Ever wondered why you write two checks when you buy a home in San Antonio? You are not alone. Many buyers mix up earnest money and down payment, which can lead to stress, delays, or even a weaker offer. The good news is that once you understand the difference, you can move with confidence and protect your budget.
In this guide, you will learn what each payment covers, what is typical in Bexar County, when the money is due, and how to use both to strengthen your offer. You will also get a simple checklist to keep your contract on track. Let’s dive in.
The difference in one glance
Earnest money is your good‑faith deposit that shows the seller you are serious. It is held in escrow and can be refundable under certain contract terms. If you close, it is credited toward your final cash to close.
Down payment is the portion of the purchase price you pay at closing. It is your equity in the home and is set by your loan program and your goals.
In Texas resale deals there is also an Option Fee. You pay this directly to the seller for the right to terminate during the agreed Option Period. It is usually smaller and is separate from earnest money.
What San Antonio buyers typically pay
Earnest money ranges
In San Antonio and Bexar County, amounts vary by price point and competition.
- Less competitive or lower‑price homes: about 1,000 to 3,000 dollars.
- Many mid‑market homes: about 1% to 2% of the purchase price.
- Multiple‑offer situations: buyers sometimes offer 2% to 5% to stand out.
The exact number is negotiated. A higher deposit can make your offer feel more committed, especially in competitive neighborhoods.
Option Fee and inspection period
Most Texas resale contracts include an Option Period so you can inspect and renegotiate or cancel. Typical local norms:
- Option Fee: often 100 to 500 dollars, paid to the seller.
- Option Period: commonly 5 to 10 days, but negotiated based on the market and your needs.
If you terminate properly within the Option Period, you usually get your earnest money back. The Option Fee is typically not refunded.
Down payment patterns
Your down payment depends on your loan program and goals.
- FHA: minimum 3.5% for eligible borrowers.
- Conventional: often 3% to 5% minimum for qualified buyers.
- Conventional to avoid PMI: often about 20% down.
- VA: 0% down for eligible veterans.
- USDA: 0% down for eligible rural buyers.
No matter your program, your earnest money is not extra on top of your down payment. At closing, it is credited toward your required cash to close.
When you pay and who holds the funds
Earnest money deadline and escrow holder
Your purchase contract sets the deadline to deliver earnest money. In our area, buyers typically deposit it within 1 to 3 business days after the contract’s effective date. The contract also names the escrow holder. Title companies commonly hold earnest money in San Antonio.
Tip: Deliver funds early and get a receipt. Timing matters, and delays can put you in default under the contract.
Down payment and closing funds
Your down payment and the rest of your closing funds are due at closing. Your lender will send a Closing Disclosure that shows the exact amount due at least 3 business days before closing. Most title companies require a wire transfer or a cashier’s check for larger sums, with wires being most common.
Documenting your funds for the lender
Lenders verify where your earnest money and down payment come from. Expect to provide bank statements and, if needed, a gift letter or proof of sale of another property. If your earnest money came from a gift or a retirement account, plan ahead so you can meet underwriting documentation and timing.
Wire transfers and fraud safety
Wire fraud is a real risk. Always verify wiring instructions by calling the title company using a known, trusted phone number. Do not rely on phone numbers in emails. Many title companies use multi‑factor verification. When in doubt, call and confirm before you send any funds.
How it shapes your offer and negotiations
Signaling strength with earnest money
A larger earnest money deposit can help your offer stand out. Sellers weigh price, contingencies, timeline, and your deposit together. In a multiple‑offer situation, increasing your earnest money is a practical way to show commitment without changing other terms.
Refund rules and contingencies in Texas
Earnest money is refundable only as allowed by the contract. In Texas, the Option Period gives you the right to terminate for any reason within that window. After the Option Period ends, refundability depends on specific contingencies such as financing, appraisal, or title issues. Do not assume earnest money is always refundable. Contract language controls.
