Homebuying

Good Faith Deposit

Direct definition

A good faith deposit is money a buyer puts down to show serious intent to purchase, often used interchangeably with earnest money.

Written by the Vabasso Mortgage Editorial Team · Reviewed against agency and federal sources · Read our editorial policy for how we research and review mortgage content

Plain-English explanation

The good faith deposit is typically held in escrow after an offer is accepted, signaling the buyer's commitment to the transaction. Terms of the contract determine when it's refundable and when it may be forfeited.

Why it matters

Understanding the conditions attached to this deposit helps buyers know what's at risk if the deal falls through.

Where you may see it

Purchase agreement
Escrow instructions
Closing Disclosure credits

A real-world example

For illustration, a buyer might put down a $5,000 good faith deposit that's later applied toward closing costs if the sale completes.

Educational and illustrative only

A common misunderstanding

A good faith deposit is not an extra fee on top of the purchase price; it's typically credited back toward the buyer's costs at closing.

Ask Vabasso AI

This glossary provides general educational information. Mortgage terminology, qualification methods, forms, timelines, fees, program rules, and legal meanings may vary by lender, investor, loan program, property, occupancy, state, and transaction. Definitions do not represent loan approval, legal advice, tax advice, or a commitment to lend.

Author: Vabasso Mortgage Editorial Team
Reviewed by: Vabasso Mortgage Licensed Advisory Team
Last reviewed: July 30, 2026