Deposit vs. Down Payment in Ontario: What Is the Difference?

A deposit and a down payment are not the same thing, and confusing them is one of the most common misunderstandings among first-time buyers in Ontario. The deposit is paid when an offer is accepted. The down payment is the full equity contribution at closing. The deposit typically forms part of the down payment, but the two terms refer to different moments in the transaction.

What Is a Deposit?

A deposit is a sum of money paid by the buyer to the seller’s brokerage, held in trust, when an offer is accepted. In Ontario, the deposit is typically due within 24 hours of acceptance, though the exact timing is specified in the offer. It demonstrates the buyer’s commitment to the transaction and is held in the brokerage’s trust account until closing.

What Is a Down Payment?

A down payment is the total equity a buyer contributes toward the purchase price at closing, representing the portion not financed through a mortgage. In Canada, the minimum down payment is 5% for homes under $500,000, with a sliding scale above that threshold. The deposit paid at offer acceptance is typically applied toward the down payment at closing.

How They Relate at Closing

At closing, the deposit held in trust is applied toward the buyer’s down payment. If the deposit is less than the required down payment, the buyer provides the remaining balance through their lawyer at closing. If the deposit exceeds the down payment, the difference is applied toward closing costs or returned to the buyer.

What Happens to the Deposit If a Deal Falls Through?

If a deal falls through due to a condition not being met (such as financing or inspection), the deposit is typically returned to the buyer. If a buyer walks away without a valid condition, the deposit may be forfeited to the seller. The specific terms depend on the offer and any mutual release agreement.

Quick Answers

Is the deposit part of the down payment?
Yes. The deposit paid at offer acceptance is typically applied toward the down payment at closing.

When is the deposit due in Ontario?
Typically within 24 hours of offer acceptance, though the exact timing is specified in the offer itself.

How much should a deposit be?
There is no fixed rule, but deposits in York Region commonly range from 2% to 5% of the purchase price. A stronger deposit can signal commitment in a competitive offer situation.

What happens to my deposit if financing falls through?
If the offer included a financing condition and financing is not approved, the deposit is typically returned to the buyer. Consult your real estate lawyer for specifics.

Can I lose my deposit?
Yes, if you walk away from a firm offer without a valid condition, the deposit may be forfeited. This is one reason conditions exist to protect buyers.

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About Pam Bechard
Pam Bechard is a Listing Strategist with Royal LePage RCR Realty serving York Region and South Simcoe, Ontario. With nearly 15 years of experience, she works with buyers, sellers, and downsizers navigating the YRSS market. Her approach is data-first, pressure-free, and grounded in verified local market intelligence.
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