What happens to earnest money if financing falls through?

If your contract has a financing contingency and you follow its terms, you generally get your earnest money back when the loan is denied. Without that contingency, or if its deadline has passed, a loan problem may not protect you, and the seller could have a claim to the deposit.

Financing contingencies usually require you to apply for the loan promptly and in good faith, then give written notice by a set date if you cannot get approved. Missing a step can cost you the protection. The exact rules vary by state form and by contract.

Getting a solid pre-approval before you make an offer lowers the odds of a surprise denial. Avoid new debt and job changes until closing. For how the clause works, see the glossary entry on the financing contingency.