One of the first surprises for many VA buyers is that a “no down payment” loan still involves writing a check early in the process. That check is earnest money, and it works a little differently than most people expect. Here is what the VA says about it (very little), what Reno sellers typically expect, and how to protect it.
What earnest money is
Earnest money (often called an earnest money deposit, or EMD) is a good-faith deposit you make after the seller accepts your offer. It shows the seller you are serious about closing, since the seller is taking the home off the market for you. In Northern Nevada the deposit is typically held by the title or escrow company handling the transaction, not by the seller or either agent.
Earnest money is not an extra fee. If the purchase closes, it is applied to your side of the transaction.
Does the VA require earnest money?
No. The VA has no earnest money requirement. Earnest money is a term of the purchase contract, negotiated between you and the seller like price, closing date and repairs. Technically you could offer with a very small deposit or none at all.
In practice, though, sellers and listing agents read earnest money as a signal. An offer with little or no deposit can look weaker next to another buyer’s offer, especially on a well-priced home that draws attention. So while the VA does not require it, most Reno VA offers include a meaningful deposit.
How much earnest money is typical in Reno?
There is no fixed number, but deposits in the Reno area are commonly around 1% of the purchase price, and they are negotiable in both directions. What makes sense for your offer depends on a few things:
- Competition. If a home is likely to receive multiple offers, a somewhat larger deposit can help your offer stand out without changing your price.
- Days on market. A home that has been listed for a while gives you more room to offer a smaller deposit.
- New construction. Builders set their own deposit terms, which may differ from resale homes and may be less refundable. Read the builder’s contract carefully.
- Your cash position. Earnest money has to come from your own documented funds (or a properly documented gift). Do not stretch so far that you cannot cover inspections and moving costs.
| Hypothetical price | Around 0.5% | Around 1% | Around 2% |
|---|---|---|---|
| $400,000 | $2,000 | $4,000 | $8,000 |
| $550,000 | $2,750 | $5,500 | $11,000 |
| $700,000 | $3,500 | $7,000 | $14,000 |
These are round example figures to show the math, not recommendations or typical prices. Your agent can look at the specific listing and suggest a deposit that fits the situation.
When you get it back, and when you could lose it
Earnest money is refundable when you cancel within the protections your contract gives you. In a typical Nevada purchase agreement those include a due diligence period (for inspections and reviewing the property), a financing contingency, and an appraisal contingency.
VA buyers also get an extra layer of protection: the VA amendatory clause, sometimes called the escape clause. If the VA appraisal comes in below the purchase price, you can cancel without losing your earnest money, or choose to renegotiate or pay the difference. The details are in what happens if a VA appraisal comes in low.
Where buyers can put their deposit at risk:
- Missing a contract deadline, such as the end of the due diligence period, without acting
- Backing out for a reason not covered by a contingency after those periods have ended
- Failing to close because of a change you made, such as taking on new debt that disqualifies you
Your contract, not the loan type, controls when earnest money is refundable. Know your deadlines and put them on your calendar the day your offer is accepted. For anything legal about a specific contract, talk to a real estate attorney.
What happens to earnest money at closing
At closing, your deposit is credited toward what you owe: closing costs, prepaids or, if you are putting money down, your down payment. It shows up on your Closing Disclosure as a credit.
On a VA loan with $0 down and seller-paid costs, it is possible for your credits to exceed what you owe. In that case, the excess earnest money is generally refunded to you through escrow. Your lender and the title company will show exactly how it is applied. If you are planning to ask the seller for help, read whether a seller can pay closing costs on a VA loan to see how the two pieces work together.
Practical tips for VA buyers
- Keep the funds in a bank account your lender can easily verify, and avoid large undocumented deposits
- If family is helping, ask your lender how to document a gift before the money moves
- Deliver the deposit within the time the contract specifies, often shortly after acceptance
- Confirm wiring instructions by phone with the title company using a number you already trust; wire fraud targeting home buyers is real
- Save the receipt from the title company
- Budget separately for the home inspection and wood-destroying insect inspection, which are paid before closing
If you are buying from out of state or on PCS orders, earnest money can be wired or sent electronically, so you do not need to be in Reno to make the deposit. The step-by-step VA buying process for Reno shows where earnest money fits in the overall timeline and cash-to-close, and first-time buyers may find the first-time home buyer overview for Reno helpful for the other up-front costs. For remote purchases, see buying remotely during a military move to Northern Nevada.
The bottom line
The VA does not require earnest money, but most Reno sellers expect it, and around 1% is a common starting point that you can adjust up or down based on the home and the competition. It is refundable within your contract contingencies, protected by the VA escape clause if the appraisal is low, and credited back to you at closing. Confirm the funds and documentation with your lender before you write the offer.