When it comes to buying or selling a home, one topic that often confuses buyers, sellers, and even some agents is the deposit — how much to pay, when to pay it, and whether it’s truly protected. Let’s break it all down clearly.
🕒 When Do You Pay the Deposit?
Once a buyer and seller have signed an Agreement of Purchase and Sale — whether it’s conditional or firm — the buyer must deliver the deposit to the listing brokerage within the agreed-upon timeframe.
In most cases, the deposit is due within 24 hours after the offer is accepted. If the transaction falls on a weekend or holiday, the parties can mutually agree on an alternate schedule for payment.
💰 How Much Should You Pay?
In Ontario, the deposit typically equals around 5% of the purchase price.
For example:
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On a $1,000,000 home → the deposit is about $50,000.
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On a $2,000,000 home → about $100,000.
That means buyers should have this amount ready before making an offer — because once your offer is accepted, the deposit must be paid right away.
⚠️ The Key Number to Remember: $200,000
No matter how expensive the property is, it’s important to remember one key number — $200,000.
Why? Because in Ontario, all licensed real estate agents are required to carry mandatory insurance through the Real Estate Council of Ontario (RECO). One part of this coverage is called Consumer Deposit Insurance, designed to protect buyers in extreme situations — for example:
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if a brokerage faces insolvency,
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misuses trust account funds, or
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if a deposit fraud occurs.
However, this insurance only covers up to $200,000 per buyer.
📰 A Real-Life Example
Earlier this year (2025), a large Toronto-area real estate brokerage — iPro Realty — was investigated by RECO after approximately $10 million (later reduced to 'less than $8 million' according to RECO) in trust funds were reportedly misused. These funds largely consisted of deposits from buyers and tenants.
Under RECO’s consumer protection framework, each buyer is eligible for a maximum reimbursement of $200,000, and the total coverage for all buyers affected by a single incident is capped at $4 million.
This means that if many people are impacted at once, individual buyers may not recover the full amount of their deposits.
💡 So, How Much Should You Actually Pay?
Even if you can afford to pay more, it’s generally not advisable to deposit more than $200,000. Paying a higher amount doesn’t make your offer “safer” — in fact, it can increase your risk exposure if something goes wrong.
✅ Quick Summary
1️⃣ Typical Amount: Around 5% of the purchase price.
2️⃣ Payment Timing: Usually within 24 hours of offer acceptance (or as mutually agreed).
3️⃣ Who Holds It: The deposit is paid to the listing brokerage, held securely in their trust account until closing.
4️⃣ How It’s Used:
• For buyers — it’s credited toward your down payment on closing.
• For sellers — once the deal closes, the brokerage deducts commission and HST before releasing the balance to the seller.
5️⃣ Deposit Protection: Ontario’s Consumer Deposit Insurance covers up to $200,000 per buyer, so it’s best to work with a reputable, well-established brokerage for peace of mind.
🗝️ Final Thoughts
While the deposit may seem like a small part of a real estate transaction, it represents trust and financial security between both parties.
Understanding how much to pay, when to pay, and how it’s protected will help you make informed, confident decisions throughout your home-buying journey.
I’m Fisher Yu from The Fisher Group — helping you navigate the GTA real estate market with confidence and clarity.
