Deposit vs Down Payment in Canada: What's the Difference? (2026)
Deposit and down payment aren't the same thing in a Canadian home purchase. Here's what each one is, when you pay it, who holds it, and how the deposit counts toward your down payment at closing.
Deposit and down payment aren't the same thing in a Canadian home purchase. Here's what each one is, when you pay it, who holds it, and how the deposit counts toward your down payment at closing.
Two of the most confused terms in a Canadian home purchase are "deposit" and "down payment." Buyers often use them interchangeably, but in a 2026 real estate deal they happen at different times, go to different places, and do different jobs. Mixing them up can leave you scrambling for cash on closing day. Here's exactly how each one works — and how they connect.
The short answer
A deposit is the money you submit with your offer to show you're serious — usually a few percent of the price, held in trust by the seller's brokerage or a lawyer, and credited back to you on closing. A down payment is the total amount of your own money you put toward the purchase, paid at closing, with the mortgage covering the rest. The key link: your deposit is not extra money — it counts as part of your down payment. You don't pay both on top of each other.
Deposit vs down payment, side by side
The simplest way to see the difference is to line up what each one actually does:
| Deposit | Down payment | |
|---|---|---|
| When you pay it | With your offer (typically within 24 hours of acceptance) | At closing, when the deal completes |
| Who holds it | Held in trust — usually the listing brokerage or a lawyer | Goes to your lawyer, then to the seller through the mortgage closing |
| Typical amount | A few percent of the purchase price (varies by market and offer) | 5%–20%+ of the price, depending on price and goals |
| Refundable? | Yes if you walk away within a valid condition; usually forfeited if you breach a firm deal | It's your equity in the home — not refundable, it becomes ownership |
| What it does | Shows good faith and gives the seller security that you'll close | Reduces the size of the mortgage you need and builds instant equity |
| Relationship | The deposit is applied toward the down payment at closing — it's part of it, not separate | |
Why the deposit exists
When a seller accepts your offer, they take their home off the market and stop entertaining other buyers. The deposit is your "good faith" money — proof you intend to follow through. If you back out without a valid reason (for example, after all your conditions like financing and inspection are satisfied and the deal is firm), you can lose the deposit. That's why it matters to keep a financing condition in place until your mortgage is fully confirmed. A solid pre-approval before you shop reduces the odds of a financing surprise that puts your deposit at risk.
Why the down payment exists
The down payment is the portion of the price you cover yourself; the lender finances the rest. In Canada the minimum is 5% on the first $500,000 of the price, 10% on the portion from $500,000 to $1.5 million, and 20% on homes over $1.5 million. Put down less than 20% and you'll pay mortgage default insurance (CMHC, Sagen, or Canada Guaranty). The down payment isn't a fee you lose — it becomes your equity in the home from day one. Use the down payment calculator to see your minimum for any price.
How the deposit folds into the down payment: a worked example
Say you're buying a $600,000 home with a planned 10% down payment.
- Your total down payment is 10% of $600,000 = $60,000.
- When you offer, you include a $20,000 deposit, which goes into the brokerage's trust account.
- At closing, your lawyer applies that $20,000 toward your down payment. You only need to bring the remaining $40,000 ($60,000 − $20,000), plus closing costs.
- Your lender finances the other $540,000 (before any insurance premium added to the loan).
So you didn't pay $80,000 — you paid $60,000 in total toward ownership, just split into a deposit up front and the balance at closing. The common mistake is forgetting the deposit already left your bank account and budgeting the full down payment again for closing day.
What this means for your cash plan
Have your deposit ready in liquid, accessible funds before you make offers — you typically need to deliver it within a day. Keep the rest of your down payment "seasoned" (in your account, traceable) so the lender can verify the source. And budget separately for closing costs — land transfer tax, legal fees, and adjustments — which sit on top of your down payment. First-time buyers can plan all of this in our first-time home buyer resources.
Frequently asked questions
Is the deposit part of the down payment in Canada?
Yes. The deposit you submit with your offer is credited toward your down payment at closing. It's not an additional cost — you subtract the deposit from your total down payment to find the balance you owe on closing day.
How much should my deposit be?
There's no fixed rule; it's usually a few percent of the purchase price and is negotiated as part of your offer. A stronger deposit can make your offer more competitive, but it should still be money you can deliver quickly and are comfortable committing.
Can I get my deposit back?
If you walk away while a valid condition (such as financing or inspection) is still in place, your deposit is generally returned. If you back out of a firm deal with no valid reason, you can forfeit it. Always confirm the terms with your real estate lawyer and agent.
What's the minimum down payment in Canada in 2026?
5% on the first $500,000 of the price, 10% on the portion between $500,000 and $1.5 million, and 20% on homes over $1.5 million. Below 20% requires mortgage default insurance.
Do I pay the deposit and the down payment separately?
You pay the deposit first (with your offer) and the rest of the down payment at closing. The two together equal your total down payment — you never pay the full down payment twice.
Not sure how much cash you'll actually need to close? Ask Maya for a quick breakdown of deposit, down payment, and closing costs, or talk to an advisor who'll map your exact numbers before you write an offer.
Mortgage content produced by Mortgage Squad Advisors' team of FSRA-licensed mortgage advisors and reviewed under the supervision of the brokerage's Principal Broker (FSRA Brokerage #13737) before publication.
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