Are you trying to figure out what you owe upfront in McLean and what can wait until closing? You are not alone. First-time and relocating buyers often hear about earnest money and down payments and wonder how they differ. In this guide, you will learn what each payment does, how much is typical in McLean, when funds are due, and how to protect your deposit. Let’s dive in.
Earnest money explained
Earnest money is a good-faith deposit you offer with your contract to show the seller you are serious. It is customary, not legally required, and it is held in escrow by a neutral party named in your contract. You do not pay it to the seller directly.
If the sale closes, your earnest money is credited toward your closing costs or down payment. If you cancel under a valid contingency by the deadline, your deposit is typically returned. If you default without protection, the seller may be allowed to keep it under the contract terms.
Down payment explained
Your down payment is the portion of the purchase price you pay at closing. It is the difference between your loan amount and the price you agreed to pay. Your lender uses this to determine your loan-to-value ratio and whether mortgage insurance or jumbo rules apply.
You wire the down payment to the settlement agent at closing. Any earnest money you already deposited will show as a credit on your settlement statement.
How the two work together
Think of earnest money as an early credit and a promise to perform. It secures your contract and later offsets your cash due at closing. The down payment is the final amount you bring to close your loan. Earnest money reduces what you bring on closing day, but it does not replace the down payment your lender requires.
Typical amounts in McLean
McLean is an upper-tier market within Fairfax County. Many single-family homes exceed conforming loan limits, so jumbo loans and larger down payments are common. Local competitiveness can also influence deposit size.
- Earnest money: A common baseline is about 1 percent of the purchase price. In McLean, you will often see 1 to 3 percent. On higher-priced or very competitive listings, buyers sometimes offer a larger flat deposit, such as 10,000 to 50,000 dollars or more.
- Down payment: Conventional programs can start as low as 3 to 5 percent, but many McLean buyers bring 10 to 20 percent or more to improve terms or avoid mortgage insurance. Jumbo loans often require 10 to 25 percent, depending on the lender and your profile. Some specialized programs, like VA for eligible buyers, may allow low or zero down, but property price, lender rules, and occupancy requirements still apply.
The right strategy depends on your price point, financing, and how competitive the property is. A strong local plan balances deposit strength with protection.
When each payment is due
- Earnest money timing: In Northern Virginia, it is typical to deliver your deposit within 24 to 72 hours after the contract is ratified. Your contract should name the escrow holder, set the amount, and include the deadline. Always get a written receipt from the escrow holder.
- Down payment timing: Your lender will verify your funds well before closing. You will wire your remaining cash to close on or just before settlement per written instructions from the title company. Most title companies prefer wires over checks.
Who holds your earnest money
Your contract will identify the escrow holder. In many Fairfax County transactions, the title or settlement company named in the contract holds the deposit. Some brokerages can hold escrow, but title companies are common. Verify the holder and request written confirmation.
How to protect your deposit
Your earnest money is safest when your contract is clear and you meet your deadlines. Key protections include:
- Inspection contingency. You can inspect and, if needed, terminate or renegotiate within the inspection period. Follow all notice rules in your contract.
- Financing contingency. If your lender does not approve the loan within the agreed timeline, this protects you if you need to cancel.
- Appraisal contingency. If the appraisal is lower than the purchase price, you can renegotiate, bring additional funds, contest the appraisal, or terminate if the contingency allows.
- Title and survey review. This lets you resolve or cancel over title issues.
Best practices:
- Put every deadline in writing and track them closely. Start inspections immediately.
- Deliver earnest money to the named escrow holder, not to the seller. Keep your receipt.
- Maintain documentation for all funds, including gift letters and bank statements, so your loan stays on track.
- Confirm dispute resolution language in the contract so everyone knows how funds are released if there is a disagreement.
Security tips:
- Always confirm wiring instructions directly with the title company by calling a known, verified number. Do not rely on last-minute emails with new wire details.
- If anything changes, call your title company and your agent before you wire.
Budgeting for McLean’s upper-tier homes
If you are shopping above the conforming loan limit, prepare for jumbo loan requirements. Many buyers plan for 20 percent down, though some lenders allow less. Your earnest money can strengthen your offer without overexposing you to risk.
