Deposit vs Down Payment:

What’s the Difference? 

Mariko Baerg Realtor Headshot
Written By: Mariko Baerg, REALTOR of Bridgewell Real Estate Group
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We often get questions about the difference between a deposit and a down payment, and if that is your question then you’ve come to the right place!

This blog explains the different definitions of a deposit vs down payment, PLUS examples of both.

They’re both money that is given throughout the real estate process, but they are given at different times and for different purposes. It’s important that as a buyer you are aware of the key differences between the two.

We also go through when each is due, and the difference in amounts between the deposit and down payment.

Read on for everything you need to know about the deposit & down payment in real estate!

What is a deposit?

A deposit is a form of security for the seller that holds the buyer accountable for completing on the agreement of purchase and sale once the deal goes firm.

Depending on the way the contract is worded, a deposit is usually due within 24 hours of subject removal. If subjects do not remove, then the deposit is not due.

The deposit ensures that the buyer’s offer has been made in good faith, and that they have the intention of closing the deal. In the case that a buyer removes subjects, and hands in the deposit but refuses to complete on the purchase then the seller may get to keep the deposit and the buyer would forego it.

The deposit is paid BEFORE the down payment, as it is there as a commitment to complete the deal. The down payment is not due until the agreed upon completion date.

The deposit forms a part of the down payment. In the simplest terms, you can refer to this calculation:

Deposit (due within 24 hours of subject removal) + Remaining Down Payment (due at completion) + Mortgage (done at completion) = Purchase Price

For more information on subject removal and deposits, check out our blog here: Subject Removal 101

How much is the deposit?

A typical deposit in the Greater Vancouver resale market is 5% of the purchase price.

The amount of the deposit is not fixed, and can be higher or lower depending on the location market conditions. It is typically a percentage basis, so the amount depends on the value of the property.

In a market like Vancouver, a seller will typically expect at least a 5% deposit when reviewing offers and may expect more depending on if the property is in a multiple offer scenario.

What is a down payment? 

A down payment is the amount that the buyer pa

ys to complete while the rest of the purchase price is funded by a mortgage lent by a bank to be repaid over a period of time.

The down payment is the amount paid by the buyer up to the value of the mortgage, therefore it can be calculated as:

Purchase Price – Value of Mortgage = Total Down Payment

With relation to the deposit, you can view the down payment as the following calculation:

Purchase Price – Mortgage – Deposit = Remaining Down Payment Funds Due at Completion

If a real estate purchases completes as planned, the deposit is then credited towards the purchase price and forms a part of the down payment. Therefore, is it a part of the down payment, but they are not the same thing and are paid at different times.

deposit vs down payment

What is the minimum down payment required in BC?

Similar to the deposit, the down payment is not a fixed amount and depends on the lender rules and value of the property.

While the standard amount for the deposit is 5%, a down payment can range between 5% to 20% or more of the total value of the property.

There are different down payment requirements based on certain circumstances; however, in BC, the generic minimum down payment rules are as follows:

5% on properties priced below $500,000

10% on properties between $500,000-$1,000,000

20% on properties $1,000,000 and above

If you are purchasing an investment property, most banks will require a minimum of 20% down payment regardless of the purchase price.

When do I have to pay a deposit vs down payment? 

Typically, the deposit is due within 24 hours of subject removal. The remaining down payment is not due until completion.

Remember: Deposit before down payment!

Who do I pay the deposit to? 

Typically the deposit will be held in trust by the buyer’s agents brokerage. If the property is sold without buyer representation, the deposit should be paid to an appointed solicitor in trust.

DO NOT pay a deposit directly to the seller when buying a home, as there is always the chance that the seller will not return the deposit or that they are not the real owner and perpetrating a fraud.

In a real estate transaction, always make sure that you have the proper representation and have hired both a realtor and a lawyer to represent you to ensure that the deposits are handled in a professional and proper manner.


Example 1:

The buyers are buying a property with a purchase price of $500,000. They will be putting a 10 per cent down payment ($50,000). They remove subjects and the offer becomes a firm offer on January 27 and they will be closing on March 4.

Deposit: They immediately pay a deposit of $25,000 to secure the property. (5%)

Down Payment: The buyers will need to pay the balance of the down payment on the closing date, another $25,000, for a total down payment of $50,000. (remainder of 10% down)

Example 2:

The buyers are buying a property that is under construction and the developer is asking for a 10% deposit. The property that they are purchasing is $619,900 plus GST. The final purchase price with GST is $650,895.

Deposit: They have given a deposit of $61,990. (10%)

Down payment: The buyers have decided they will only put 10% down. In this case, the deposit amount given equals the total down payment.

Example 3: 

The buyers are purchasing a property that costs $750,000. They have decided they will put 20% down which is $150,000. They remove subjects and the deal completes in 2 weeks, the deposit amount they negotiated with the seller is 7%.

Deposit: They hand in their deposit of $52,500 (7% agreed upon).

Down Payment: At completion, they need to pay the remaining 13% of their down payment, which equates to $97,500. The buyers have now come up with 20% down payment between their initial deposit and remaining cash funds.

Now that you have a rough idea of the difference between a deposit vs down payment, it’s important that you keep learning everything about the real estate process from an experienced professional. If you’re just starting out in your home purchasing journey, then give us a call at 604-765-0376. Prefer text? 604-319-0200 or email [email protected] to start a conversation. We’re here to help.

Make the home buying process straight-forward from the start. Talk to one of our realtors today.


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