Ever wondered why you’re asked for money twice when you buy a home in Edina? You hear about earnest money and a down payment, and they sound similar, but they play very different roles. If you mix them up, you could risk your negotiating position or even your deposit. In this guide, you’ll learn exactly how each works in Edina, typical local amounts, key timelines, and how to protect your funds if a deal falls through. Let’s dive in.
The short answer
Earnest money and a down payment are not the same. Earnest money is a good-faith deposit you put down soon after your offer is accepted. The down payment is the larger amount you bring to closing. Your earnest money is usually credited toward your down payment or closing costs at closing.
Earnest money basics
Earnest money is a deposit that shows a seller you are serious about buying. In Minnesota, the purchase agreement names who holds the funds, often a title company, escrow company, or a broker’s trust account. The deposit goes in shortly after acceptance and stays in escrow until closing or until the contract ends. If you close, it is credited to you.
Earnest money also helps protect the seller if a buyer backs out without a valid reason. Contracts spell out when a seller may keep the funds and when you get them back. The exact outcomes depend on the Minnesota REALTORS Purchase Agreement and any addenda you sign.
Down payment basics
Your down payment is the portion of the purchase price you pay at closing, after the lender provides the loan. It affects your loan-to-value ratio, interest rate options, and whether you need mortgage insurance. You send your down payment as a wire or certified funds to the title company on closing day. Any earnest money you already deposited is credited toward that amount.
Edina amounts to expect
Edina is an upper-tier Twin Cities suburb with a wide price range, so deposits and down payments vary. Local practice combines flat-dollar deposits with percentage-based norms. Your exact numbers depend on the home, market conditions, and your loan program.
Earnest money ranges
- Common range in Edina: about 2,500 to 10,000 dollars, often tied to price and competitiveness.
- Rule of thumb: around 1 percent of the purchase price. In hot multiple-offer situations, buyers sometimes offer 2 to 3 percent or more to stand out.
- What influences the amount:
- Price point of the property
- Strength of competition and number of offers
- Your comfort with risk if you default
- Cash buyers may use larger deposits or rely on proof of funds
Down payment by loan type
- Conventional loans: many programs allow 3 to 5 percent down. A 20 percent down payment is common to avoid private mortgage insurance.
- FHA loans: 3.5 percent minimum for qualified borrowers.
- VA and USDA loans: often 0 percent down for eligible buyers.
- Jumbo loans: often 10 to 20 percent or more, depending on the lender and your profile.
Your actual dollar amount depends on your price and program. Getting fully pre-approved before you shop will clarify the down payment and documentation you need.
When payments are due
Timing is a key difference between the two.
Earnest money timing
In Minnesota contracts used around Edina, the purchase agreement sets an earnest money deadline. Local practice is to deliver the funds within 24 to 72 hours after your offer is accepted. Some buyers offer a 24-hour deposit to strengthen their offer in a competitive situation. You typically wire funds to the title company or provide a check to the escrow holder named in the contract. Always get a receipt confirming the deposit.
Down payment timing
You bring the down payment to closing. It is wired or delivered as certified funds to the title or closing agent on the day of closing. Your earnest money is credited to you at that time.
Contingencies to know
Contingencies are contract protections that let you cancel under certain conditions and get your earnest money back. Your timelines are set in the purchase agreement.
Inspection window
A typical inspection period in Minnesota runs 7 to 15 days, with 10 days common. Within that window, you can complete inspections, negotiate repairs or credits, or cancel. If you cancel within the inspection window under the terms of the contingency, your earnest money is generally returned.
Financing and appraisal
Financing or loan-commitment timelines often run 21 to 45 days, depending on lender and loan type. The appraisal is usually completed during this period and ties into your financing approval. If you cannot secure financing before the deadline and your contract includes a financing contingency, you can usually cancel and recover your earnest money if you follow the notice rules.
Closing timeline
Standard closings around Edina often fall 30 to 45 days from acceptance. The exact timing depends on your lender, appraisal, title work, and any negotiated terms.
If a deal falls through
What happens to your earnest money depends on why the contract ends and what your agreement says.
