Deposit Structures Explained: What You Really Pay Before Occupancy
A pre-construction deposit is rarely a single payment. It is a schedule, spread across months or years, and understanding its shape matters as much as its total.
The typical shape
Most Ontario and British Columbia projects follow a similar rhythm. A small amount — often $5,000 to $10,000 — is due on signing. The remainder is then staged, frequently in five percent instalments at intervals like 30, 90, 180 and 365 days. A final instalment lands on occupancy.
A common structure looks like this:
- $5,000 on signing
- 5% at 30 days
- 5% at 90 days
- 5% at 180 days
- 5% on occupancy
That totals roughly 20 percent. Some builders ask for 15 percent; a few in softer markets ask for 10. The structure is negotiable far less often than buyers assume, but incentives sometimes include a reduced or extended deposit schedule.
Why the schedule matters more than the total
Two projects can both ask for 20 percent and represent very different financial commitments.
A deposit spread over 18 months gives you time to accumulate the funds and keeps capital in your hands longer. The same amount due in three months is a different proposition entirely, particularly if you are also carrying a mortgage on your current home.
Before committing, map the payment dates onto your own cash flow. The instalments arrive whether or not the market is cooperating.
Where the money is held
In Ontario, deposits on pre-construction residential units must be held in trust, typically by the builder's lawyer or a trustee. That protection is meaningful — it is one of the reasons Canadian pre-construction carries less counterparty risk than some international markets.
Confirm the arrangement in your agreement rather than assuming it. And note that in some provinces and for some non-residential projects, the protection differs.
Deposits are not your down payment
This is the most common misunderstanding. Your deposit goes toward the purchase price, but it does not automatically satisfy your mortgage lender's down payment requirement at closing.
If you put 20 percent down as a deposit and your lender wants a 20 percent down payment, the deposit covers it. If your deposit is smaller, you will need to bring the difference to closing. If it is larger, the surplus is credited to your purchase price.
Get a mortgage pre-approval that reflects the actual closing date, not today's date. Pre-approvals commonly run for 90 to 120 days, which is far shorter than most pre-construction timelines. Comparing deposit structures across projects is easiest when you have several in front of you — our pre-construction developments directory lists deposit structures alongside pricing for each listing.