Frequently Asked Questions about Home and House Deposits

What is a home or house deposit?

Much like a down payment guarantees the bank you’ll pay the mortgage, a house or home deposit guarantees the seller you’re serious about buying their property. 

A house deposit is typically 5 - 10% of the purchase price of the property, and is a separate amount than the down payment on a home.  These deposits are typically secured via a loan or cashier’s cheque, and also with cash equivalent deposit guarantees, like those offered by Home Deposits Now.

How much should my home deposit be in Canada in 2022?

Home or house deposits in Canada are usually between 5 - 10% of the property value, but there isn't a hard rule for what makes an adequate house deposit amount.

Canadians now have the all-new option of using a Home Deposits Now cash equivalent guarantee instead of making an offer to purchase a home with a traditional cash deposit. 

Our insurers' 'A' grade guarantee backs up your commitment to buy, making it safe for the seller, and easy for the buyer.

Our fees start as a fraction of a percent of the deposit. For a quote, you can use our free Calculator.

What’s a house or home deposit vs a down payment?

A house or home deposit is essentially a down payment to the seller.  Much like a down payment guarantees the bank you’ll pay your mortgage, a house or home deposit is a guarantee you’ll buy from the seller.  

A house or home deposit is generally 5 - 10% of the value and a down payment is typically much more - up to 20%

A key difference between the deposit and down payment is their purpose in securing the confidence of the seller and the mortgage lender, respectively, about your financial ability to own a home. 

While a deposit tells the seller that you are determined to purchase the property, a down payment tells the bank about your capability to handle the mortgage expenses.

Now Canadians have the option of securing their home deposit via Home Deposit Now Guarantees - providing more flexibility and ease to an arduous process.

Is a larger house deposit better?

A larger house deposit makes more sense for home buyers in most situations.

A smaller house deposit can give the buyer more flexibility at the time of settlement, but in a hot housing market, a larger deposit often makes for a more competitive offer. Home Deposits Now allows you to make a larger deposit on multiple listings without having to release your funds, sell your assets, or take out loans through closing.

We help home buyers with equity, and can instantly unlock a larger deposit with Home Deposits Now to secure a larger deposit. As funds do not change hands until closing, buyers can keep earning returns on their house deposit money until the settlement date, and since guaranteed deposits are not loans, buyers need not worry about interest charges, applications, or even credit checks! 

Is a deposit on a house refundable?

Not often.

When you’re buying a property in Canada, a deposit on your home is accompanied by an Agreement of Purchase and Sale (APS). When the deposit is paid and the APS is signed, you’re officially in a legally binding contract.

Now that the purchase has been processed, it is not a good idea to try and go back on your word - the seller may have grounds to sue. Unless you have put conditions on the deposit (i.e., for the sale to go through only if the seller agrees to fix a door or a fence on the property) and the conditions have not been met, your deposit can be returned after both parties sign a release form.