Deposit vs. Down Payment: Key Differences for Homebuyers

Josh Perez • February 18, 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.


Josh Perez
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Why a Mortgage Pre-Approval Protects Both Your Head and Your Heart

By Josh Perez • May 13, 2026
Why a Mortgage Pre-Approval Protects Both Your Head and Your Heart There’s no denying it—buying a home is an emotional journey. In a competitive market, it can feel like you need to stretch beyond your comfort zone or bid above asking just to have a chance. That pressure can make it hard to separate what you want from what you can realistically afford. One of the biggest pitfalls buyers face is falling in love with a home that’s outside their price range. Once that happens, every other property seems like a compromise—even the ones that might have been a perfect fit otherwise. The best way to avoid this heartache? Get pre-approved before you start shopping. What a Pre-Approval Does for You A mortgage pre-approval gives you more than just a number—it provides clarity, confidence, and protection: Know your buying power : Shop within your true price range and avoid disappointment. Spot potential roadblocks : Uncover issues like credit bureau errors before you make an offer. Get organized : Learn exactly what documentation you’ll need so there are no surprises. Lock in a rate : Many lenders hold your rate for 30–120 days, giving you peace of mind if rates rise. Save yourself heartache : Protect yourself from falling for a home you can’t afford. Head vs. Heart Buying a home is about balance. Your head tells you what’s financially sound, your heart tells you what feels right—and both matter. A pre-approval helps bring those two sides together, so you can make confident choices without emotional stress clouding your judgment. The Bottom Line Looking at properties for fun is one thing—but if you’re serious about buying, a pre-approval is the smartest first step you can take. It sets realistic expectations, saves time, and protects your emotions along the way. If you’d like to explore your options and get pre-approved, I’d be happy to walk through the process with you. Let’s make sure you’re ready to shop with confidence.
Modern navy kitchen with marble island, pendant lights, and a vase of white flowers

When Waiting to Buy Real Estate Actually Makes Sense (And When It Doesn't)

By Josh Perez • May 6, 2026
Is waiting for lower rates the right move? Learn when holding off on buying a home in Ontario actually makes sense — and when it's quietly costing you money.