Costs & Fees
What is earnest money and is it refundable?
The short answer
Earnest money is a good-faith deposit you make when your offer is accepted, showing the seller you are serious. It is typically held in escrow and applied toward your down payment or closing costs at settlement. Whether it is refundable depends on the contingencies in your purchase contract — deals that fall through for a covered reason (financing, inspection, appraisal) usually return it, while walking away without a covered reason can forfeit it.
Key points
- Held in escrow, not paid directly to the seller.
- Applied to your down payment or closing costs at closing.
- Contingencies in your contract determine refundability.
How it protects both sides
Earnest money gives the seller confidence to take the home off the market. Your contingencies give you defined exits that protect the deposit if specific conditions are not met.
Sources
Every claim above traces to a public government source.
- ViewT1What is earnest money?
Consumer Financial Protection Bureau · Government / primary · 2024