Deposit vs Down Payment in Canada: What's the Difference and When Each Is Due

Two payments, two deadlines, one common confusion. Getting this wrong doesn’t just cost money — it can cost the house and the deposit with it.

The deposit: due in 24 hours

• What: good-faith money showing the seller you’re serious
• How much: typically 1–5% — often a flat $25k–$50k draft in hot markets; bigger deposits strengthen offers
• When: within ~24 hours of the accepted offer (bank draft or wire — plan liquidity before offer night)
• Where: the listing brokerage’s trust account — never the seller’s pocket
• Fate: credited toward your down payment at closing

The down payment: due at closing

• What: your total equity in the purchase
• How much: minimum 5% on the first $500,000, 10% on $500,000–$1.5M, 20% to skip mortgage default insurance — full tiers in the down payment rules
• When: closing day, via your lawyer — along with the rest of the closing costs (budget 1.5–4% on top)
• The deposit counts toward it. $30,000 deposit + $60,000 total down = $30,000 left to bring at closing

Model any scenario — price, percentage, insurance premium — with the down payment calculator.

When you lose the deposit (and when you don’t)

You get it back: the offer had conditions — financing, inspection, status certificate — and you walk away properly within the condition window. Mutual release signed, deposit returned in full.

You lose it: your offer was firm and you don’t close. Cold feet, financing that wasn’t as solid as promised, a better house appearing — doesn’t matter. The seller keeps the deposit and can pursue the difference if they resell for less. On a $50,000 deposit over a $1M home, that’s real money plus legal exposure.

The liquidity checklist before offer night

1. Deposit funds liquid now — not in a TFSA that settles in 3 days, not in a GIC. High-interest savings or chequing.
2. The bank draft logistics — know your bank’s same-day draft cutoff; in bidding-war season, some buyers carry a draft before the offer is even accepted.
3. Down payment traceable for 90 days — lenders require a paper trail on the full amount; last-minute transfers from mom need a gift letter.
4. Closing costs separately budgeted — land transfer tax alone is $8,475 on $600,000 in Ontario (before rebates).
5. If a firm offer is the plan, the financing must be bulletproof — not a 5-minute online pre-qualification, but a real pre-approval with documents verified.

The deposit buys the seller’s patience; the down payment buys the house. Have both mapped before anyone writes an offer — and run the monthly payment that follows through the mortgage calculator so closing day starts a plan, not a scramble.