What a deposit means in a Canadian home purchase and how it differs from the down payment at mortgage closing.
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.
A buyer pays a deposit shortly after the offer becomes firm. At closing, that deposit is credited as part of the buyer’s total funds rather than treated as money separate from the overall cash contribution.
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.