable if you cancel under valid contingencies and follow contract notice rules. Down payment is not a refundable deposit once you close.
What buyers typically pay in Bellevue
Bellevue is a competitive, higher‑priced market within King County. Practices vary by neighborhood and price point, but these are common ranges you will see in local offers:
Earnest money
- Lower‑price or less competitive listings: about $2,500 to $10,000, or roughly 1%.
- Mid‑price Eastside homes: about $10,000 to $25,000, or around 1–3%.
- Higher‑end or luxury listings: often $25,000 to $100,000 or more, commonly 2–5% depending on price and seller expectations.
- Some buyers use a flat number, like $5,000, $10,000, or $25,000, instead of a percentage.
Down payment
- Conventional loans: commonly 3% to 20% or more. Many move‑up buyers target 20% to avoid private mortgage insurance.
- FHA loans: minimum down payment often 3.5% for qualified borrowers.
- VA loans: eligible veterans may have 0% down options.
- Jumbo loans: more common at Bellevue price points and usually require stronger down payments and reserves.
Remember, earnest money is usually a portion of your total cash to close. For example, on a $1,000,000 purchase with 20% down ($200,000), a 3% earnest deposit ($30,000) is credited toward your $200,000 at closing.
How earnest money works during escrow
Here is how earnest money typically moves through a King County transaction:
You and the seller reach mutual acceptance on a Purchase and Sale Agreement. The contract sets your earnest amount, where it will be deposited, and the deadlines.
You deliver the deposit to the named escrow or title company within the time stated in the contract, often within a few business days.
Escrow holds the funds until closing, cancellation, or a release per the contract instructions. The money is not the seller’s until closing or a proper disbursement.
If you close, escrow credits the earnest funds toward your down payment and closing costs.
If you cancel, refundability depends on your contingencies and whether you gave the required written notices on time.
What happens if a deal falls through
The Purchase and Sale Agreement controls what happens. In our area, contracts commonly include contingencies that protect your earnest money when used correctly.
Common contingencies and outcomes:
- Inspection: Often a defined window, such as 7 to 14 days in many markets, though local practice varies. If you terminate within the period and follow notice rules, your earnest money is typically refundable.
- Financing: If you cannot obtain loan approval within the financing contingency period and you terminate properly, your earnest money is usually refundable.
- Appraisal: If the appraisal is low and you have an appraisal contingency, you may renegotiate, bring additional funds, or terminate and receive a refund per the contract.
- Sale‑of‑home: If you cannot sell your current property and the contingency allows termination, the earnest money should be refunded if you follow contract steps.
- Title: Unresolved title issues can justify termination and a refund.
If you back out without a valid contractual reason or after removing contingencies, the seller may be entitled to keep your earnest money as liquidated damages or pursue other remedies, depending on the contract.
Dispute handling:
- Escrow will usually hold the deposit until both parties sign a release or a final decision by mediation, arbitration, or a court instructs disbursement.
- Many contracts require mediation or arbitration before litigation for earnest money disputes.
Bottom line: observe deadlines, give notices in writing, and keep records. These steps protect your rights and your deposit.
Strategies to protect your funds in Bellevue
For buyers
- Get fully pre‑approved and gather proof of funds before you write. This strengthens your offer and reduces financing risk.
- Right‑size your earnest money. Larger deposits can stand out but increase exposure if you waive protections. Balance competitiveness with risk tolerance.
- Preserve key contingencies. Keep inspection and financing protections until you are satisfied with the property and your lender has issued a strong approval.
- Use clear timelines. Shorter contingency windows can work if you plan ahead and line up inspectors and lenders. Put notice deadlines on your calendar.
- Plan for appraisal gaps. If values are rising or competition is strong, discuss how you will handle a low appraisal. Decide in advance if you will bring extra funds, renegotiate, or keep the appraisal contingency.
For sellers
- Ask for meaningful earnest money and clear contingency deadlines. This helps screen for serious buyers.
- Request proof of funds and a lender pre‑approval with the offer. It reduces the odds of a financing collapse.
- Use clear contract language on earnest money disposition, including any liquidated damages provisions, and keep backup offers engaged when possible.
Real‑world examples
Scenario A: You deposit $15,000 earnest money and complete inspections on time. You discover major defects and cancel within the inspection window. Escrow returns your $15,000.
Scenario B: To compete, you waive inspection and financing contingencies and deposit $30,000. Later, your lender declines the loan. Without protections, you may lose your $30,000 and the seller may have additional remedies per the contract.
Scenario C: Your appraisal comes in below the purchase price. If you kept an appraisal contingency, you can renegotiate, add funds, or cancel and receive your earnest money back. If you waived it, you are responsible for the shortfall.
Quick offer checklist
- Get a lender pre‑approval and collect proof of funds.
- Choose an earnest money amount you can afford to risk if you waive contingencies.
- Set realistic inspection, financing, and appraisal timelines with your agent.
- Keep down payment funds in verifiable accounts. Avoid last‑minute large deposits without documentation.
- Read the Purchase and Sale Agreement language on earnest money, release conditions, dispute resolution, and notice requirements.
The bottom line
Earnest money and down payment serve different purposes. Earnest money secures your contract and can be at risk if you default without protections. The down payment funds your purchase at closing. In Bellevue’s competitive market, smart structuring of deposit amounts and contingency timelines helps you write a stronger offer without taking on more risk than you intend.
If you are planning a purchase or sale in Bellevue or the Eastside, let an experienced, calm advisor guide you through the details. Connect with The Corwin Group to walk through your goals, run scenarios, and build a clean, competitive plan.
FAQs
Is earnest money the same as a down payment?
- No. Earnest money is a good‑faith deposit held by escrow during the transaction and credited to you at closing. The down payment is your larger equity contribution paid at closing.
How much earnest money is typical in Bellevue offers?
- Many offers land around 1–3% of the price. On higher‑end homes, deposits of $25,000 to $100,000 or more are common. Match the amount to market conditions and your risk tolerance.
Who holds the earnest money in King County?
- An impartial escrow or title company usually holds the funds per the Purchase and Sale Agreement and escrow instructions. Brokerage trust accounts are possible but less common for final holding.
Can the seller keep my earnest money if I cancel?
- If you cancel outside valid contingencies or after removing them, the seller may keep the deposit or seek other remedies under the contract. If you cancel properly within contingencies, your earnest money is typically refundable.
Should I waive contingencies to win a Bellevue offer?
- Only if you fully understand the risks. Waiving protections can strengthen your offer but increases the chance of losing your deposit if something goes wrong. Discuss options with your agent and lender.
Does earnest money count toward my cash to close?
- Yes. If you close, the deposit is credited toward your down payment and/or closing costs, reducing the remaining funds you must bring to closing.
