Is a deposit the same as a down payment?

No. The deposit is part of the down payment. It is paid early with your offer and credited toward the down payment at closing, with the remaining balance due then.

Can I lose my deposit?

Yes, if you back out of a firm deal without a valid condition. If a genuine condition such as financing fails within its deadline, the deposit is generally returned to you.

How much should a deposit be?

It varies by market, but it is often a few percent of the purchase price. A larger deposit signals commitment and can strengthen your offer in a competitive situation.

Mortgage Glossary

What is Deposit?

A deposit is money a buyer submits with their offer to show good faith and commitment to the purchase. It is usually held in trust by the seller's brokerage or a lawyer and is credited toward the down payment at closing. The deposit forms part of, not on top of, your down payment.

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Quick answer

Also known as: earnest money, good faith deposit

Key points

A deposit is paid with the offer to show the buyer's good faith.
It is usually held in trust by a brokerage or lawyer until closing.
The deposit forms part of, and is credited toward, the down payment.
A larger deposit can make an offer more competitive.
Backing out without a valid condition can mean forfeiting the deposit.

Deposit explained

When you make an offer on a home, you typically include a deposit, a sum paid shortly after the offer is accepted. It signals that you are serious and gives the seller some security that you intend to complete the deal. The deposit is normally held in trust, often by the listing brokerage or a lawyer, until closing.

The deposit is part of your down payment, not an extra cost. At closing it is applied toward the amount you owe, so the balance of your down payment and the mortgage make up the rest of the purchase price. If you back out without a valid condition, you may forfeit the deposit; if a genuine condition fails, it is generally returned.

What a Deposit is for

A deposit exists to demonstrate the buyer's good faith and to give the seller assurance that the buyer will follow through. It puts something at stake, discouraging buyers from walking away on a whim and compensating the seller's reliance if the buyer defaults without a valid reason.

How it can help you

A solid deposit can strengthen your offer in a competitive market, signalling to the seller that you are committed and well prepared. Since the deposit counts toward your down payment, planning your full cash needs early matters. Lenderoo shops 40+ lenders for free, so you know your mortgage and down payment numbers before you commit funds.

When it comes up

The deposit comes up right after your offer is accepted. Your agreement specifies the amount and when it is due, often within 24 hours or a few days. You provide the funds, the brokerage or lawyer holds them in trust, and at closing they are applied toward your down payment.

Example: Deposit within the down payment

Suppose you buy a home for $500,000 with a planned 20% down payment of $100,000. With your accepted offer you submit a $25,000 deposit, held in trust.

At closing, that $25,000 counts toward your $100,000 down payment, so you bring the remaining $75,000 (plus closing costs) to complete the deal. Your mortgage covers the other $400,000. The deposit is not extra money; it is simply an early instalment of the down payment.

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Deposit: frequently asked questions

Common questions Canadians ask about deposit.

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Related mortgage terms

Down Payment

The upfront cash payment made when purchasing a home

Read definition

Agreement of Purchase and Sale (APS)

The legal contract that sets out the agreed terms of a home purchase between buyer and seller.

Read definition

Conditional Offer

A purchase offer that depends on one or more conditions, such as financing or a home inspection.

Read definition

Closing Costs

Fees and expenses paid when finalizing a real estate transaction

Read definition

Closing Date

The day ownership of the property legally transfers and the mortgage funds advance.

Read definition

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Find my best mortgage Explore the glossary

Mortgage Glossary

What is Deposit?

Find my best mortgage Back to glossary

Quick answer

Also known as: earnest money, good faith deposit

Key points

A deposit is paid with the offer to show the buyer's good faith.
It is usually held in trust by a brokerage or lawyer until closing.
The deposit forms part of, and is credited toward, the down payment.
A larger deposit can make an offer more competitive.
Backing out without a valid condition can mean forfeiting the deposit.

Deposit explained

What a Deposit is for

How it can help you

When it comes up

Example: Deposit within the down payment

Suppose you buy a home for $500,000 with a planned 20% down payment of $100,000. With your accepted offer you submit a $25,000 deposit, held in trust.

Have a question about deposit?

Lenderoo shops 40+ lenders for free and matches you with a mortgage professional who explains every term — and finds your best rate.

Get pre-approved free Talk to an expert

Questions & answers

Deposit: frequently asked questions

Common questions Canadians ask about deposit.

Keep learning

Back to full glossary

Understand your mortgage with confidence

Lenderoo shops 40+ lenders for free and pairs you with a mortgage professional who keeps the jargon simple — and gets you a great rate.

Find my best mortgage Explore the glossary