Upfront purchase money paid with the offer, separate from the final mortgage down payment.
A deposit is money paid as part of the purchase process to show seriousness and support the agreement of purchase and sale. It is not the same thing as the full down payment.
Borrowers often confuse the deposit with the minimum down payment. The distinction matters because both affect closing cash flow, but they arise at different points in the transaction.
In a typical Canadian purchase, the deposit is paid after an offer is accepted or as required by the agreement. It later forms part of the buyer’s total contribution at closing.
The exact timing, holder of the deposit, and consequences of default depend on the purchase agreement and the transaction structure. That is why deposit language is both a real-estate and mortgage-cash-flow concept.
| Term | When it usually appears | What it means |
|---|---|---|
| Deposit | Early in the purchase process | Money paid with or shortly after an accepted offer to support the agreement |
| Down payment | Closing funding structure | The buyer’s total equity contribution toward the purchase price |
| Cash to close | Final pre-closing calculation | The remaining amount the buyer still must provide after costs, credits, and adjustments are counted |
A buyer agrees to a 10% down payment on a $700,000 purchase and pays a $25,000 deposit when the offer becomes firm. At closing, that $25,000 is usually treated as part of the buyer’s overall contribution, so the remaining down-payment amount still to be provided is lower than the full 10% figure.
Deposit is not another fee on top of the down payment. It usually forms part of the buyer’s total contribution.
Borrowers also sometimes assume any deposit amount is acceptable from the lender’s perspective. The lender still wants clear proof of funds and a file that supports the full closing structure.
Deposit treatment depends on the agreement, the brokerage or legal process holding the funds, and the facts of the transaction. This page is educational and not legal advice on a specific contract.