What Is Earnest Money (the Deposit) in Ontario?

When you make an offer on a home in Ontario, you back it up with a cheque called the deposit — what's often referred to as earnest money. It signals you're serious, and it becomes part of your down payment if the deal closes. Here's exactly how the deposit works, how much you'll need, and the situations where you do (and don't) get it back.

Key takeaways

• Earnest money is the deposit you submit with your offer to show you're committed.
• In Ontario it's typically held in the listing brokerage's trust account, not paid to the seller directly.
• If the deal closes, the deposit is credited toward your down payment.
• A bigger deposit can strengthen your offer in a competitive market.
• HOMEH gives eligible buyers the industry's highest Cashback Rebate on their purchase.

What is earnest money (the deposit)?

Earnest money — almost always called the deposit in Ontario — is a sum of money you provide along with your offer to purchase. It demonstrates that your offer is genuine and that you have the funds to follow through. If the seller accepts and the sale completes, the deposit isn't an extra cost; it's applied directly to your down payment and purchase price at closing.

The deposit is different from your full down payment. The deposit is paid up front with the offer; the rest of your down payment is paid on closing day. To see how the two fit together, read our guide on what a deposit is when buying a home.

How much deposit do you need?

There's no fixed legal amount — the deposit is negotiable and stated in your offer. In practice, buyers in many GTA markets put down a few percent of the purchase price, and a larger deposit can make your offer stand out in a competitive situation. The deposit is part of, not on top of, your down payment, so plan it as part of your total cash needed.

A bigger deposit can win you the home

In a bidding war, a substantial deposit signals financial strength and reassures the seller you'll close. Just make sure the funds are genuinely available and accessible before you commit.

Where does the money go?

You don't hand the deposit to the seller. In Ontario it's typically delivered to the listing brokerage and held in a regulated trust account until the transaction closes or is otherwise resolved. This protects both sides: the seller knows the money is real, and you know it isn't simply spent. On closing, the deposit is released and credited against the purchase price.

Can you get your deposit back?

It depends on how your offer is structured. If your offer includes conditions — for example, a financing or home inspection condition — and a condition isn't met, you can usually walk away and recover your deposit. But once an offer becomes firm (no conditions, or all conditions waived) and you back out without a valid reason, you risk losing the deposit. Understand the stakes in our guide to conditional vs firm offers.

Conditions protect your deposit

This is exactly why buyers include conditions like financing and inspection. Skipping a home inspection to win an offer also removes a safety net for your deposit — weigh that carefully.

Plan your purchase with HOMEH

Knowing your numbers before you write an offer keeps your deposit safe and your budget realistic. Start with the affordability calculator to see your price range, then learn how to make an offer in Ontario. And remember: HOMEH is a licensed Ontario brokerage that gives eligible buyers the industry's highest Cashback Rebate — estimate yours with the cashback calculator.