Earnest Money

[sailon]

If someone applies for a specific first time home owner loan ( no money down-no PMI-bank pays part of closing) but doesn't qualify due to exceeding income cap would earnest money be lost if lender does approve the loan under an FHA or conventional loan.

Thanks in advance for responses.

[Anonymous]

What is in your sales contract?  Did it say your earnest money would be returned if financing could not be obtained, or inspection issues arise, etc.?

[sailon]

Contract states performance is contingent upon buyers ability to obtain a CONVENTIONAL loan. So I'm going to assume that if not approved for first time home buyer program (unconventional?) but approved for conventional (FHA?) I will not get earnest money back. If this is correct I would lose the earnest money but could walk away from the purchase without any furthur obligation-correct?

Thanks MsSDW

[ShanetheMortgageMan]

Any type of financing that isn't FHA, VA or USDA, and that is offered by a bank or mortgage lender, is considered conventional financing.

I have a feeling if you aren't approved for any type of financing, be it conventional or government, you'll get your earnest money back.  This is certainly a question for your real estate agent though.