Consider this approach:
- Aim for 1 to 3 percent earnest money as a starting point. Increase strategically if the home is highly competitive and your risk tolerance allows.
- Keep core contingencies that matter to you. You can tighten timelines to remain competitive rather than waive protections you need.
- Coordinate with a lender that regularly underwrites jumbo loans in Fairfax County so your approval and documentation are aligned with local norms.
What to expect at closing
On your settlement statement, you will see the earnest money credited against your total cash to close. You will wire the remaining balance of your down payment and closing costs to the settlement company per instructions. After signing, your loan funds, the deed records, and you receive your keys once the file is disbursed.
A simple checklist for buyers
Before you write an offer:
- Secure a strong pre-approval, especially if your price is likely in jumbo territory.
- Set an earnest money plan. Be ready to provide 1 to 3 percent, or a higher flat amount if your agent expects a competitive situation.
- Review recent local offer norms with your agent so your deposit sends the right signal without taking on unnecessary risk.
Right after ratification:
- Deliver your earnest money to the named escrow holder within the contract window and get a receipt.
- Start inspections immediately and stay ahead of all deadlines.
- Send your lender updated documents for funds verification and appraisal order.
Leading up to closing:
- Confirm wiring instructions by phone with the title company. Then wire your funds as directed.
- Review your final closing disclosure and settlement statement. Confirm the earnest money credit and total cash to close.
Common scenarios and how to respond
- Appraisal comes in low. You can negotiate a price reduction, split the gap, bring additional cash to meet your loan-to-value requirement, or terminate if you have an appraisal contingency and want to use it.
- Loan approval is delayed. If you included a financing contingency, request an extension before the deadline. Keep lender and title updated to avoid a default claim on your deposit.
- You need to be more competitive. Consider a higher earnest money amount or faster timelines, but keep essential protections. You can shorten inspection windows and keep appraisal or financing language that fits your risk tolerance.
The bottom line for McLean buyers
Earnest money and down payments serve different purposes but work together. Your earnest money shows commitment and becomes a credit at closing. Your down payment finalizes your loan and price. In McLean’s upper-tier market, plan for 1 to 3 percent earnest money as a baseline and expect down payment targets of 10 to 20 percent or more, especially for jumbo loans. With a clear strategy, tight timelines, and a secure escrow process, you can protect your deposit and move confidently to closing.
If you want a tailored plan for your price point and timeline, connect with the local team that handles complex, high-value transactions every week. Start your next step with The Alliance Group.
FAQs
What is earnest money and why do I need it?
- Earnest money is a good-faith deposit held in escrow that signals seriousness to the seller and is credited to you at closing.
How much earnest money is typical in McLean?
- Many offers include 1 to 3 percent of the price, and some competitive situations use larger flat deposits such as 10,000 to 50,000 dollars or more.
When is earnest money due after offer acceptance?
- In Northern Virginia, buyers commonly deliver the deposit within 24 to 72 hours of a ratified contract, per the timeline written in the agreement.
Does earnest money count toward my down payment?
- Yes. It appears as a credit on your settlement statement and reduces your cash to close.
How much should I plan for a down payment in McLean?
- Many buyers target 10 to 20 percent or more, and jumbo loans often require 10 to 25 percent depending on the lender and your qualifications.
What protects my earnest money if something goes wrong?
- Contingencies like inspection, financing, appraisal, and title review protect your deposit if you cancel within the agreed deadlines.
Can I lose my earnest money?
- If you miss deadlines or default without a valid contingency, the seller may be allowed to keep it under the contract terms.
Who holds the earnest money in Fairfax County?
- The deposit is usually held by the title or settlement company named in your contract, though some brokerages can also hold escrow.
How do I avoid wire fraud when sending funds?
- Call the title company using a verified phone number to confirm wiring instructions, and never rely on last-minute emailed changes without verbal confirmation.
I am using VA or FHA financing. Do I still need earnest money?
- Yes. Earnest money is a customary contract term regardless of loan type; your loan program determines the down payment rules, not the deposit requirement.
