Deposit vs. Downpayment: What’s the Difference?
Deposit: A good faith payment made with a purchase offer to secure the agreement. It's held in trust by your real estate brokerage until the deal is finalized.
Downpayment: The upfront payment toward a property when using a mortgage. In Canada, it’s at least 5% of the purchase price. A downpayment under 20% requires mortgage insurance.
Example:
For a $400,000 home with a 10% downpayment ($40,000):
You provide a $10,000 deposit with your offer.
Upon deal finalization, the $10,000 deposit is applied to the $40,000 downpayment.
The remaining 90% is covered by your mortgage, and you’re ready to close the deal! 🎉
