If you’re buying a home, you’ve probably heard the terms “good faith deposit” and “escrow money.” While they may sound technical, they’re actually simple - and very important to understand before you submit an offer.

In this FAQ from Amanda Marcum of the Marcum Sold Team, she breaks down exactly what these terms mean and how they work for buyers here in Kentucky.

Good Faith Deposit vs. Escrow Money: What’s the Difference?

The short answer? There isn’t one.

In Kentucky, good faith deposit and escrow money are interchangeable terms. They both refer to the same thing: money you submit with your offer to show the seller you’re serious about buying the home.

What Does a Good Faith Deposit Do?

Your good faith deposit:

  • Is real money you put up when you go under contract
  • Is held securely in your realtor’s escrow account
  • Shows the seller that you’re committed to moving forward
  • Helps “bind” the contract with financial proof of your intent

In other words, it’s your way of backing up your offer with more than just words.

Do You Get the Money Back?

In most cases, yes.

Your good faith deposit is typically:

  • Applied toward your closing costs or
  • Credited back to you at closing

If a contract falls apart, the purchase agreement will spell out exactly who receives the deposit and under what circumstances. This is why working with an experienced agent - and understanding your contract terms - is so important.

How Much Is a Typical Good Faith Deposit?

In our area, it’s customary for buyers to submit:

About 1% of the purchase price

For example:

  • $250,000 home → around $2,500 deposit
  • $350,000 home → around $3,500 deposit

The exact amount can vary based on your situation and the strength of your offer.

Why This Matters for Buyers

Understanding your good faith deposit helps you:

  • Prepare financially
  • Make competitive offers
  • Avoid surprises during the contract process
  • Feel confident about where your money is going

Buying a home is a big step - and knowing how escrow works is part of making smart, informed decisions.

Have More Questions About Buying or Selling?

Amanda Marcum and the Marcum Sold Team are always happy to help explain the process, step by step.

📞 Call or text Amanda Marcum at 859-353-2853

Whether you’re just starting to look or ready to make an offer, expert guidance can make all the difference.