Earnest Money Deposit: How It Works When You Buy New Construction
In this article
"An earnest money deposit is money you pay up front to show a seller you are serious about buying. If you close, it counts toward your down payment or closing costs. On a new-construction home, the builder may call it a ""builder deposit,"" and the rules for getting it back are set by your contract, so read them before you sign.
Here is how earnest money works, how much it can be, when you get it back, and what is different when you buy from a builder.
What is an earnest money deposit?
Earnest money is a good-faith payment. You make it when your offer is accepted or when you sign the purchase contract. It tells the seller you plan to follow through.
The money does not disappear. At closing, it shows up on your Closing Disclosure as a credit. Federal rules require the Closing Disclosure to list any amount ""paid to the seller or held in trust or escrow by an attorney or other party under the terms of the agreement for the sale of the property,"" labeled ""Deposit"" (CFPB, Regulation Z § 1026.38).
So if you put down $10,000 in earnest money, you bring $10,000 less to closing.
How much earnest money do you need?
There is no single national number. The amount is whatever you and the seller agree to in the contract. Builders set their own deposit amounts, and they can change by community.
Lenders do keep an eye on big deposits. Fannie Mae tells lenders that ""large earnest money deposits and deposits that exceed the amount customary for the area should be closely evaluated"" (Fannie Mae Selling Guide B3-4.3-09).
To help you plan, here is what different deposit sizes look like on one price. This is an EXAMPLE only — it is not what any builder charges.
Deposit as a share of price | EXAMPLE: $400,000 home |
|---|---|
1% | $4,000 |
2% | $8,000 |
3% | $12,000 |
5% | $20,000 |
10% | $40,000 |
Call 561-704-0091 for the deposit a specific community asks for today.
Does earnest money go toward your down payment or closing costs?
Yes. Fannie Mae says the deposit on the sales contract ""is an acceptable source of funds for both the down payment and the closing costs"" (Fannie Mae Selling Guide B3-4.3-09).
That is why your Closing Disclosure subtracts it from the cash you owe. It is not an extra fee. It is part of what you were going to pay anyway, just paid early.
Do you get earnest money back?
Sometimes. It depends on your contract.
The Consumer Financial Protection Bureau (CFPB) suggests making your offer and sales contract ""contingent on obtaining financing and contingent on a satisfactory inspection."" Then, if you cannot get a loan or the inspection finds serious flaws, ""you're not contractually required to buy the home"" (CFPB, Find the right home).
Those ""contingencies"" are what usually protect a deposit. If your contract has none, or you miss a deadline in it, you could lose the money.
Common ways buyers put a deposit at risk:
Walking away for a reason the contract does not allow
Missing a contract deadline, such as the date to apply for a loan
Making a big new purchase on credit that stops the loan from closing
Signing a builder contract without reading the deposit section
How is a builder deposit different from earnest money on a resale home?
This is where new-construction buyers get surprised.
The CFPB puts it plainly: if you are buying a home that is not yet built, ""your builder could ask for an upfront builder deposit, also called earnest money. Before committing, ask the homebuilder under what conditions the builder deposit can be returned"" (CFPB, Find the right home).
Why does that question matter so much? Because a builder contract is written by the builder. The refund rules, the deadlines and what counts as a default are all in that contract. They can be very different from a standard resale contract.
The CFPB adds one more point on the same page: builders ""often have an associated mortgage lender they work with. You don't have to use that lender, and you have the right to shop around for a better deal.""
Who holds your deposit — and why it matters
On a resale home, the deposit may be held in trust or escrow by an attorney or another party until closing — that is how federal closing rules describe it. With a builder, the money may go to the builder.
Some states have rules for this. Florida is one example. Under Florida Statute 501.1375, a builder or developer who sells 10 or more one-family or two-family homes a year must tell buyers that any deposit, up to 10 percent of the price, will be placed in an escrow account ""unless waived in writing by the buyer.""
The same law says that if the builder wants to use escrowed money for building, the builder must first notify the buyer and get a surety bond payable to the buyer, if one is readily available.
The lesson for any state: ask who holds your money, whether it sits in escrow, and whether anything you sign waives that.
What lenders check about your deposit
Your lender will want to see where the earnest money came from. Fannie Mae's rules say:
If the deposit is part of your required down payment, the lender must verify the funds came from ""an acceptable source.""
Your bank statements must show your average balance for the past two months was large enough to cover the deposit.
Proof that the deposit was paid must be either a copy of your canceled check or ""a written statement from the holder of the deposit.""
(Fannie Mae Selling Guide B3-4.3-09)
So keep your receipt. Pay from your own bank account. Avoid moving large sums around right before you pay the deposit.
What this means for new-construction buyers
Buying from a builder can take months, and your deposit may sit with the builder that whole time. That makes the contract terms more important, not less.
Before you sign, ask the builder these questions:
Under what conditions is my deposit returned? (This is the CFPB's own suggested question.)
Is my deposit held in escrow, and by whom?
Is there a financing contingency? What happens to my deposit if my loan is denied?
Are payments for upgrades or design choices treated the same way as the deposit?
Do I have to use your lender to get any incentive?
Get the answers in writing. Then keep your finances steady until closing day. If you want to understand how money is held for you during a purchase, read what escrow is when you buy a house. If this is your first new home, our first-time guide to buying a new-construction townhome walks through each step.
Common Questions
What is an earnest money deposit?
It is a good-faith payment you make when your offer is accepted or you sign the contract. It shows the seller you are serious. If you close, it is credited toward your down payment or closing costs.
Does earnest money go toward my down payment?
Yes. Fannie Mae says the sales contract deposit is an acceptable source of funds for both the down payment and closing costs. It appears as a credit labeled Deposit on your Closing Disclosure.
Is earnest money refundable?
It depends on your contract. Financing and inspection contingencies can let you walk away and keep your deposit. Without them, or if you miss a deadline, you could lose it.
Is a builder deposit the same as earnest money?
The CFPB calls an upfront builder deposit ""also called earnest money."" The difference is that the builder writes the contract, so ask under what conditions the builder deposit can be returned before you commit.
How much earnest money do I need?
There is no single national amount. It is whatever you and the seller or builder agree to in the contract. Lenders look closely at deposits that are large or above what is customary for the area.
Will my lender check where my earnest money came from?
Usually, yes. If the deposit is part of your required down payment, the lender must verify it came from an acceptable source. Keep a copy of your canceled check or a written receipt from whoever holds the deposit.
Ready to take the next step?
Call 561-704-0091 to talk with a National House Search specialist, or Schedule a visit.
Related reading: What is escrow when you buy a house? · Buying a new-construction townhome for the first time · When should you lock your mortgage rate?
This is general information, not financial, tax or legal advice. Figures checked October 7, 2026."