Earnest Money Deposit Mortgage 2026: Sourcing Requirements and What Counts

The earnest money deposit (EMD) is the good faith payment a buyer makes when a purchase contract is executed. For mortgage underwriting purposes, the EMD must be properly sourced and documented before the lender will credit it toward the borrower's down payment and closing costs.

Documentation Required for the EMD

Underwriting requires a copy of the cancelled check or wire confirmation showing the EMD was paid, along with evidence the funds left the borrower's account. If the EMD was paid from a checking or savings account, a 60-day bank statement showing the cleared transaction is typically acceptable. If the amount exceeds one month's gross income, the lender may request a written explanation.

What Counts as an Acceptable EMD Source

• ✦EMD funds must come from the borrower's own documented accounts or from an acceptable gift.
• ✦EMD paid via cashier's check may require additional documentation showing the funds came from the borrower's verified bank account.
• ✦Personal loans are not acceptable EMD sources.
• ✦If the EMD was paid in cash, it will not be counted toward the down payment on a conventional or FHA loan because cash transactions cannot be traced.

EMD Refund at Closing

If the contract calls for the EMD to be credited toward closing costs or down payment, it appears as a credit on the Closing Disclosure. If the EMD exceeds what is needed after all credits are applied, the borrower may receive a refund at closing, which is acceptable as long as the full sourcing was documented at origination. The lender will reconcile the CD against the underwriter's approval to confirm the EMD credit was properly handled.