Cash Deposit on Sales Contract (Earnest Money)
See B3-4.3-09, Earnest Money Deposit, for documentation requirements.
Form 1003 7/05 (rev. 6/09)
When cash deposit on sales contract (earnest money) is entered in Section VI Assets, DU does not consider it liquid. Therefore, in order to give the borrower credit for earnest money that is not already reflected in a liquid account, the lender must enter the earnest money amount as follows:
- If the earnest money check has not cleared the borrower’s bank account, the amount can be included in a depository account, such as a checking or savings account.
- If the earnest money check has cleared the borrower’s bank account, the amount can be entered as Other Credit in Section VII, where it is assumed to be verified.
Do not enter the amount in both places.
Form 1003 1/2021
Earnest money is treated as a credit to the transaction and will reduce the borrower’s required funds to close as reflected in L4 Qualifying the Borrower – Minimum Required Funds or Cash Back. The earnest money check is assumed to have cleared the borrower’s bank account and must not be reflected in the balance of an asset account.
Refer to B3-4.4-02, Requirements for Certain Assets in DU for additional information.