Quick answer
Earnest money is a contract deposit, not a substitute for verified down-payment and closing funds. Keep the source, transfer and receipt trail intact, and verify instructions directly with the title or escrow company before sending money.
Build one evidence chain from account to escrow receipt
Earnest money is a contract deposit; it is not a substitute for verified down-payment and closing funds. Keep the buyer account, payment instrument, contract-named escrow holder and receipt connected. The current FHA Handbook 4000.1 governs lender documentation; contract and refund questions belong with the appropriate real-estate and legal professionals.
Deposit evidence chain
| Step | Record to retain | Control point |
|---|---|---|
| Contract instruction | Signed contract and named escrow-holder details | Confirm deadline and recipient before funds move. |
| Payment | Check image or wire confirmation | Keep the payment tied to the buyer account. |
| Account trail | Statement showing source and transfer | Explain gifts, assistance or recent transfers early. |
| Receipt | Escrow/title receipt | Match amount, date and holder to contract terms. |
Wire-safety stop rule
If an email changes wiring instructions, stop. Independently call the title or escrow company using a trusted number from the signed contract or verified public source. The FBI’s business-email-compromise alert explains why last-minute payment-instruction changes require caution.
Keep one uninterrupted deposit trail
The earnest-money record should connect the buyer’s account, the payment instrument, the contract-required escrow holder and the receipt. A lender may need to understand the source of funds just as it reviews the rest of the cash-to-close file. A gift, assistance payment or recent transfer can require its own documentation; do not substitute an oral explanation for records.
Wire-safety example: if an email changes wire instructions, stop and independently call the title or escrow company using a trusted number from the signed contract or a verified public source. The FBI’s business-email-compromise alert describes the risk of fraudulent payment instructions. This is practical safety guidance, not a statement about a particular title company.
Topic-specific sources
Frequently asked questions
Does earnest money count toward FHA cash to close?
It may be credited under the contract and settlement process, but the lender still verifies the source and required funds for the file.
Can a family member send the earnest money?
That can create gift documentation questions. Ask the lender before the transfer.
How can I avoid wire fraud?
Verify instructions independently with the title or escrow company using trusted contact details, and be cautious with last-minute email changes.
What proof should I keep?
Keep the contract, payment record, bank statement, wire or check image and escrow receipt.
Can earnest money be refunded?
That is governed by the contract and transaction facts; consult the appropriate real-estate and legal professionals.
Keep the earnest-money trail ready for review
Share the contract-required escrow details and source-of-funds context so the lender can explain the mortgage documentation questions.
Educational information only; not legal, tax or employment advice and not a commitment to lend. No approval, rate, payment, savings or closing date is promised. FHA and lender requirements depend on the complete application, verification, property and current policy.