Financing and appraisal outcomes
If your loan is denied or the appraisal is low, what happens to earnest money depends on the financing or appraisal terms in your contract. Some sellers ask buyers to waive certain protections to strengthen an offer. If you consider this, weigh the risk and discuss other ways to stay competitive, such as a larger earnest money deposit, flexible closing, or a targeted price strategy.
If a deal falls through
If a buyer defaults outside of allowed contract terminations, the seller may be entitled to keep the earnest money or pursue other remedies as stated in the contract. Title companies do not release earnest money unless both sides sign a release or a legal resolution is reached. Keep clear records of all notices and deadlines.
A simple buyer checklist for Bexar County closings
- Contract stage
- Decide your earnest money amount and who will hold it. Set the delivery deadline in the contract.
- Negotiate the Option Period length and Option Fee. Note who receives the fee.
- After contract acceptance
- Deliver earnest money on time to the escrow holder and get a receipt.
- Notify your lender and provide proof of deposit.
- Documentation
- Save your escrow receipt, bank statements, and any gift or retirement‑fund documentation.
- Work with your lender early if funds are gifted or drawn from investments.
- Closing funds
- Request wiring instructions directly from the title company and verify by phone.
- Review your Closing Disclosure at least 3 business days before closing and confirm final funds needed.
- If issues arise
- If you plan to terminate under the Option Period or another contingency, send notice in writing and keep proof of delivery and timing.
- If there is a dispute over earnest money, contact your agent and, if needed, an attorney. The title company will hold funds until the matter is resolved.
Real‑world examples
- On a 250,000 dollar purchase: 1% earnest money is 2,500 dollars; 2% is 5,000 dollars; 3% is 7,500 dollars. If you put 5% down on a conventional loan, your total down payment would be 12,500 dollars, and your earnest money would count toward that amount at closing.
- On a 400,000 dollar purchase: 1% earnest money is 4,000 dollars; 2% is 8,000 dollars; 3% is 12,000 dollars. If you plan a 20% down payment to avoid PMI, your 80,000 dollars down payment includes any earnest money you already deposited.
Common pitfalls to avoid
- Missing the earnest money deadline. Late delivery can put you in default or weaken your position if the seller asks for strict compliance.
- Assuming earnest money is always refundable. It is only refundable as allowed by your contract and timeline.
- Mixing or moving funds at the last minute. Large, unexplained transfers can cause underwriting delays.
- Not verifying wire instructions. Always call the title company before you send a wire.
- Skipping the Option Period to look strong. You can still write a competitive offer with a solid earnest money deposit and a realistic Option Period.
Work with a local guide
Buying in San Antonio or the Hill Country is easier when you have a calm, experienced advisor who knows the contract details and local customs. From right‑sizing your earnest money to coordinating with trusted title companies and lenders, you deserve a plan that fits your goals and protects your funds. If you want a tailored strategy for your next move in Bexar County, Boerne, Fair Oaks Ranch, or nearby suburbs, let’s connect.
Ready to take the next step? Reach out to Samantha Zamora to build your offer strategy and close with confidence.
FAQs
What is the difference between earnest money and a down payment?
- Earnest money is a good‑faith deposit held in escrow after contract acceptance, while a down payment is the equity you bring at closing. Your earnest money is credited toward your final cash to close.
How much earnest money do San Antonio buyers usually put down?
- Many local offers include about 1% to 2% of the price, with 2% to 5% in multiple‑offer situations. Lower‑price or less competitive deals may use 1,000 to 3,000 dollars.
What is the Option Fee in Texas, and do I get it back?
- The Option Fee buys your right to terminate during the Option Period. It is paid to the seller, usually 100 to 500 dollars, and is typically not refunded if you cancel.
Does earnest money count toward my down payment at closing?
- Yes. Earnest money is credited toward your down payment and closing costs on the settlement statement.
When are earnest money and down payment due in Bexar County?
- Earnest money is usually due within 1 to 3 business days after the contract’s effective date. Your down payment and remaining funds are due on closing day per your Closing Disclosure.
What happens to my earnest money if financing falls through?
- Whether you receive a refund depends on the financing and appraisal terms in your contract and whether you act within the allowed timelines.
