Are you wondering why you are being asked for both earnest money and a down payment when you buy a home in Chandler? You are not alone. These two terms sound similar, yet they serve different purposes and follow different rules. By the end of this guide, you will know how each works, what is typical in the Phoenix metro, and how to structure a competitive, safe offer. Let’s dive in.

What earnest money is

Earnest money is a good faith deposit you deliver after a seller accepts your offer. It shows you are serious about buying. It is part of the purchase contract between you and the seller and is governed by the contract language, any contingencies, and state law.

In Arizona, standard residential contracts explain where the deposit goes, when it is due, and how it can be released. The contract also spells out what happens to the deposit if either party defaults or cancels within the agreed terms.

What down payment is

Your down payment is the portion of the purchase price you bring to closing from your own funds. It is separate from earnest money. The down payment amount depends on your loan program and your goals, such as whether you want to avoid private mortgage insurance.

Your lender and the title or escrow company handle the down payment as part of your closing funds. It is not a term of the purchase contract. It is part of your loan and closing calculations.

Key differences

• Purpose: Earnest money shows intent to buy. Down payment is your equity at closing.
• Timing: Earnest money is due shortly after offer acceptance. Down payment is due at closing.
• Control: Earnest money follows contract rules. Down payment follows your loan program.
• Outcome: Earnest money is credited toward what you owe at closing. Down payment is the main cash you bring to close.

Typical amounts in Chandler

There is no single required number for earnest money. Many buyers use a flat amount or a percentage of the price. In many U.S. markets, 1 to 3 percent is a common reference point, with lower flat deposits more common at lower price points. In competitive situations around the Phoenix metro, buyers sometimes increase earnest money to stand out.

For down payments, typical minimums depend on the loan type:

• FHA: minimum 3.5 percent of the purchase price.
• Conventional first‑time buyer programs: some allow 3 percent down if you qualify.
• VA: eligible veterans can finance with 0 percent down.
• USDA: certain rural-eligible properties can be 0 percent down.
• To avoid PMI: many buyers choose 20 percent down to avoid private mortgage insurance, though there are options with less down and PMI or lender-paid mortgage insurance.

Your strategy should match your budget, the home’s price point, and current competition in Chandler’s market.

How escrow handles funds

• Where the deposit goes: Earnest money is usually deposited with the title or escrow company named in the contract. Sometimes it can be held in a brokerage trust account if the contract specifies.
• When it is due: Your contract sets the deadline. In many markets, that timing is within 24 to 72 hours of acceptance, but your exact deadline is in your contract.
• How it is credited: At closing, the title or escrow company applies your earnest money as a credit on your closing statement. It reduces the total cash you need to bring. Your remaining cash to close equals your down payment plus closing costs, minus your earnest money and any other credits.

If the deal cancels

• Protected cancellations: If you cancel using a valid contingency, like inspection, appraisal, or financing, and you follow the notice rules in the contract, your earnest money is typically refundable.
• Buyer default: If you cancel after removing contingencies or you miss a contract requirement, you risk forfeiting your earnest money. Some contracts allow the seller to keep it as liquidated damages.
• Seller default: If the seller breaches, you may be entitled to a return of your earnest money and possibly other remedies. Escrow usually needs joint written instructions, a court order, or terms clearly spelled out in the contract to release funds.

Contingencies and your risk

Contingencies protect your earnest money when used correctly and on time.

• Inspection contingency: Allows you to inspect the home and, if needed, request repairs or cancel within the inspection period.
• Financing contingency: Covers you if your loan cannot be approved within the set timeframe.
• Appraisal contingency: Protects you if the home appraises below the purchase price. You may be able to renegotiate or cancel within the appraisal window.

Once you remove contingencies or let deadlines expire, your ability to recover earnest money is limited. Always follow the contract’s written notice requirements.

Smart offer strategies in Chandler

Your main balancing act is showing strength without taking unnecessary risk. Consider these moves:

• Increase earnest money moderately: Moving closer to 1 percent of the price, or using a meaningful flat sum, can signal confidence in competitive situations.
• Split deposits: Offer a smaller initial deposit with a second deposit at a clear milestone. Make sure the contract spells out the amounts and timing.
• Shorten contingency periods carefully: Tighter timelines can appeal to sellers. Only shorten them if you are prepared with lender pre-approval and fast inspections.
• Strengthen your financing: Provide a strong pre-approval letter and proof of funds for your earnest money and down payment.
• Use an escalation clause thoughtfully: An escalation clause can help you compete without committing to very large deposits. Follow local rules and seller preferences.
• Be cautious with waived contingencies or non-refundable deposits: These can win offers but raise the chance of losing earnest money if something goes wrong.

Buyer checklist for Chandler

• Get a strong pre-approval that details your down payment plan and reserves.
• Ask your agent what earnest money amounts are typical for similar Chandler homes right now.
• Choose your earnest amount based on your comfort with risk and the competition level.
• Confirm where the deposit will be held and your deadline to deliver it.
• Follow anti-fraud wiring instructions from title, and confirm receipt of funds in writing.
• Track all contingency deadlines, and send any notices in the exact form the contract requires.

Common mistakes to avoid

• Missing the deposit deadline. Late delivery can create a default issue and weaken your position.
• Vague or late notices. If you plan to cancel or request repairs, follow the contract’s written notice rules and timelines exactly.
• Overcommitting earnest money without protections. Larger deposits can help you win, but make sure your contingency strategy matches the risk.
• Confusing earnest money with your down payment. Plan for both when calculating total cash to close.

How this plays out at closing

As you approach closing, your lender will prepare a Closing Disclosure that shows your final numbers. Your earnest money appears as a credit. Your remaining cash to close equals your down payment plus closing costs, minus your earnest money and any other credits from the seller or lender. You will wire the rest of your funds per the title or escrow company’s instructions.

The bottom line for Chandler buyers

Earnest money and down payment work together, but they are not the same. Earnest money is a contract deposit that signals seriousness and can be at risk if you default outside of contingencies. Your down payment is the equity you bring at closing and is driven by your loan choice. In Chandler, right-sizing both is key to making a competitive offer that still protects you.

If you want help tailoring an offer strategy to a specific Chandler neighborhood and price range, connect with Erik Kelly for a clear plan and local insight from contract through closing.

FAQs

What is the difference between earnest money and down payment in Chandler?

• Earnest money is a contract deposit showing good faith after acceptance, while the down payment is your equity portion paid at closing and guided by your loan program.

How much earnest money is typical for Chandler offers?

• Many buyers reference 1 to 3 percent or a meaningful flat amount, then adjust based on competition, price point, and recent local norms.

When is earnest money due after my offer is accepted?

• Your contract sets the deadline, and many markets use a short window such as 24 to 72 hours, so check your specific contract terms.

Can I get my earnest money back if financing falls through?

• If your contract includes a financing contingency and you cancel within the allowed timeframe with proper written notice, the deposit is typically refundable.

How is earnest money applied on the Closing Disclosure?

• It shows as a buyer credit that reduces the total cash you must bring to close.

What happens to earnest money if the seller defaults in Arizona?

• You are generally entitled to a return of your earnest money, and escrow will release funds per joint written instructions, a court order, or clear contract provisions.