Earnest money

Once a purchase contract is signed, the buyer often puts down a deposit held by a third party. That deposit is earnest money. If the sale closes, the deposit is usually applied to the down payment or closing costs. If the contract ends for a permitted reason, it may be returned. Those outcomes depend on the contract, not on this page.

CFPB’s key-terms heading defines earnest money as a good-faith deposit on a signed purchase agreement, held by the seller or a third party. That official heading is PRIMARY.

Buyers often count earnest money twice, once as a deposit and again as the down payment. It is one sum that may later be applied.

• Closing costs
• Down payment