Deposit vs. Down Payment: What Buyers Need to Know

Buyer Advice Dave Dubbin July 14, 2026

These two get used interchangeably at dinner parties, and they are not the same thing. The short version: the deposit is the money you hand over within a day of your offer being accepted, to show you are serious. The down payment is the full chunk of the price you are not borrowing, paid at closing. The deposit ends up counting toward the down payment, which is where the confusion comes from. Here is how each one actually works in a Toronto deal.

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The deposit: your money where your mouth is

When you make an offer on a home in Ontario, the offer includes a deposit. In Toronto and Etobicoke the custom is around 5 percent of the purchase price, and it is typically due within 24 hours of the seller accepting your offer, as a bank draft or wire.

That timing matters more than people expect. On an $800,000 purchase, you need $40,000 ready to move on a day's notice. Not invested in something that takes three days to sell, not sitting in an account with a $10,000 daily transfer limit. Ready. We remind our buyers to line this up before offer night, because scrambling for a bank draft at 9 pm is nobody's best moment.

The deposit does not go to the seller directly. It sits in the listing brokerage's trust account until closing, where it is protected and earns its keep as part of the deal.

Can you lose your deposit?

This is the question behind the question, and the honest answer is yes, in specific circumstances. If your offer had no conditions and you walk away, the deposit is at risk, and the seller may have further claims beyond it. If your offer included conditions, financing or inspection for example, and a condition legitimately is not met, you get the deposit back.

This is exactly why we are careful about when a clean, condition free offer makes sense and when it does not. It is a competitive tool, and it is also a commitment. You want to know which one you are signing before you sign it.

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The down payment: the bigger picture

The down payment is the portion of the purchase price you pay yourself, with the mortgage covering the rest. Canada's minimums run 5 percent on the first $500,000, 10 percent on the portion between $500,000 and $1.5 million, and 20 percent of everything once the price passes $1.5 million.

The down payment is not paid all at once on offer day. It comes together at closing, and your deposit is part of it. Stay with the $800,000 example: say you are putting 20 percent down, which is $160,000. You already paid $40,000 as the deposit, so on closing day your lawyer collects the remaining $120,000 from you, combines it with the mortgage funds from your lender, and sends the full amount where it needs to go.

The mistake we see most often

Buyers budget for the down payment and forget the deposit's timing. The money is the same money, but it moves in two stages, weeks or months apart, and the first stage moves fast. If your savings are locked in GICs or scattered across accounts, a great offer can get complicated in a hurry.

Our advice is simple. Before you start offering, know exactly where your deposit is coming from, confirm you can move it within 24 hours, and keep proof of funds handy. Sellers and their agents notice buyers who have their act together, and in a multiple offer situation, that impression is worth real money.

One more thing about closing costs

The deposit and down payment are not the whole cash picture. Land transfer tax, legal fees, and the other closing costs stack on top. We break the full number down in our post on how much you actually need to buy a home in Etobicoke, worked examples included.

Buying a home has a lot of moving parts, and the money mechanics should be the boring part. That is our job. We have walked hundreds of Etobicoke buyers through offer night, and we are happy to walk you through yours.