is earnest money refundable 
earnest money isn t always refundable the good news for buyers is in most situations as long as a buyer acts in good faith earnest money is refundable as long as any contract agreements are not broken or decision deadlines are met buyers usually get their earnest money back specific conditions where buyers often get their earnest money back include every situation is different but broadly speaking the seller gets to keep the earnest money if the buyer decides not to go through with the home purchase for reasons not specified as part of the contract for example if a buyer simply has a change of heart decides not to buy the property the seller is most likely entitled to retain earnest money proceeds protecting your earnest money depositprospective buyers can do several things to protect their earnest money deposits earnest money vs down paymentearnest money and down payments are both used in real estate transactions yet they serve different purposes earnest money is a sum of money provided by the buyer to prove seriousness on the other hand a down payment is usually a larger sum of money paid by the buyer at the time of closing to secure financing for the purchase of the property unlike earnest money which is more of a gesture of commitment the down payment represents a portion of the total purchase price and is required by lenders as a form of collateral the size of the down payment is determined by various factors including the type of mortgage the lender s requirements and the buyer s financial situation for instance for transactions where the seller has more risk they may require a higher down payment i e 20 of the acquisition price as opposed to 10 the down payment reduces the amount of money that needs to be borrowed thereby lowering the loan to value ratio and potentially improving the terms of any mortgage while earnest money could be applied as a down payment it is usually returned to the buyer as part of the transaction as it initially never represented a portion of the purchase price example of earnest moneysuppose tom wants to buy a home worth 100 000 from joy to facilitate the transaction the broker arranges to deposit 10 000 as a deposit in an escrow account the terms of the subsequent agreement signed by both parties state that joy who is currently living in the home will move out of it within the next six months however joy is unable to find another place of residence by moving day as a result tom cancels the transaction and gets his deposit money back the deposit money has earned interest of 500 from the escrow account during this time period since the amount is less than 600 tom is not required to fill out an irs form to retrieve the amount 1