What are the HUD Home earnest money deposit requirements?

The Earnest Money Deposit is a buyer’s deposit towards the purchase of real estate to demonstrate that they are serious about wanting to complete the purchase.

The buyer and selling broker must sign the earnest money forfeiture agreement.  The selling broker must submit the earnest money deposit with the completed form HUD-9548 Sales Contract Property Disposition Program, for all sales other than Asset Control Area (ACA) sales, to the Asset Manager (AM) within two business days of being notified that their buyer is the winning bidder, unless otherwise instructed by the AM, and the AM will forward the deposit to the Closing Agent.

The earnest money deposit must be in the form of a cashier’s check, certified check, or money order with no termination date or cancellation provision, payable to the Closing Agent or to another Entity as designated by HUD.

The earnest money deposit amount is as follows:

  • for Properties with a sales price of $50,000 or less, the earnest money deposit is $500;
  • for Properties with a sales price greater than $50,000, the earnest money deposit is between $500 and $2,000, as determined by HUD;
  • for vacant lots, the earnest money deposit is 50 percent of the list price; and
  • for Properties to be purchased under the Good Neighbor Next Door (GNND) Sales Program, the earnest money deposit is one (1) percent of the list price, but no less than $500 and no more than $2,000.  

The buyer or selling broker may contact the AM for the earnest money deposit amount for a specific Property.
Listing brokers who fail to comply with HUD’s instructions for the collection and forwarding of the earnest money deposit to the AM (or other party as instructed by the AM) may be subject to such action including:

  • Limited Denial of Participation (LDP);
  • notification of the state real estate commission or regulatory body;
  • referral to the appropriate office(s) for enforcement review; and/or
  • suspension or termination of the Broker’s NAID.

For additional information please contact the Asset Manager with jurisdiction over the property.  To locate contact information for your state's Asset Manager go to the HUD HomeStore website at https://www.hud.gov/sites/dfiles/SFH/documents/SFH_AM_Contacts.pdf   
For policy information see Handbook 4000.1 IV.B.2.i.iii. at https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh

All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.

Topic Number: KA-03371