Deposit vs Down Payment: What's the Difference?

Buyers often use 'deposit' and 'down payment' interchangeably — but they're two different things, paid at different times for different reasons. Getting the distinction right helps you budget properly and avoid surprises on offer day. Here's exactly how each one works when buying a home in Ontario.

Key takeaways

• A deposit is paid with your offer to show good faith; a down payment is your equity contribution at closing.
• Your deposit usually counts toward your down payment — it isn't an extra cost.
• Minimum down payment in Canada starts at 5% and rises with the purchase price.
• Homes at $1.5M or more require at least 20% down and can't be insured.
• HOMEH gives eligible buyers the industry's highest Cashback Rebate that can help with your purchase.

Deposit vs down payment: the core difference

A deposit is money you hand over with your offer to show the seller you're serious. It's held in trust (usually by the listing brokerage) and applied to your purchase if the deal closes. A down payment is the share of the purchase price you pay yourself at closing — the rest is covered by your mortgage.

The crucial point: your deposit is normally part of your down payment, not on top of it. For the full borrowing picture, see our pillar guide on how mortgages work in Canada.

How the deposit works in Ontario

In a competitive market, a strong deposit signals commitment. There's no fixed legal amount — it's negotiated as part of the offer — and it's typically delivered within 24 hours of an accepted offer. If the deal closes, it's credited toward what you owe; if you walk away without a valid condition, you can lose it.

Learn more in our guides to what is a deposit when buying a home and conditional vs firm offers, which affect how protected your deposit is.

How much down payment do you need?

Canada's minimum down payment scales with price. Here are the rules you need to know:

• Under $500,000 — 5% minimum.
• $500,000 to $1,499,999 — 5% on the first $500,000, plus 10% on the portion above.
• $1,500,000 or more — 20% minimum (these mortgages can't be insured).

Put down less than 20% and you'll need CMHC mortgage insurance. Crunch your exact numbers with the down payment calculator, and see the full breakdown in how much down payment you need in Ontario.

Budgeting for both

Because your deposit becomes part of your down payment, you don't budget for them separately — but you do need the deposit available fast, in cash, right after your offer is accepted. The rest of your down payment is due at closing, along with your closing costs.

Stretch your budget with HOMEH cashback

Eligible HOMEH buyers receive the industry's highest Cashback Rebate — money that can help cover your costs on closing. Estimate yours with the cashback calculator.