The deposit and down payment are one and the same thing, but the timing of each is different.
Your typical home purchase contract includes the deposit amount but not the downpayment amount. Because the main difference between deposit and down payment is the time it’s due. Your deposit is due with your offer, which is included in the purchase contract. At the same time, your down payment is due on completion (at closing).
For example, making a 5% deposit with your offer to purchase in Metro Vancouver is common practice. Your deposit is then held in trust until your purchase closes on your completion date. The seller won’t have access to your deposit funds; they’re held in good faith that you’ll complete the sale. Your deposit is held by a neutral party, usually your real estate agent’s office or your lawyer or notary’s office. In some cases, you can give the seller access to the funds by paying the deposit directly to the seller. If you can’t close your purchase as planned, you’ll most likely, at the very least, forfeit your deposit.
On your completion day, your deposit becomes part of your down payment. If you intend to use a down payment above that original deposit amount, you’ll add the funds at closing. The down payment is the amount you need in “cash” when purchasing a home. While getting a mortgage or loan and borrowing funds for a portion of the price is expected, you won’t be able to pay for the home entirely with credit. Adding your mortgage, deposit, and downpayment together comes up to the purchase price.
