Deposit
Explore what a deposit means in Canadian real estate transactions, how much is typical, and why it’s a vital part of making a serious offer on a home.
May 22, 2025
What is a Deposit?
A deposit is an upfront payment made by a homebuyer to show their good faith and commitment when submitting an offer on a property. It forms part of the total purchase price.
Why Deposits Matters in Real Estate
In Canadian real estate, the deposit is a critical part of any offer to purchase. It demonstrates the buyer’s seriousness and is held in trust – typically by the seller’s brokerage – until closing.
If the transaction goes through, the deposit is applied toward the purchase price. If the buyer backs out without a valid reason under the contract, the seller may be entitled to keep the deposit as compensation. Conversely, if the seller defaults, the buyer may be entitled to a refund.
The amount of the deposit is negotiable but usually ranges from 1% to 5% of the purchase price, depending on market conditions. In competitive or high-value markets, larger deposits can strengthen an offer and signal financial readiness.
Buyers should ensure the deposit funds are readily available, as delays can breach the terms of the Agreement of Purchase and Sale. Legal and real estate professionals help structure deposits to protect both parties and reduce transaction risk.
Example of a Deposit
A buyer submits a $30,000 deposit along with their offer on a $750,000 home in Calgary. The deposit is held in trust and later applied to the purchase price on closing day.
Key Takeaways
- An upfront payment showing a buyer’s commitment to a property purchase.
- Held in trust and applied toward the final sale price.
- Helps protect sellers from buyer default.
- Amount varies but often ranges from 1% to 5% of the purchase price.
- Must be submitted promptly as per contract terms.
Related Terms
- Agreement of Purchase and Sale
- Conditional Offer
- Firm Offer
- Closing Date
- Good Faith
The Rupert and Renfrew Station Area Plan boundaries. / CIty of Vancouver
The land use plan, heights, densities (left) and limitations (right) for the Rupert and Renfrew Station Area Plan. / City of Vancouver
The 5655 Cambie Street site at the northeast corner of W 41st Avenue and Cambie Street in Vancouver. / NSDA Architects, Polygon
Renderings of the commercial building podium for Elysee. / NSDA Architects, Polygon
Renderings of the commercial building podium for Elysee. / NSDA Architects, Polygon
Renderings of the commercial building podium for Elysee. / NSDA Architects, Polygon 
Renderings of the 31-storey Elysee proposed for 5655 Cambie Street in Vancouver. / NSDA Architects, Polygon
Rendering of 1025 The Queensway/WZMH Architects
Rendering of 3406-3434 Weston Road/ICON Architects
Rendering of 13-21 John Street/Turner Fleischer
Rendering of 604-610 Bay and 130 Elizabeth streets/Studio Gang, architects–Alliance
Rendering of 3434 Lawrence Avenue East/BDP Quadrangle via First Capital REIT
Rendering of 1251-1311 Yonge Street/BDP Quadrangle
Lawrence Plaza Master Plan/Diamond Schmitt, RioCan REIT, Milestone Group
2720–2734 Danforth Avenue/Batay-Csorba Architects Inc., Collecdev-Markee Developments
36-40 Avondale Avenue/DIALOG
614 Danforth Road/BDP Quadrangle, Achille Developments, DBS Developments 
41-47 Hendon Avenue/Arcadis, 41H Development Limited Partnership
429 Lake Shore Boulevard East/SvN Architects + Planners, Castlepoint Numa
