The Home-Buying Deposit in Ontario: How It Differs From the Down Payment, the 24-Hour Rule, and Trust Accounts
Where your good-faith money goes from offer to closing — and when it’s at risk
What is a real estate deposit in Ontario, and is it the same as the down payment?
A deposit is the good-faith money you submit with your offer to show the seller you are serious and able to complete the purchase. It is not the same as your down payment: the deposit is paid at the offer stage, held in trust by a brokerage, and credited toward the purchase price on closing — while the down payment is the cash portion (price minus mortgage) you provide at closing. According to the Real Estate Council of Ontario (RECO), there is no fixed statutory deposit amount; it is negotiated between buyer and seller.
Source: Real Estate Council of Ontario (RECO) (2025)
Many buyers confuse the deposit with the down payment and then scramble the moment their offer is accepted. These are two different sums, paid at different times, exposed to different risks. I’m Arthur Zhao, and here is how the Ontario home-buying deposit actually works, walked through a real GTA transaction.
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Deposit vs. down payment: two different sums
Start here, because it trips up almost everyone. The deposit is the money you hand over with your offer to signal you’re serious; if the deal closes, it is applied toward your total purchase price. The down payment is the cash you actually pay at closing — essentially the purchase price minus your mortgage. The deposit is a prepaid slice of that down payment, not extra money on top. Example: on a $1,000,000 home with a $200,000 down payment and a $50,000 deposit already paid, you bring only $150,000 more in cash at closing — the $50,000 is already counted. According to the Real Estate Council of Ontario (RECO, 2025), the deposit’s purpose is to reassure the seller you are acting in good faith and have the means to buy.
Step 1: The deposit is written into your offer
Step 2: How much? ~5% is typical in the GTA — but it’s not a rule
⚠️The 24-hour clock runs from the moment the seller accepts your offer, often counted to the second. If the seller accepts late at night, you may need to deliver the deposit first thing the next morning — have your certified cheque ready in advance.
Step 3: Deliver within 24 hours of acceptance (a hard deadline)
Step 4: What form of payment? Certified cheque or bank draft — usually not a personal cheque
ℹ️Tip: the deposit is typically held in a non-interest-bearing trust account, so it earns you nothing while it sits there. On large deposits held for a long time, ask your agent whether a separate interest-bearing arrangement makes sense.
💡 Key point: once delivered, your deposit is not in the seller’s hands and not in yours — it sits with the listing brokerage in a Real Estate Trust Account, held by a neutral third party until it’s credited toward the purchase price at closing. According to the Real Estate Council of Ontario (RECO), as long as the funds are held in a registered brokerage’s trust account, they are covered by RECO’s Consumer Deposit Insurance against fraud, insolvency, or misappropriation by the brokerage — up to a maximum of $200,000 per claim. That protection applies only when you work with a registered real estate professional.
When is the deposit at risk — can it be forfeited?
The deposit is not something you can simply reclaim on a whim. According to the Real Estate Council of Ontario (RECO), if a deal fails, the brokerage can only release the deposit from trust with a mutual written release signed by both buyer and seller, or by a court order. If the parties can’t agree on who gets the money, it goes to court — and the court will investigate why the transaction didn’t close, with no guarantee the buyer gets the full deposit back. If the money sits unclaimed in trust for two years, the brokerage must forward it, with the paperwork, to RECO. Bottom line: if you default or walk away without a valid condition to rely on, the deposit is very much at risk of being forfeited to the seller.
🚨A firm (unconditional) offer is binding the moment it’s accepted. If you back out without a valid condition, your deposit can be forfeited — and you may even face a claim from the seller for their losses. Think carefully before going firm.
How to protect your deposit: use conditions
The most effective protection is to make your offer conditional — for example, on financing, on a satisfactory home inspection, or (for condos) on review of the status certificate. If a condition isn’t met within its stated timeframe, you can walk away in accordance with the contract and recover your deposit. By contrast, once a firm (unconditional) offer is accepted, you lose that safety net — and backing out puts the deposit squarely at risk. Whether to include conditions, and which ones, is one of the biggest trade-offs in a competitive offer, and it’s something we work through line by line.
💡 The deposit is proof of your good faith and the first real money you put down: set in the contract, commonly around 5%, delivered within 24 hours of acceptance by certified cheque or bank draft, held in the brokerage’s trust account, and credited toward the purchase price at closing. Keeping that money safe comes from sensible conditions and preparing your funds early — not from trying to fix things after the fact.
Frequently Asked Questions
How much deposit is typical when buying a home in Ontario?
The Real Estate Council of Ontario (RECO) states there is no minimum or standard deposit amount — it is negotiated between buyer and seller. In the GTA, the common convention is around 5% of the purchase price (sometimes 2%–5%). In multiple-offer situations, a larger deposit is often used to strengthen an offer’s credibility.
Is the deposit the same as the down payment?
No — they’re paid at different times but combine in the end. The deposit is paid with your offer as good-faith money and is credited toward the purchase price at closing; the down payment is the cash you provide at closing (price minus mortgage). The deposit is a prepaid part of your down payment, not an extra amount.
How fast do I have to deliver the deposit, and can I use a personal cheque?
If the offer says “Upon Acceptance,” OREA Form 100 defines this as delivering the deposit within 24 hours of acceptance. Payment is usually required by certified cheque or bank draft; a personal cheque is generally not accepted, and overseas buyers often wire the funds.
Who holds the deposit — could the seller run off with it?
The deposit is held in the listing brokerage’s trust account by a neutral third party, not in the seller’s personal hands. While it’s held by a registered brokerage, it’s covered by RECO’s Consumer Deposit Insurance against fraud, insolvency, or misappropriation — up to $200,000 per claim — provided you worked with a registered real estate professional.
If the deal falls through, do I get my deposit back?
It depends on whether you had a valid condition. If you exit properly because a contract condition (financing, inspection, etc.) wasn’t met, you can usually recover the deposit. If you default without a condition, the brokerage can only release the funds with a written mutual release or a court order — and if it goes to court, there’s no guarantee of a full refund; the deposit can be awarded to the seller.
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