Pre-Construction Deposits vs. Down Payments in Ontario
Compare builder deposits, mortgage down payments, payment schedules and protection before committing to an Ontario new home.
5 min read · Reviewed 2026-10-07
A builder deposit is paid before closing under your purchase agreement. A mortgage down payment is the part of the final purchase price you fund yourself. Deposits normally credit that purchase price, but their amount and due dates come from the builder’s agreement. The mortgage minimum does not set the builder’s deposit schedule. Build a dated cash-flow plan before signing.
Two calculations, one purchase
| Question | Builder deposit | Mortgage down payment |
|---|---|---|
| Who sets it? | The purchase agreement | Financing rules and lender requirements |
| When is it due? | Signing and contractual instalments | Accounted for at closing |
| Does it ensure a mortgage? | No | Lender approval is still required |
A $600,000 worked example
The standard minimum down payment on an eligible owner-occupied $600,000 purchase is $35,000: $25,000 on the first $500,000 and $10,000 on the remaining $100,000. A builder might instead require an illustrative $60,000 staged deposit. That is an example, not a project quote. If $60,000 has already been paid toward the price, your lawyer accounts for it at closing; you do not automatically add another $35,000. Closing costs and lender conditions remain separate.
Create a payment calendar
- List the initial payment, each instalment and its exact deadline.
- Confirm the payee, trust or security arrangement and any milestone notices.
- Keep receipts and copies of the signed schedule.
- Separate closing-cost funds from deposit funds.
- Ask the lender how borrowed funds or a change in employment could affect approval.
Check deposit protection and registration
Freehold and condominium deposits have different protections. Ask your lawyer how your money is held and what coverage applies. Tarion currently encourages freehold buyers to register within 45 days of signing and describes a transition to January 1, 2027 for changes to deposit coverage. Follow the current instructions for your signing date; do not assume every payment is automatically covered without limits or conditions.
Compare total cost and timing
An extended deposit schedule can help cash flow without reducing the price. Ask about flexibility before signing, and record any change in the agreement. Compare the total deposit, deadlines, refund provisions and closing costs across projects. A low initial payment does not establish an affordable final mortgage. Review the complete plan with your lawyer and lender while there is time to resolve uncertainty.
Buyer questions
Does a 5% mortgage illustration mean the builder only needs 5%?
No. The agreement can require different payments on different dates. Obtain the actual deposit schedule.
Is my deposit added to the down payment a second time?
Deposits normally credit the purchase price. Have your lawyer reconcile amounts paid, mortgage funds and the remaining cash required.
What should I check before paying?
Confirm the vendor, payee, deadlines, trust or security arrangements and applicable protection with your lawyer.
Sources
Andy Nagpal · 380 Wellington Street, Tower B, 6th Floor, Suite A, London, ON N6A 5B5 · 548 490 4577
Andy Nagpal is a Real Estate Broker registered with the Real Estate Council of Ontario (RECO) under the Trust in Real Estate Services Act, 2002, trading as eXp Realty, Brokerage. Pre-construction pricing, incentives, deposit structures and availability are set by the builder and are subject to change or withdrawal without notice. E. & O.E. This is not an offer for sale; any such offer can only be made with a builder's disclosure statement and agreement of purchase and sale. Not intended to solicit buyers or sellers currently under contract with another brokerage.