Deposit vs. Down Payment: Key Differences for Homebuyers
Kevin Roye • June 17, 2026
When you’re buying a home, two terms often cause confusion: deposit and down payment. While they’re related, they serve very different purposes in the homebuying process.
Here’s what you need to know.
What Is a Deposit?
A deposit is the money you provide when you make an offer on a property. Think of it as a show of good faith that proves you’re serious about purchasing.
- How it works: Typically, you provide a certified cheque or bank draft that your real estate brokerage holds in trust. If your offer is accepted, the deposit remains in trust until the deal moves forward. If negotiations fall through, the deposit is refunded.
- Connection to your down payment: Once the sale is finalized, your deposit becomes part of your total down payment.
- Why it matters: The amount is negotiable, but a larger deposit can make your offer more attractive in a competitive market. Keep in mind, however, that if you back out after conditions are removed, you risk losing your deposit.
What Is a Down Payment?
Your down payment is the amount you contribute toward the purchase price of your home when securing a mortgage.
- Minimum requirement: In Canada, the minimum down payment is 5% of the home’s purchase price. Anything less than 20% requires mortgage default insurance.
- Sources: Down payments can come from your savings, the sale of another property, RRSP withdrawals (through the Home Buyers’ Plan), a gift from family, or even borrowed funds.
Example: How They Work Together
Imagine you’re buying a $400,000 home with a 10% down payment ($40,000).
- When you make your offer, you provide a $10,000 deposit.
- Once conditions are met, that deposit is transferred to your lawyer’s trust account.
- At closing, you add the remaining $30,000 to complete your full down payment.
- The lender provides the rest—$360,000—through your mortgage.
The Bottom Line
Your deposit shows commitment and secures your offer, while your down payment is what makes the mortgage possible. Together, they work hand in hand to get you into your new home.
📞 If you’d like clarity on deposits, down payments, or any other part of the mortgage process, let’s connect. I’d be happy to walk you through it step by step.
Share
Recent Posts
On October 28, 2026, the Bank of Canada raised its key interest rate by 0.25%, bringing it to 2.5%. If you have a mortgage, are shopping for a home, or have a renewal coming up, this decision matters. Here is a plain-language look at what changed, why it happened, and what it could mean for you.
Missed a Credit Card or Line of Credit Payment? Here’s What to Do If you’ve missed a payment on a credit card or line of credit and you’re worried about how it might affect your credit—or your future mortgage—this is for you. First things first: 👉 If you currently have an overdue balance, log in and make the minimum payment now. Seriously. Do that first. Everything else can wait. If You’re Only a Few Days Late Here’s the good news: Credit bureaus don’t record late payments until they reach 30 days past due. So if you missed a due date by a few days and paid it as soon as you noticed, it typically won’t show up on your credit report as a late payment—as long as you’re under the 30-day mark. That said, it never hurts to double-check. You can call your credit card company, explain what happened, and confirm the account is back in good standing. If you normally pay on time, they may even reverse the interest charged. It doesn’t hurt to ask. If You’re 30, 60, or 90 Days Behind If payments have gone past 30 days, your credit has likely been impacted—but the situation is still fixable. The most important step is to: Bring all accounts current as soon as possible Make at least the minimum payment on every account The faster you catch up, the more you limit the damage. Ignoring missed payments only makes things worse. If Cash Flow Is Tight If you’re struggling to make payments, communication matters. Contact your lender and keep them informed—even if you can’t pay right away. Lenders are far more willing to work with you when you’re transparent. What hurts your credit most is silence . If lenders don’t hear from you after repeated missed payments, they may write the balance off as bad debt and send it to collections. Collections can significantly impact your credit and stay on your report for years. How This Affects Mortgage Qualification Repeated missed payments can make qualifying for a mortgage more difficult—but timing matters. Once you’re back to making regular, on-time payments: Your credit can improve over time The impact of past mistakes becomes less significant If you’re planning to buy a home in the next couple of years, addressing credit issues early gives you far more options later. Final Thoughts Missing a payment doesn’t mean you’re “bad with money,” and it doesn’t mean homeownership is off the table. What matters most is how quickly you respond and how consistent you are going forward . If you’d like help reviewing your credit report or understanding where you stand from a mortgage perspective, feel free to connect. I’d be happy to walk through it with you and help you create a clear path forward.
