You pay the down payment in two stages: a small amount (earnest money) within days of making an offer, and the bulk of it at closing, typically 30 to 45 days later
The down payment is not a single payment. The first piece—called earnest money—goes to a third party (usually a title company or escrow agent) within 1 to 3 days after your offer is accepted. This is typically 1 to 3 percent of the purchase price and shows the seller you are serious. The second piece—the remaining down payment—is due at closing, when you sign the final paperwork and receive the keys. That closing happens 30 to 45 days after your offer is accepted, though it can be sooner or later depending on what you and the seller agree to.
The earnest money is held in an escrow account and applied toward your down payment at closing. If your offer falls through for reasons the contract allows (like a failed inspection), you get the earnest money back. If you walk away without a valid reason, the seller typically keeps it.
Key Takeaways
- Earnest money (1 to 3 percent of the purchase price) is due within 1 to 3 days of your offer being accepted and is held by a third party until closing.
- The remaining down payment is due at closing, which typically occurs 30 to 45 days after your offer is accepted.
- Your lender will tell you the exact amount due at closing, including the remaining down payment, closing costs, and any other fees.
- You will need to bring a cashier's check or arrange a wire transfer for the closing amount; personal checks are not accepted.
- If your offer is rejected or you back out for a reason the contract does not allow, you may lose the earnest money.
Earnest money: the first payment, due within days
Earnest money is a deposit that shows the seller your offer is genuine. The amount is negotiable but typically ranges from 1 to 3 percent of the home's purchase price. On a $300,000 home, that would be $3,000 to $9,000. In a competitive market, offering more earnest money can make your offer stronger.
You send the earnest money to an escrow agent or title company, not directly to the seller. The escrow agent holds it in a separate account and releases it at closing. The important date is usually 1 to 3 days after your offer is accepted, though the exact timing is written into your purchase agreement. If you miss the important date, the seller can cancel the contract.
At closing, the earnest money is credited toward your down payment. If you were putting down 20 percent and your earnest money was $6,000, that $6,000 counts toward the total 20 percent you owe at closing.
The remaining down payment at closing, 30 to 45 days later
Closing is when the sale becomes final. You sign the deed, the mortgage note, and dozens of other documents. Your lender funds the mortgage, the seller receives their money, and you receive the keys. Closing typically happens 30 to 45 days after your offer is accepted, though you and the seller can negotiate a different date.
At closing, you pay the remainder of your down payment. If you put down 20 percent on a $300,000 home, that is $60,000 total. If you already sent $6,000 in earnest money, you owe $54,000 at closing. You also pay closing costs at this time—typically 2 to 5 percent of the loan amount—which cover the lender's fees, title insurance, appraisal, inspection, and other services.
Your lender will send you a Closing Disclosure at least three business days before closing. This document lists every dollar you owe at closing, broken down by line item. Review it carefully against your initial loan estimate to catch any unexpected changes.
How to pay at closing: wire transfer or cashier's check
You cannot bring a personal check to closing. Lenders and title companies require either a wire transfer or a cashier's check. A wire transfer is faster and more common—you contact your bank, provide the wire instructions from the title company, and the money moves electronically. A cashier's check is a check your bank issues on its own account, may provide by the bank itself.
If you wire the funds, do it the day before closing or the morning of closing. Ask the title company for the exact wire instructions, including the bank name, routing number, account number, and any reference information. Verify the instructions are legitimate by calling the title company directly using a phone number from your closing documents, not from an email. Wire fraud targeting homebuyers is common.
If you use a cashier's check, bring it to the closing appointment. The title company will deposit it after closing is complete.
What happens to earnest money if the deal falls through
If your offer is rejected or the sale does not close, what happens to your earnest money depends on why. If the seller rejects your offer before accepting it, the earnest money is returned to you when ready. If you accept the contract and then back out without a valid reason, the seller typically keeps the earnest money as compensation for taking the home off the market.
Valid reasons to back out and recover earnest money are written into your purchase agreement and usually include a failed home inspection, an appraisal that comes in lower than the purchase price, or a failed mortgage underwriting. Your real estate agent can explain which contingencies are in your contract.
If the seller backs out, you get your earnest money back. If the lender denies your mortgage, you get it back. If you discover a major structural problem during inspection and the seller refuses to fix it or lower the price, you can typically back out and recover the earnest money if your contract includes an inspection contingency.
Timeline from offer to closing payment
Here is the typical sequence. You make an offer on a Monday. The seller accepts it by Wednesday. By Thursday or Friday, you send earnest money to escrow. Your lender orders an appraisal and inspection. The appraisal takes 1 to 2 weeks. The inspection happens within 1 to 2 weeks. You review both and decide whether to proceed. Your lender sends you a Closing Disclosure 3 business days before closing. Closing happens 30 to 45 days after your offer was accepted—typically a Tuesday or Wednesday morning. You wire funds or bring a cashier's check. You sign documents for 1 to 2 hours. The title company records the deed with the county. You receive the keys.
This timeline can shift. If you and the seller agree to close in 21 days instead of 45, everything moves faster. If the appraisal is delayed or the lender requests more documents, closing can be pushed back. Your real estate agent and lender will keep you updated on the expected closing date.
Frequently Asked Questions
What if I do not have the full down payment ready by closing?
Contact your lender when ready. Some lenders allow you to borrow the down payment from a family member (a gift letter is required) or to delay closing. Closing cannot happen without the full down payment in hand, so waiting until the last minute creates risk. If you cannot pay, the seller can cancel the contract and keep your earnest money.
Can I use a personal check for the down payment at closing?
No. Lenders and title companies require a wire transfer or a cashier's check because they need to verify the funds are real and available. A personal check can bounce, which would delay or cancel the closing. Ask your bank how to arrange a wire or cashier's check at least a few days before closing.
Do I get my earnest money back if the appraisal is too low?
Yes, if your contract includes an appraisal contingency. If the home appraises for less than the purchase price, you can renegotiate the price with the seller or back out and recover your earnest money. Without an appraisal contingency, you are obligated to close at the original price even if the appraisal is low.
What if the title company loses my earnest money check?
Contact the title company when ready and ask them to trace the check. They should have a record of receiving it. If it was truly lost, they are responsible for replacing it. This is rare because title companies are bonded and insured for this reason. Always get a receipt when you deliver earnest money.
Can the seller keep my earnest money if they back out?
No. If the seller cancels the contract, you get your earnest money back. The earnest money is only kept by the seller if you back out without a valid reason under your contract. If the seller breaches the contract, the earnest money is returned to you.