After coming up with an offer price, you must then decide how much you would like to put down as a deposit. You want to make it large enough so the owner knows you are serious, but not so large that you put yourself in financial straits.

Try to keep your deposit less than two percent of your offered price. If your deposit is larger, the lender will pay particular attention to how you came up with the funds. In this case you might have to provide a lot of paper work, which can be very time consuming.

Another reason to limit your deposit is "just in case." Although significant problems are the exception and not the rule, they do occur. "Just in case" there is a nasty or prolonged dispute between you and the seller, the less money you have tied up in a deposit, the fewer funds you have placed at risk.

As with practically everything in real estate, there are exceptions to this rule, too. During a hot market there may be multiple offers on the property that interests you. A large deposit may impress a seller enough so they will accept your offer instead of someone else’s, even when your unknown competitor is offering the same price or slightly higher.

Since large deposits do impress sellers, you may also find that by making a large deposit you can convince the seller to accept a lower offer. More money up front may save you money later.