Where the money goes and what happens when you send it
Your down payment does not go directly to the seller. It goes to an escrow account — a neutral third-party account held by a title company, attorney, or escrow agent — where it sits until closing. The escrow agent holds your money and the seller's deed in parallel. At closing, your down payment gets applied to your purchase price, and the escrow agent releases the deed to you.
The timing matters because your down payment is not at risk the moment you hand it over. It is protected in escrow. If the deal falls apart for reasons outside your control — the seller backs out, the inspection reveals major problems, or the appraisal comes in low — you can recover your down payment. If you back out for a reason the contract does not allow, you typically forfeit it.
Before you can send money anywhere, you need a purchase agreement signed by both you and the seller. That agreement names the escrow agent, sets the down payment amount, and lists the conditions under which you get your money back. Without a signed contract, there is no escrow account and nowhere to send the money.
Key Takeaways
- Your down payment goes into an escrow account held by a title company or attorney, not to the seller, and stays there until closing day.
- You cannot send a down payment until you have a signed purchase agreement that names the escrow agent and the exact amount due.
- Down payments are typically wired or sent by cashier's check within 24 to 48 hours of the offer being accepted, though the exact deadline is in your contract.
- If the deal falls apart due to inspection, appraisal, or financing issues, your down payment is returned; if you walk away without a valid reason, you lose it.
- Bring proof of funds (bank statements or a pre-approval letter) to the offer stage so the seller knows you can actually send the money.
Getting proof of funds before you make an offer
Before you even write an offer, your real estate agent or the seller's agent will ask for proof of funds — evidence that you have the down payment money in an account somewhere. This is not a formal document. It is usually a recent bank statement, a letter from your bank, or a pre-approval letter from your lender showing your available cash.
Proof of funds does two things: it tells the seller you are serious, and it prevents you from making an offer on a house you cannot actually afford to close on. If you do not have proof of funds ready, the seller can reject your offer outright, even if your price is competitive. Some sellers will not negotiate with you until you show it.
The statement or letter should show your name, the account balance, and a recent date — usually within 30 days. If you are borrowing the down payment from a family member, bring a letter from that person stating they are giving you the money as a gift and do not expect repayment. Your lender will need this gift letter anyway, so get it in writing early.
The timeline from offer to escrow deposit
Once your offer is accepted, your contract will specify when the down payment is due — usually within 24 to 48 hours. This is called the earnest money deposit or down payment deposit, depending on your region. Missing this deadline can give the seller grounds to cancel the contract and keep your deposit, so treat it as a hard deadline.
Your real estate agent or the title company will send you written instructions showing the escrow agent's name, the account number, the exact amount, and the wire instructions or mailing address. Do not wire money to an account number your agent texts you. Confirm the wire instructions directly with the title company or escrow agent by phone — real estate wire fraud is common, and scammers intercept email to redirect funds.
If you are wiring the money, call your bank and tell them it is for a real estate transaction. Many banks flag large wire transfers and may ask you to verify the recipient. This takes time, so initiate the wire at least one business day before the deadline. If you are sending a cashier's check, mail it or deliver it in person to the title company, and ask for a receipt or confirmation that it arrived.
What happens if you cannot send the money on time
If you miss the deadline, contact your real estate agent and the title company immediately. A one-day delay is usually recoverable if you have a good reason and the seller agrees. Most contracts allow for a short extension if both parties consent. Your agent can request it in writing.
If you cannot send the down payment at all because the funds fell through — a gift did not arrive, a loan was denied, or you had an emergency — your contract is likely in breach. The seller can cancel the deal and keep your earnest money. This is why proof of funds matters: it prevents you from making an offer you cannot close on.
If your financing falls apart after you have already sent the down payment, your contract should have a financing contingency that protects you. This clause says the deal is off if you cannot get a loan, and your down payment is returned. Read your contract carefully to confirm this protection exists before you send money.
Wiring versus cashier's check versus other methods
Wire transfer is the fastest and most common method. The money arrives the same day or next business day, and the escrow agent can confirm receipt immediately. The downside is that wire fraud is real — if you wire to the wrong account, you may not recover the money. Always verify wire instructions by calling the title company directly.
A cashier's check is slower but safer because the money is drawn from the bank itself, not your personal account, and it is harder to redirect. You get a receipt, and the check has a tracking number. The downside is that it takes time to mail or deliver, and the escrow agent has to deposit it and wait for it to clear — usually three to five business days.
Some title companies accept ACH transfers (electronic bank-to-bank transfers), which are cheaper than wire and safer than personal checks. ACH is slower than wire — it takes one to three business days — but it is reversible if something goes wrong. Ask the title company which methods they accept before you send anything.
Do not send a personal check. Escrow agents will not accept it because it is not may provide funds, and it signals to the seller that you may not be serious.
What to do if the deal falls apart after you send the down payment
If the inspection reveals major problems and your contract has an inspection contingency, you can back out and get your down payment back. The same applies if the appraisal comes in below the purchase price and your contract has an appraisal contingency. These are standard protections in most contracts.
If the seller backs out, you keep your down payment and may have grounds to sue for specific performance (forcing the sale) or damages. Your real estate agent and attorney can advise on whether that is worth pursuing.
If you back out for a reason not covered by your contract — you changed your mind, found a different house, or had a personal emergency — you forfeit the down payment. This is why contingencies matter: they are your escape routes. Read your contract and confirm which contingencies are included before you send money.
Once the deal closes, your down payment is applied to the purchase price. You will not see a separate transaction; it is rolled into the closing statement. The title company or closing attorney will show you exactly how much came from your down payment, how much came from your loan, and how much went to taxes, fees, and other costs.
Frequently Asked Questions
Can I send my down payment in cash?
No. Escrow agents will not accept cash because it cannot be traced and creates compliance problems under anti-money-laundering rules. Wire transfer, cashier's check, or ACH are the only accepted methods. If you have cash, deposit it into your bank account first and then send it from there.
What if I wire the money to the wrong account by mistake?
Contact your bank and the title company immediately. Wire transfers are difficult to reverse, especially if the money has already been withdrawn. Your bank may be able to recall the transfer if the receiving bank cooperates, but there is no may provide. This is why you must verify wire instructions by phone before sending anything.
Do I get my down payment back if the appraisal is low?
Only if your contract includes an appraisal contingency, which most do. This clause says the deal is off if the home appraises for less than the purchase price and you cannot renegotiate. Without this contingency, you are obligated to close even if the appraisal is low, and your down payment stays in escrow.
How much of my down payment goes toward the purchase price at closing?
All of it. Your entire down payment is credited toward the purchase price. The rest of the price is covered by your mortgage loan. At closing, the title company deducts taxes, insurance, HOA fees, and other costs from the total, and you pay the difference if any is owed.
Can the escrow agent release my down payment early?
No. The escrow agent holds the money until closing or until the contract is terminated. If the deal falls apart, the escrow agent releases it according to the terms in your contract — usually back to you if a contingency was triggered, or to the seller if you backed out without cause. You cannot access the money before one of these events happens.