Earnest money does go toward down payment.
However, the original author said that he/she paid $2000 toward her upgrades. Builders collect the funds for the upgrades in advance usually. Sometimes they collect a portion of the upgrade cost, sometimes they collect the entire cost. It varies by the builder.
Those two types of money (earnest money and upgrade payments) are two different things.
Your contract specifies how the funds will be applied. What does your contract say?
I don't understand. If the money you paid does not go towards the down payment, what is it applied to? Do you mean they are saying you still need to bring x% down payment in addition to the $2000 you paid?
So then what does the builder do with your $2000? Are they pretty much saying you already bought and paid for your upgrades? Kind of confusing.
We are building and had to give an options deposit but it is applied towards our down payment (although we had to give a larger earnest deposit because we are finishing the basement). I wonder if it is different if we had to give a larger options deposit. I will ask our builder rep and see what he says just out of curiousity.
We added some upgrades, we are doing FHA and we had some upfront costs for some items. All the upfronts will be credited during closing to be used as either down payment or closing costs.