Canceling under a contingency
If you terminate within a valid contingency period, your earnest money is typically returned. Common examples include canceling during the inspection period or being unable to obtain financing despite reasonable efforts by the financing deadline. You must give written notice as the contract requires, and the escrow holder will release funds according to the signed directions.
Buyer default outside contingencies
If you back out after contingency deadlines or otherwise breach the contract, the seller may be entitled to keep your earnest money as liquidated damages if the contract provides that remedy. In some cases, a seller may pursue additional remedies through the courts. Contracts vary, so read your remedy clause carefully.
Seller default and disputes
If the seller defaults, your earnest money is generally returned, and you may have other remedies under the agreement. If there is a dispute over the funds, parties often seek a mutual release. If that fails, contracts may call for mediation or other paths, and escrow holders can ask a court to decide.
Choose your earnest money
How much you offer should match the property, the market, and your risk tolerance. Here is a simple way to think about it:
- Start with 1 percent of the price as a baseline. For a 600,000 dollar home, that is 6,000 dollars.
- Increase the amount if competition is strong and you want to signal commitment, often to 2 to 3 percent.
- Keep enough cash reserves for inspections, appraisal fees, and closing costs. Do not tie up funds you need for due diligence.
- Align your amount with your contingency plan. If you plan shorter inspection or financing windows to compete, be sure you can complete those steps on time.
Tip: Confirm the deposit holder and wiring instructions directly with the title company to avoid fraud, and keep your earnest money liquid so you can send it quickly after acceptance.
Offer-to-close steps
Use this quick checklist to stay on track in Edina:
- Offer accepted
- Confirm earnest money amount, holder, and deadline written in your contract.
- Deposit earnest money
- Send wire or deliver a check within 24 to 72 hours, or whatever your agreement states. Get a receipt.
- Inspection period
- Schedule inspections immediately. Decide whether to request repairs, negotiate credits, or cancel within your window.
- Financing and appraisal
- Work closely with your lender on documents and conditions. Track your loan-commitment deadline.
- Title and closing prep
- Review title documents and any survey or association materials. Clear conditions well before closing.
- Closing funds
- Get final numbers from the title company. Wire your down payment and closing costs. Your earnest money is credited at closing.
Mistakes to avoid
Avoid these common pitfalls that can cost you time or money:
- Depositing earnest money late or to the wrong party
- Choosing a very short inspection window you cannot meet
- Overcommitting on earnest money without understanding default remedies
- Not keeping earnest money funds liquid and ready to wire
- Ignoring whether deadlines are business days or calendar days in your contract
- Assuming your down payment will be the same under every loan program
Your next move
Buying in Edina means balancing speed with precision. Set the right earnest money, pick the right loan, and manage your timelines so you protect your deposit and close with confidence. If you want a fast, clear plan tailored to your price point and loan program, connect with David Brandner for a focused strategy that fits the Edina market.
FAQs
Is earnest money the same as a down payment in Edina?
- No; earnest money is a good-faith deposit made after acceptance, while the down payment is the larger amount due at closing, and your earnest money is usually credited toward it.
How much earnest money should I offer in Edina?
- Many buyers offer around 1 percent of the price, with 2 to 3 percent in competitive cases; specific amounts vary by property, competition, and your comfort with risk.
When is earnest money due in Minnesota contracts?
- The purchase agreement sets the deadline, but local practice is 24 to 72 hours after acceptance, with a 24-hour deposit sometimes used to strengthen an offer.
What happens to my earnest money if I cancel after an inspection in Edina?
- If you cancel within the inspection window under the contract terms, your earnest money is typically returned after proper written notice and a signed release.
Can I lose earnest money if the appraisal is low?
- If you have a financing or appraisal contingency and act within its timeline, your earnest money is usually protected; waiving or missing the contingency can put it at risk.
How much down payment do I need for a home in Edina?
- Conventional programs may allow 3 to 5 percent down, FHA often requires 3.5 percent, VA and USDA can be 0 percent for eligible buyers, and jumbo loans often require 10 to 20 percent or more.
