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
6525 Mississauga Road and its surrounding context. (RBC Capital Markets & CBRE)
Property details for 6525 Mississauga Road. (RBC Capital Markets & CBRE)
National average resale-price growth and housing-starts growth, smoothed over three months. The comparison illustrates the cycle; it does not establish how much a price change causes construction to change.
Trailing 12-month starts in centres of 50,000 or more remove the usual monthly seasonality. Ownership combines the homeowner and condominium categories; rental is shown separately.
Six-month averages of provincial starts, expressed at annual rates. The smoothing reduces the influence of individual apartment projects.
The same August benchmark compared with two different starting points. Three-month changes are not annualized.
Average sale prices show the difference in purchase costs across markets. They do not measure affordability relative to local incomes or construction costs.
Newfoundland and Labrador remains above its pre-pandemic sales pattern, but August activity was below last year. Historical lines retain their original release vintages.
Average and median describe different aspects of the same month’s transactions. Both are affected by the mix of homes sold.
Category averages compare different homes and locations; the gaps are not estimates of the cost to upgrade an otherwise identical property.
The five categories shown account for 5,000 of the board’s 5,057 sales. The remaining 57 transactions were in other housing categories.
Monthly observations are not seasonally adjusted. Active listings count properties available at month-end; they are not construction inventory.
Average and median prices share one dollar axis. These unadjusted transaction measures do not control for changes in the homes sold.
TRREB’s 416/905 categories compare the apartments sold in each area. The difference does not isolate a location premium for equivalent units.
5680 Oak Street in Vancouver and its surrounding context. (MCMP Architects)
Ground-level renderings of the tower proposed for 5680 Oak Street in Vancouver. (MCMP Architects)