Earnest money is a deposit you make when your offer is accepted, held by the escrow company, to show the seller you intend to close. In Arizona it is credited toward your down payment and closing costs at closing. You generally do not lose it if you cancel within the protections your purchase contract gives you, such as the inspection period, and deliver proper notice on time. Buyers lose earnest money by missing deadlines, not by changing their minds in time.
How much earnest money in Arizona?
There is no legal requirement. In the Phoenix area, deposits commonly run around 1% to 2% of the price, sometimes more in competitive situations or on luxury and new construction homes. Your agent will know what sellers in that area and price range expect. A larger deposit can strengthen an offer but puts more at risk if you blow a deadline.
Where it goes
The deposit goes to the escrow company named in the contract, not to the seller. It sits there until closing, when it is applied to your cash to close, or until the parties agree or are directed on where it goes if the contract cancels.
Earnest money must come from your own documented funds or a properly documented gift, because the lender will verify it. Wire it from an account you will show the lender, and keep the receipt. Verify wiring instructions by phone with escrow, using a number you looked up yourself. Wire fraud targeting buyers is real and the money is usually unrecoverable.
What protects your deposit
The standard Arizona Association of REALTORS purchase contract includes several buyer protections. Your contract may differ, so read it with your agent. Commonly:
- Inspection period. A due diligence window, often ten days by default unless negotiated, during which you can inspect, investigate and cancel with proper notice. This is your broadest protection.
- Appraisal contingency. Protection if the appraisal comes in below the price, depending on how the contract is written. See Appraisal Gap on an Arizona Contract.
- Loan contingency. Protection if you cannot obtain the loan, provided you give timely notice under the contract's terms before closing.
- Title and HOA document review.
How buyers actually lose earnest money
- Missing the inspection deadline. Canceling a day late, or not delivering written notice in the required form.
- Waiving contingencies to win a bidding war, then needing them.
- Failing to give timely notice that the loan cannot be obtained.
- Causing the loan to fail. Opening new credit, changing jobs, or moving money can sink an approval, and that may not be protected. See What Not to Do After You Apply for a Mortgage.
- Simply walking away after protections expire.
Protect yourself with a strong approval first
The single best protection is a loan that is actually approved before you write the offer: credit reviewed, income calculated, assets verified. Then the loan contingency becomes a formality instead of a gamble. See Pre-Qualified, Pre-Approved, Underwritten.
I am a lender, not a lawyer or a real estate agent. Contract terms vary and control. Read yours and ask your agent or an attorney about your specific situation.
Why ask me
- I answer the question before I sell you anything. If renting, waiting or a different program is the better move, I will say so.
- Real numbers, not a calculator guess. I price your actual scenario, side by side, with the fees on the page.
- Every program under one roof. Conventional, FHA, VA, jumbo, and non-QM options like bank statement, DSCR and asset-based loans, so the program fits you instead of the other way around.
- You talk to the principal. Ricky Khamis is President of EPiQ Lending, NMLS #173141, lending in Arizona since 1999 and a 2025 Presidents Club Winner at CMG Home Loans. Direct line: (480) 999-9842.
EPiQ Lending is NMLS #1936984, at 7975 N. Hayden Road, Suite A-101 in Scottsdale. Verify all of it before you trust any of it: Ricky's EPiQ Lending profile, the Scottsdale branch, and the license itself at NMLS Consumer Access. Hold every lender to that standard, including us.
More plain-English answers in the Mortgage Education library.
Equal Housing Opportunity. This is general information, not a commitment to lend or an offer to extend credit. Program guidelines, eligibility requirements and documentation standards vary by investor and change over time. Rates, terms and program guidelines change and depend on credit approval, property appraisal and other qualifying factors. Not all applicants will qualify. This is not legal or tax advice; consult a qualified professional about your own situation.
Find out which program actually costs you less
FHA, conventional and jumbo price the same borrower very differently once the mortgage insurance is compared across the years you will own the home. Tell me the shape of your file and I will run them side by side.
Looking at a specific home? Send me the address and I will run the numbers: rickykhamis.com/analyze
