Good Faith Money


DEFINITION of 'Good Faith Money'

The deposit of money into an account by a buyer to show that he or she has the intention of completing the deal. In most cases, the deposit amount will be a percent of the amount owed.

The money in an account can also be known as "margin" or a "performance bond", depending on the type of transaction.

BREAKING DOWN 'Good Faith Money'

An example would be a homebuyer depositing money into an escrow account. When this is done, the seller of the home knows that the buyer will fulfill the terms of the contract and make the purchase.

  1. Margin

    1. Borrowed money that is used to purchase securities. This practice ...
  2. Performance Bond

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  3. Bid Bond

    A debt secured by a bidder for a construction job or similar ...
  4. Escrow

    A financial instrument held by a third party on behalf of the ...
  5. Futures Contract

    A contractual agreement, generally made on the trading floor ...
  6. Retract

    The withdrawal of a bid, offer or statement before any relevant ...
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