How Much Deposit Do You Need as a First-Time Home Buyer in Ontario?

One of the most confusing parts of buying your first home is understanding the difference between a deposit and a down payment — and knowing exactly when money needs to leave your bank account. In Ontario, your deposit is due much earlier than most first-time buyers expect, and the amount can significantly affect whether a seller accepts your offer.

This article explains how deposits work in Ontario real estate transactions, how much is typical, where the money sits, and what happens to it if things go sideways.

Deposit vs. Down Payment: They Are Not the Same Thing

Many first-time buyers use these terms interchangeably. They are not the same.

• Deposit: An amount paid when you make an offer (or shortly after acceptance) to demonstrate good faith. It is a partial upfront commitment — not the full purchase price.
• Down payment: The total amount you are putting toward the home out of pocket (as opposed to the mortgage). Your deposit forms part of your down payment, credited toward it on closing.

Example: You buy a $700,000 home, put 10% ($70,000) down, and paid a $25,000 deposit with your offer. On closing, you pay the $45,000 difference between your down payment and the deposit already held in trust.

How Much Deposit Is Typical in Ontario?

There is no legislated minimum deposit in Ontario. The amount is negotiable and varies by market. That said, common practice in 2024–2026 has been:

• Resale (existing homes): Deposits of 5% of the purchase price are common in most Ontario markets. In competitive markets like the Greater Toronto Area, sellers may expect 5% or more.
• New construction (builder sales): Builders typically set structured deposit schedules — for example, staggered payments of $10,000 to $40,000 at signing, then 30 days, 90 days, 180 days — totalling 5–20% of the purchase price depending on the builder and project. These are non-negotiable in most cases.
• Condominium assignments: Assignments (buying a pre-construction unit from the original buyer before closing) often involve deposits matching or exceeding the original buyer's deposit structure.

A higher deposit signals financial strength to a seller. In multiple-offer situations, it can be a meaningful factor.

When Is the Deposit Due?

For resale purchases, the Agreement of Purchase and Sale specifies the deposit deadline. The most common structures are:

• On offer ("herewith"): You hand over the deposit (usually a certified cheque or bank draft) at the same time you submit the offer. Risky if the offer is rejected — though the funds are returned.
• 24 hours after acceptance: The deposit is due within one business day of the seller accepting your offer. This is the most common arrangement.
• Within a set number of days: Sometimes 48–72 hours post-acceptance.

Miss the deposit deadline and you are technically in breach. The seller can treat the contract as terminated and re-list.

Where Does the Deposit Go?

In Ontario real estate transactions, the deposit is held in trust by the listing brokerage (the seller's real estate agent's firm) or, in some cases, by the seller's lawyer. It sits in a segregated trust account and earns no interest for you.

Key point: The deposit is not paid directly to the seller. It is held by a neutral party until closing. On the closing date, it is released as part of the purchase funds.

What Happens to the Deposit if the Deal Falls Through?

This is the most important concept to understand before you pay a deposit.

If a Condition Is Not Met

If your offer contains a condition — most commonly a condition on financing or home inspection — and that condition is not satisfied within the timeframe, you have the right to walk away. The deposit is returned to you in full. This is why conditions are so valuable for first-time buyers.

If You Walk Away Without a Condition

If the deal is firm (no conditions) and you fail to close, you may forfeit the deposit. The seller can also sue you for additional damages beyond the deposit if their actual losses exceed it. Firm offers carry real financial risk.

If the Seller Breaches

If the seller fails to close (for example, they cannot deliver clear title), you are entitled to the return of your deposit, and you may have additional remedies at law.

Paying the Deposit: Acceptable Forms

Most sellers and their agents require:

• Certified cheque drawn on a Canadian bank
• Bank draft
• Wire transfer to the brokerage's trust account (increasingly common)

Personal cheques are generally not accepted. Electronic transfers (e-transfer) are accepted by some brokerages for lower-value deposits — confirm with the listing agent before the deposit deadline.

Practical Tips for First-Time Buyers

• Have the deposit funds liquid before you start making offers. Scrambling to move RRSP or TFSA funds after an accepted offer is stressful and risky.
• Do not exceed what you can absorb if the deal collapses. Conditions protect you, but not every situation is foreseeable.
• In pre-construction, read the full deposit schedule before signing. Builder contracts lock in large sums over months. Ensure your financial plan covers all installments.
• Confirm the trust details. Your lawyer or agent can confirm which brokerage or firm is holding funds in trust.

Frequently asked questions