Money paid earlier and money still due
Earnest Money vs. Down Payment vs. Cash to Close
Earnest money, your down payment, and cash to close are connected. They do not represent three separate bills to stack on top of one another.
Earnest money is a deposit paid earlier under your purchase contract. Your down payment is your contribution toward the home's purchase price. Cash to close is what remains due at closing after applicable prior payments, credits, and adjustments are accounted for.
When a purchase closes, an applicable earnest-money deposit is generally credited toward the amount the buyer owes in the completed transaction. It does not simply become an unrelated extra charge. CFPB mortgage terms.
HomeBuyersPath · Sources and example calculations checked September 19, 2026.
A quick comparison
- Earnest money
Meaning: A deposit made under the purchase contract.
Timing: Paid before closing according to the contract; accounted for in settlement.
At closing: An applicable deposit generally counts toward the amount the buyer owes.
- Down payment
Meaning: The buyer's contribution toward the purchase price.
Timing: Accounted for at closing, including transaction funding already paid when applicable.
At closing: Separate from closing costs.
- Cash to close
Meaning: The amount the buyer still needs to pay at closing.
Timing: Estimated during the loan process and detailed in closing paperwork.
At closing: Accounts for applicable prior payments, credits, and adjustments.
Earnest money: a deposit paid earlier
Earnest money shows your intention to complete the purchase. Your contract sets the deposit terms, including when it is due.
The money is commonly held by a third party until the transaction is completed or its disposition is resolved. You may hear this called escrow—an arrangement in which someone holds and handles funds under agreed conditions.
In a completed purchase, an applicable deposit is generally credited toward the amount the buyer owes for the transaction. Its purpose and timing are different from a down payment, even when it ultimately helps fund the same purchase. The exact presentation depends on the transaction documents. NAR consumer guide to escrow and earnest money.
Down payment: your contribution toward the home price
Your down payment is the portion of the purchase price you contribute rather than finance through the mortgage. Closing costs are separate expenses associated with the loan and transaction.
For example, a 5% down payment on a $400,000 home is $20,000.
When an earlier earnest-money deposit is credited in the transaction documents, it helps fund the amount the buyer owes. It does not reduce the agreed home price or create another down payment. CFPB mortgage terms.
Cash to close: what remains due
Cash to close is the amount still required at closing after the relevant amounts have been accounted for. That can include the down payment, closing costs, deposits already paid, applicable credits, and other adjustments.
Your Loan Estimate shows an estimated figure. Your Closing Disclosure provides the transaction's closing details. Neither should be confused with a general online planning estimate. CFPB Loan Estimate guidance.
Simplified fictional example
Follow the money on a $400,000 purchase
Suppose a buyer plans to purchase a $400,000 home with a $20,000 down payment. For this example, sample all-in closing costs are $12,000, and the buyer has already paid $5,000 in earnest money.
The example assumes that the deposit is credited in full, with no seller credit or other adjustments.
| Home price | $400,000 |
|---|---|
| Down payment: 5% | $20,000 |
| Sample all-in closing costs: 3% | + $12,000 |
| Down payment + sample closing costs, before prior payments or credits | $32,000 |
| Earnest money already paid and credited | − $5,000 |
| Seller credit | $0 |
| Other adjustments | $0 |
| Estimated amount still due at closing | About $27,000 |
First, the down payment and sample closing costs total $32,000. Then the $5,000 already paid is credited against that amount, leaving about $27,000 still due.
$5,000 already paid + about $27,000 still due = $32,000 in this fictional example.
The $5,000 changes when part of the money was paid. It is not another $5,000 expense added to the $32,000.
The 3% closing-cost figure is a fictional planning assumption—not a lender quote, a current market quote, or a percentage that applies to every purchase. This example's all-in amount already includes modeled prepaids and initial escrow funding, so those amounts should not be added again.
The $27,000 result is an educational estimate, not an official Closing Disclosure figure, mortgage approval, or recommended spending level. Actual costs, credits, and adjustments can produce a different result.
