An earnest money deposit is required for HUD home transactions to show that you’re serious about purchasing the property.
Homes with a sales price of $50,000 or less require a deposit of $500. Homes that sell for more than $50,000 require a deposit between $500 – $2,000.
If an owner-occupant buyer fails to close on the transaction due to certain circumstances (such as job loss or death of an immediate family member), HUD will return 100% of the earnest money deposit.
If an owner-occupant buyer fails to close for a nonqualified reason, they forfeit the earnest money deposit. Investor buyers who are unable to close on the transaction also forfeit their deposit.