Down Payment Vs. Deposit

Down Payment Vs. Deposit

  • 01/31/23

What is the difference between a Down Payment and Deposit?

A down payment is an upfront payment made when purchasing a house or property and is a part of the total cost of the property. It is paid in addition to the mortgage loan and serves to lower the amount of the loan and the monthly mortgage payment. A down payment can range from a few percent to 20% or more of the total cost of the property.


A deposit is a payment made by a buyer to show their commitment when making an offer to purchase a property. The deposit is usually held in a trust account and is applied towards the purchase price if the offer is accepted. If the offer is not accepted, the deposit is typically refunded to the buyer. The amount of the deposit can vary and is often negotiable between the buyer and seller, but it is typically a few thousand dollars or 1-2% of the purchase price. The purpose of the deposit is to demonstrate the buyer's commitment to the purchase and to show that they have the financial means to follow through with the transaction.

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