Option money is typically paid to the seller in exchange for the buyer’s negotiated option period, as described in the purchase contract. If you terminate the contract properly under the option clause within the applicable period, the option fee is generally not refundable.

The amount, payment deadline, and option-period terms depend on your contract. For information about arranging a property inspection during this period, see our Home Inspection guide.

Earnest money is a deposit made toward the home purchase and is generally held by the title company or other escrow agent named in the contract.

If the purchase closes, earnest money is generally credited toward the buyer’s amount due at closing. If the contract is terminated, whether the deposit is refundable depends on the contract terms, applicable deadlines, and circumstances.

Confirm payment instructions and deadlines with your real estate agent or title company. For an overview of what happens after your offer is accepted, visit our Mortgage Loan Process guide.

Your mortgage lender may need documentation showing where your option and earnest money came from and how the payments were made. Keep copies of cleared checks or other payment confirmations, along with bank statements showing the funds leaving your account.

If the money comes from a gift, another person, or another source, ask your lender what documentation is required before transferring the funds.

For additional guidance on preparing financial paperwork, see our Mortgage Document Checklist.

Buying new construction? Keep your payment records in a safe place, as the time between deposit and closing may be several months.