Moving expenses and retained emergency savings are outside this example. For a broader savings-planning example, see how much money you may need to buy a $400,000 house.
Where should earnest money show up on closing paperwork?
Look beyond the headline amount to the calculation that supports it.
- Loan Estimate: Page 1 summarizes estimated cash to close. Page 2 includes the calculation and a deposit entry. CFPB sample Loan Estimate.
- Closing Disclosure: Page 1 summarizes cash to close. Page 3 includes the calculation comparing estimated and final amounts, including the deposit. CFPB sample Closing Disclosure.
Compare the deposit shown with your payment records. If it appears missing or incorrect, ask your lender and the professional handling settlement to reconcile it and explain how it affects the remaining amount.
“Can you show me where my earnest-money deposit is accounted for and confirm how much remains due?”
Do not reduce the official amount yourself to compensate for an apparent missing deposit. Resolve the discrepancy and confirm the amount with the people handling your closing. The CFPB's Closing Disclosure explainer can help you navigate the document.
What if the purchase does not close?
Whether earnest money is returned or forfeited depends on the purchase contract, its conditions, deadlines, and the circumstances.
Those conditions are often called contingencies. They may address matters such as an inspection or financing, but their wording and deadlines matter. Earnest money is not always refundable.
Ask your real estate professional—and a qualified attorney when legal interpretation is needed—about your specific agreement. NAR consumer guidance.
For an overview of the stages leading to closing, see the first-time-homebuyer guide.
Use your own assumptions
Try your own numbers
Use the free HomeBuyersPath cash-needed calculator to explore a planning estimate.
Enter your home price, down payment, selected closing-cost estimate, and earnest money already paid. Review any seller-credit assumptions separately. If you use an all-in closing-cost estimate, avoid adding expenses that are already included in it.
The calculator distinguishes the estimated amount still due at closing from a broader savings target. It cannot reproduce every adjustment on an actual Closing Disclosure, decide whether a deposit is refundable, or determine mortgage approval.
Use your transaction documents and lender or settlement professional to confirm the actual amount due.
Calculate cash needed →An optional way to organize your planning
The paid Homebuyer Decision Toolkit offers an Excel workbook for organizing purchase assumptions, amounts already paid, cash planning, home comparisons, and mortgage offers. Desktop Microsoft Excel is required.
The toolkit is optional. The educational guides and online calculators remain free.
Frequently asked questions
Does earnest money go toward the down payment or closing costs?
In a completed transaction, an applicable deposit is generally accounted for as part of the buyer's transaction funding and the total amount owed. The exact presentation depends on the transaction documents; do not assume it must be assigned exclusively to either the down payment or closing costs. CFPB mortgage terms.
Is earnest money an extra cost?
When it is credited toward a completed purchase, it is money paid earlier toward an existing obligation. Adding it again on top of the full down payment and closing costs would count it twice.
Does cash to close already subtract earnest money?
The calculation should account for the applicable deposit. Check the deposit entry rather than assuming it is missing. If it is already credited, do not subtract it again. CFPB Loan Estimate guidance.
Where should earnest money appear on my closing documents?
Look for the deposit entry in the cash-to-close calculation—on page 2 of the standard purchase Loan Estimate and page 3 of the Closing Disclosure. Ask for help locating it if your paperwork differs.
What if my earnest-money deposit does not appear?
Ask your lender and settlement professional to compare the documents with your payment records and explain or correct the accounting. Confirm the amount due instead of making your own adjustment.
Do I get earnest money back when the sale closes?
In a completed sale, an applicable deposit is generally accounted for as part of the buyer's transaction funding rather than returned as a separate payment. Any actual refund or excess-funds treatment depends on the transaction.
What happens to earnest money if the purchase falls through?
A refund or forfeiture depends on the contract, contingencies, deadlines, circumstances, and applicable rules. Do not assume either outcome without reviewing your agreement. NAR consumer guidance.