Can You Get Your Earnest Money Deposit Back if Your Financing Falls Through?

Posted by Allison Van Wig on Thursday, November 21, 2019 at 1:06 PM By Allison Van Wig / November 21, 2019 Comment

When you’re buying a home for sale in Lakewood or Long Beach, it’s a process - unless you’re a cash buyer, you don’t just walk away with the keys overnight. You have to apply for (and wait for) your financing to be approved by your lender, and that part comes after you’ve already made an earnest money deposit.

But what happens if your financing falls through? Will you get your earnest money deposit back?

Here’s what you need to know.

Can You Get Your Earnest Money Deposit Back if Your Financing Falls Through?

As long as your real estate agent has put a financing contingency in your purchase contract, you should be able to get your earnest money deposit back if your financing falls through. Sometimes sellers will give you a little extra time to pull things together, too, which is nice if you still want to buy the home after a few snags.

How Can You Avoid Financing Mishaps?

It’s always best to apply for mortgage preapproval before you even start house-hunting. That way, you’ll know what kind of financing you’ll qualify for (provided your circumstances don’t change between the time you get preapproved and the time you sign the dotted line to buy your home).

What About That Financing Contingency?

Your real estate agent will most likely put a contingency in your contract that says you’re off the hook for buying the home if you can’t get financing within a set period of time. That contingency can also help protect your earnest money deposit.

A contingency is something that has to happen in order for a deal to go through. If you can’t hold up your end (by getting financing), the seller can’t make you buy the house anyway.