After completing a down payment on a home purchase, you should first review the purchase agreement for cancellation clauses or cooling-off periods. Contact the seller, real estate agent, or mortgage lender to formally request cancellation, as failing to act may forfeit refund rights. Penalties, such as cancellation fees (typically 1-5% of the down payment), may apply depending on state laws and contract terms. Consult a real estate attorney to navigate legal obligations.

In the U.S., home purchase cancellation policies vary by state, with most requiring adherence to specific deadlines and contractual terms. For example, the Federal Housing Administration (FHA) allows buyers to cancel within 3 days of signing closing documents, but this applies before the down payment is finalized. After the down payment, cancellation often hinges on the contract’s cancellation fees and notice requirements. Data from the National Association of Realtors (NAR) shows that approximately 5-10% of buyers cancel transactions after the down payment, with average penalties ranging from $1,000 to $5,000 (1-5% of the purchase price). State-specific regulations, such as California’s 3-day right-to-correct mistake period or New York’s cancellation window for new home purchases, further influence outcomes. The Consumer Financial Protection Bureau (CFPB) emphasizes that lenders must disclose cancellation terms upfront, though enforcement gaps persist. Legal non-compliance by sellers or lenders can invalidate penalties, but buyers often bear financial responsibility unless fraud is proven. Ultimately, proactive communication and legal review are critical to minimizing losses and complying with state and federal frameworks.