Short answer
The deposit is money delivered under the purchase agreement and is normally credited toward the total down payment at closing. The down payment is the full portion of the purchase price not covered by the mortgage. The buyer must also provide closing costs and prove acceptable sources and movement of funds, often through a documented account history.
The myth
“I paid the deposit, so my down payment is handled.”
Why buyers get caught
The buyer uses nearly all available cash for the offer deposit and later discovers a remaining down payment, land-transfer tax, legal fees, adjustments and an appraisal shortfall. Transfers between family or business accounts are also difficult to trace.
A practical Ontario example
Illustration only: A buyer pays a $40,000 deposit toward a planned $100,000 down payment. At closing, the lawyer still needs the remaining $60,000 plus closing costs and adjustments. Rajiv also needs a clear trail for the funds and any gift.
Questions to ask before proceeding
- How much deposit is due and when can it become non-refundable?
- What is the total required down payment after the deposit credit?
- How much is reserved for taxes, legal fees and adjustments?
- Can every account transfer and large deposit be documented?
- Is there a reserve for appraisal shortfall and moving costs?
What the buyer can do now
- Build a closing-funds statement before making the offer.
- Keep required funds traceable and avoid unnecessary cash movements.
- Confirm gift, borrowed down payment and business-fund rules with Rajiv and the lawyer early.
Separate approval from affordability
A lender’s maximum is an underwriting result, not a personal spending recommendation. Test the mortgage payment alongside property tax, heating, condominium fees where applicable, insurance, maintenance, transportation, childcare and other household commitments. Keep an emergency reserve after closing. A buyer who qualifies at the edge of policy may still feel financially trapped when one expense changes.
Keep each professional’s job clear
The Realtor advises on representation, market evidence, offer wording and negotiation. The lawyer advises on the agreement, title, legal obligations and remedies. The inspector and other specialists assess the property within their stated scopes. The appraiser considers value and marketability for the assignment. The insurer decides coverage. Rajiv reviews income, credit, funds, mortgage structure, lender conditions and property acceptability. RECO and FSRA regulate professional conduct in their respective areas; they do not set one universal lender approval policy.
If the standard mortgage route changes
An A lender is usually the first route where the borrower, income and property fit. Alternative lenders may use broader income or credit approaches, including business bank statements, business financials, eligible expense add-backs or T1 information for suitable self-employed files, but cost and policy differ. An institutional MIC or private lender may solve a short-term timing, equity or property problem through a six-to-twelve-month or longer structure, sometimes interest-only, amortized, open, partly open or matched to a known maturity. The buyer still needs sufficient equity, a clear reason for the temporary financing and a credible exit to suitable A or B lending. Higher-cost financing should not be used merely to preserve an unaffordable purchase.
Verified public guidance
CMHC’s purchase-cost worksheet lists the deposit, down payment, appraisal, inspection, legal fees, taxes, adjustments and insurance as distinct purchase costs. Exact lender evidence requirements vary.
Read the primary source. Source checked 2026-09-03. Public guidance explains the general consumer issue; the agreement, property facts, insurer and individual lender policy determine the file.
Pressure-test the answer
Before relying on this answer, ask what could make it wrong for this buyer. Income may be variable or verified differently. A debt may have an exception, but the lender must approve it. One credit bureau may score differently from the other, but only a lender using that bureau and accepting the full file can help. Rental income treatment may change by subject property, non-subject property, insured or conventional lending and lender method. A property may fail valuation, insurance or marketability even when the borrower qualifies. Separate confirmed facts from assumptions, identify the missing evidence, compare realistic A, alternative, MIC and private routes, and calculate the cash, monthly payment, fees and exit for each viable option.
Buyer file to keep current
- Income, employment or business-income documents requested by the proposed lender
- Credit obligations and explanation of any recent changes
- Complete 90-day or lender-required trail for down payment and closing funds
- Signed offer, schedules, amendments and condition deadlines
- Property, appraisal, inspection, status, insurance and legal documents
- Written lender conditions and evidence showing each condition is satisfied
Related AskRajiv guidance
Continue with deposit vs down payment home purchase ontario, closing costs cash needed home purchase ontario.
Check the risk before it becomes a closing problem
Use Rajiv’s direct mortgage strategy form. Include the property price, closing date, income type, down payment source and the concern you want reviewed.
Source and review
Reviewed by Rajiv Verma, Mortgage Broker on 2026-09-03. Educational information only; not legal, real-estate, inspection, appraisal, insurance, tax or mortgage approval advice.