Before you write your first offer on a DFW home, you need to understand two deposits that are easy to confuse — and the confusion can be expensive. I'm Bond Peter Njoku (NMLS #2670329) and I've watched buyers lose thousands of dollars because they didn't understand the most important distinction: the option fee goes directly to the seller, while earnest money goes to the title company. These two deposits serve entirely different purposes and have different rules for when you get them back.
What is earnest money in Texas and how much do DFW buyers typically pay?
Earnest money is a good-faith deposit that shows the seller you're serious about purchasing the property. In Texas, it's delivered to a neutral third party — the title company — where it sits in an escrow account until closing, when it's applied toward your down payment or closing costs.
In DFW in 2026, the standard earnest money amount is 1% to 2% of the purchase price:
- $280,000 home (Garland / Mesquite range): $2,800–$5,600
- $315,000 home (Rockwall / Forney range): $3,150–$6,300
- $380,000 home (McKinney / Plano range): $3,800–$7,600
- $450,000 home (Frisco / Prosper entry level): $4,500–$9,000
The earnest money must typically be delivered to the title company within 3 business days after the effective date of the contract. In competitive situations, some sellers request delivery within 1–2 days. Miss this deadline and the contract could be void.
What is the option fee in Texas and where does it go?
The option fee is what buys you the right to terminate the contract for any reason during the option period — typically 5 to 10 calendar days (7 days is most common in DFW). You pay this fee directly to the seller — not the title company. It's nonrefundable: even if you terminate during the option period, the seller keeps the option fee.
In exchange, the seller cannot sell the home to anyone else during your option period, and you can walk away for any reason — including if you just change your mind — without losing your earnest money.
DFW option fee norms by submarket in 2026:
- Garland, Mesquite, Irving (moderate competition): $100–$300
- Rockwall, Forney, Royse City (steady demand): $200–$500
- McKinney, Allen, Plano (higher competition): $400–$750
- Frisco, Prosper, Southlake (premium competition): $750–$1,500
The option fee must be delivered within 3 days after the effective date — and there's a critical detail here: it goes to the seller directly, not the title company. Agents often wire it or deliver a check to the seller's agent. Sending it to the title company by mistake is a common error that can invalidate the option period.
What is the option period used for — and why does your loan officer need to know about it?
The option period is primarily used for property inspection — the buyer's window to schedule a general home inspection, specialty inspections (foundation, sewer scope, roof, HVAC), and to negotiate repairs or a price reduction. A typical DFW inspection costs $350–$600 for the general inspection, plus $150–$400 per specialty inspection.
As your loan officer, I use the option period as the signal to start your loan file in earnest — ordering the appraisal, pulling full documents, and submitting to underwriting. That timing matters because I need the Buyer Approval deadline on the financing addendum (typically 21–28 days after the effective date) to line up with realistic underwriting timelines. If your option period is 7 days, my clock starts on day 1.
Side-by-side comparison: Earnest money vs option fee in Texas
| Feature | Earnest Money | Option Fee |
|---|---|---|
| Who holds it | Title company (escrow) | Seller (directly) |
| Typical DFW amount | 1–2% of purchase price | $100–$1,500 (varies by submarket) |
| Delivery deadline | 3 business days after effective date | 3 days after effective date (to seller) |
| Refundable? | Yes, if contingencies properly exercised | No — nonrefundable always |
| Purpose | Good-faith deposit toward closing | Buys unrestricted termination right |
| Applied at closing? | Yes (toward down payment or costs) | Sometimes (negotiable — often applied to purchase price) |
When do you get your earnest money back — and when do you lose it?
This is where most first-time buyers have gaps in their understanding. The answer depends on when you terminate and why.
| Situation | Earnest Money | Option Fee |
|---|---|---|
| Terminate during option period (any reason) | ✓ Refunded | ✗ Seller keeps it |
| Loan denied, written notice before Buyer Approval deadline | ✓ Refunded | ✗ Seller keeps it |
| Loan denied, notice after Buyer Approval deadline | ✗ At risk (seller may claim) | ✗ Seller keeps it |
| Appraisal below purchase price, notice by 3 days before closing | ✓ Refunded (Property Approval) | ✗ Seller keeps it |
| Buyer walks with no contingency reason (cold feet) | ✗ Seller may claim | ✗ Seller keeps it |
| Closing happens successfully | ✓ Applied to closing costs / down payment | Often applied to purchase price |
I had a buyer in Garland last spring — first-time buyer, $315,000 home, $3,150 in earnest money, $250 option fee. During the 7-day option period, a general inspection found a significant roof issue. We used the option period to negotiate a $4,200 seller credit for roof repair. The buyer kept their earnest money (because we were still in the option period during negotiations) and lost only the $250 option fee — which they were fine with since the credit more than covered the roof. The lesson: use your option period actively, and don't let it expire without a decision.
