In most cases, a down payment on a home purchase is non-refundable once the sale is finalized. However, exceptions may apply depending on the circumstances, such as home inspection disputes, financing issues, or specific contractual terms. Lenders and sellers typically retain the down payment to ensure the buyer’s commitment to the transaction. If the deal falls through due to the buyer’s failure to secure financing or meet conditions, the down payment is generally not refunded. Conversely, if the seller fails to meet agreed-upon terms or the property has material defects discovered post-inspection, the buyer might negotiate a refund or credit. The Federal Housing Administration (FHA) and Department of Housing and Urban Development (HUD) loans, for example, outline strict refund policies tied to closing deadlines and buyer obligations. According to the Consumer Financial Protection Bureau (CFPB), approximately 5-10% of homebuyers encounter down payment disputes annually, often resolved through mediation or legal avenues. Real estate data from the National Association of Realtors (NAR) shows that 3.8% of home sales involve canceled transactions after the underwriting process, with most refunds contingent on pre-closing negotiations. Refund policies are typically outlined in the purchase agreement, requiring buyers to seek legal or mediation assistance if disputes arise. Lenders may also impose penalties for early withdrawal of down payment assistance programs, such as those offered by state housing agencies. Ultimately, refund eligibility hinges on contractual terms, state laws, and the reason for transaction cancellation.