Deposit vs. Down Payment: What's the Difference?

In this example, the base mortgage amount before any mortgage-insurance premium is $565,000 ($600,000 less $35,000). The deposit does not increase the purchase price; it is part of the buyer's $35,000 contribution. At closing, the lawyer reconciles the purchase price, funds from the mortgage lender, deposit credit and any remaining buyer funds.

Be careful with the phrase “balance at closing.” The $20,000 is only the remaining down-payment portion. The actual money required by the lawyer can also include legal fees, land-registration charges, property-tax adjustments, title insurance and other agreed costs. A new home may also involve GST or rebates depending on how its contractual price is expressed.

These are federal minimums for qualifying purchases, not promises of mortgage approval. A lender may require a larger contribution after reviewing income, existing debts, credit, property appraisal and permitted sources of funds. A down payment below 20% normally requires mortgage default insurance, which protects the lender—not the homebuyer—and can increase borrowing costs.

For a $600,000 home, the graduated formula produces $35,000, not a flat 5% of $600,000. The minimum rules may also differ for particular property uses or lending programs, so buyers considering rental or multi-unit properties should verify their exact financing terms.

A mortgage pre-approval is not the same as final mortgage approval on a particular property. For homes under construction, lenders may require updated employment documents, a new appraisal, or other conditions closer to possession. Keep sufficient accessible funds for builder installments and avoid assuming a rate hold will last through a lengthy build.

A resale purchase often involves one main deposit administered through the real estate brokerage's trust arrangement. A builder's presale or semi-custom transaction may involve multiple installments, because planning, selections and construction take place before final possession. There is no universal Kapish or Alberta-wide deposit percentage or installment schedule that should be assumed for every builder transaction.

When working directly with Kapish Homes, ask for the deposit schedule that applies to the specific home and purchase agreement, including who receives funds, what documents confirm each payment and whether additional installments are required for custom options.

Not automatically. Refund rights depend on the signed contract, who holds the funds, any applicable conditions, how deadlines are met and which party fails to perform. A properly invoked financing condition may allow the deposit to be returned under the particular agreement; once conditions are waived or expire, a buyer who defaults can risk losing the deposit and potentially face other remedies.

For example, if a resale agreement includes a financing condition that cannot be satisfied and the buyer gives the required notice on time, the contract may provide for release of the deposit. If the agreement becomes unconditional and the buyer later refuses to complete, the outcome can be very different. Builder agreements may contain their own cancellation, delay, refund and forfeiture provisions, which deserve especially careful review.

Alberta advises new-home buyers to put deposits, payment milestones and refund policies in writing and obtain receipts. It also identifies deposit-protection insurance as a product that can protect money paid to a builder. That is separate from mandatory new-home warranty coverage against construction defects; buyers should ask whether deposit protection exists, who provides it, and what limits and exclusions apply. Do not assume every deposit is held in trust or automatically insured.

The new-home buying experience is more comfortable when the financial milestones are explained early. Through the Kapish New Home Concierge, buyers can discuss whether they are looking at a quick-possession property, a spec home or a more customized building pathway, and request a clear explanation of the applicable deposit schedule and next steps.

Kapish Homes can help buyers understand the difference between a contract deposit, selection-related costs and the remaining funds that will be due at closing. The team can also coordinate builder-side documentation and help clarify what the written agreement says about payment deadlines. Mortgage eligibility, legal interpretation and actual closing requirements should still be confirmed with the buyer's independent lender and lawyer.

The most useful approach is a simple one: understand your total required down payment, track every deposit already paid and plan a separate reserve for closing costs. That way, your focus can remain on choosing the right home rather than facing an unexpected cash requirement as possession approaches.