How do I protect my earnest money when buying in DFW?
The three things that protect your earnest money in a Texas transaction:
- Get fully pre-approved before going under contract. A real pre-approval — where your income, credit, and assets have been reviewed by an underwriter, not just a loan officer — dramatically reduces the risk of a Buyer Approval denial. I can have a full pre-approval ready for you within 48 hours of receiving your documents.
- Set realistic Buyer Approval deadlines. Don't let your agent negotiate a 14-day Buyer Approval period when conventional underwriting typically takes 21–25 days. Agree on a deadline that aligns with your loan type: conventional 25 days, FHA 30 days, USDA 35–40 days.
- Use the option period for its intended purpose. Schedule your inspection within the first 48 hours of the option period. Make your go/no-go decision before the deadline — never let the option period expire without a deliberate choice.
Frequently Asked Questions
What is the difference between earnest money and option fee in Texas?
I'm Bond Peter Njoku (NMLS #2670329) and this is the #1 confusion I see with first-time buyers. Earnest money (typically 1–2% of purchase price in DFW) is deposited with the title company and held in escrow — it's refundable if you terminate correctly using one of your contractual contingencies. The option fee ($100–$500 in standard DFW markets, $750–$1,500 in competitive submarkets) is paid directly to the seller and is nonrefundable — you pay it to purchase the unrestricted right to terminate during the option period for any reason. If you terminate during the option period, you get your earnest money back but lose the option fee. Call or text me at 469-545-7180 before you write your first offer.
How much earnest money is required in Texas in 2026?
I'm Bond Peter Njoku (NMLS #2670329) and in Texas there's no legal minimum for earnest money — it's negotiated between buyer and seller. In most DFW markets in 2026, 1% to 2% of the purchase price is standard. On a $315,000 Garland home, that's $3,150 to $6,300. In highly competitive submarkets like Frisco or McKinney, sellers sometimes request 2–3%. The earnest money is applied toward your down payment or closing costs at closing, so it's not truly an extra cost — just funds you deliver early. Call or text me at 469-545-7180 and I'll tell you what's competitive for the specific neighborhood you're targeting.
Can I get my earnest money back if my loan is denied in Texas?
I'm Bond Peter Njoku (NMLS #2670329) and yes — if your loan is denied and you give written notice to the seller before the Buyer Approval deadline on the Third Party Financing Addendum, you are entitled to your earnest money back. The key word is 'before' — miss that deadline even by one day and your earnest money may be at risk. This is exactly why I recommend getting a fully underwritten pre-approval before going under contract, not just a pre-qualification letter. With a real pre-approval, the risk of a Buyer Approval denial drops dramatically. Call or text me at 469-545-7180 and I'll get you a real pre-approval before you write any offers.
What happens to the option fee and earnest money if I back out after the option period?
I'm Bond Peter Njoku (NMLS #2670329) and once the option period expires, your unconditional termination right goes away. After that, you can still terminate under the financing contingency (Buyer Approval or Property Approval) on the Third Party Financing Addendum — but only for specific documented financing reasons, with written notice before the applicable deadline. If you back out for a reason not covered by a contingency, the seller can claim your earnest money. The option fee is always nonrefundable regardless. This is why I tell buyers: the option period is your risk-free inspection window — use it. Call or text me at 469-545-7180 and I'll connect you with reliable DFW inspectors.
Ready to Buy in DFW? Let Me Get You Pre-Approved So Your Earnest Money Is Protected
I'm Bond Peter Njoku (NMLS #2670329). The best protection against losing your earnest money is a real pre-approval — not a letter generated in 30 seconds without reviewing your documents. I work with buyers across Garland, Mesquite, Rockwall, Forney, and all of DFW. Call or text me at 469-545-7180, message me on WhatsApp, or start your pre-approval online.