Pre-Construction Deposit Structures in Ontario, Explained

A pre-construction deposit structure is the schedule of instalments a builder collects between the day you sign and the day you close. Instead of one lump sum, the deposit is split into a series of payments, usually totalling 15 to 20% of the purchase price on a condo and often less on a freehold home. The structure is written into the agreement of purchase and sale, and it varies by builder, by project, and by how strong sales are. Understanding it before you sign matters more than almost anything else in a pre-construction purchase, because the deposit is the largest cheque you write before the home exists.

What a typical condo deposit structure looks like

Every project publishes its own schedule, but a common GTA condo pattern looks like this:

• $5,000 to $10,000 with the offer, credited toward the first instalment
• Balance to 5% of the price within 30 days
• 5% at 90 to 180 days
• 5% at 365 to 540 days
• 5% at interim occupancy

That adds up to 20% before final closing, spread over roughly two years. Builders collect the schedule with post-dated cheques or wires, and missing an instalment is a default under the agreement, so the dates belong in your calendar the day you sign.

Why do builders structure it this way? Construction lenders generally want to see a sold building and real deposits before they advance funds. Your instalments are part of how the project gets financed and built.

Freehold deposit structures

Detached and townhome projects usually ask for less in total but collect it faster. In our experience most GTA low-rise builders ask for somewhere between 10 and 15% of the price, often collected within the first 6 to 12 months rather than stretched to occupancy. A $1.2M detached release might ask for $100K to $150K across three or four cheques in the first year.

Freehold schedules are also more negotiable than buyers assume, especially outside a launch weekend. A builder holding inventory will sometimes stretch the same total across more months for a qualified buyer. It costs nothing to ask, and this is exactly the kind of term we push on for our buyers.

Where your deposit money actually sits

This is the difference most buyers never hear about at a sales office.

For a new condominium, the Condominium Act requires the builder to hold your deposit in trust, typically with the builder's lawyer. The money is not the builder's to spend until the Act's conditions for release are met.

For a freehold home, there is no equivalent blanket trust requirement. Builders can and do use freehold deposits in the project. That is why the warranty program's deposit protection limits matter far more on freehold purchases.

How Tarion protects your deposit

Every new home builder in Ontario must be licensed by the Home Construction Regulatory Authority (HCRA), and every new home is enrolled with Tarion, which backstops deposits if a builder goes insolvent or fails to close. The current limits for purchase agreements signed on or after January 1, 2018:

• Freehold home priced at $600,000 or less: deposit protection up to $60,000
• Freehold home priced over $600,000: 10% of the purchase price, to a maximum of $100,000
• Condominium unit: the Condominium Act trust is the first layer, and Tarion adds protection of up to $20,000 if a deposit was not placed in trust as required

Read those freehold numbers against a real schedule. If a builder asks for $150K on a $1.2M home, Tarion's cap is $100K. The gap is real risk, and it is one reason we check a builder's licence status and history in the HCRA's Ontario Builder Directory before our buyers sign. An established builder with a clean record and delivered projects is the strongest deposit protection there is.

Cooling-off periods and getting your deposit back

On a new condo, Ontario law gives you a 10 day cooling-off period after you receive the signed agreement and the disclosure statement. Cancel in writing within that window and the builder must promptly refund every dollar, no reason required. We tell every condo buyer to treat those 10 days as a working period: lawyer review, mortgage pre-approval, and a hard look at the deposit schedule.

Freehold buyers currently have no equivalent statutory window, although Ontario's Homeowner Protection Act, 2024 introduced a 10 day cooling-off period for new freehold homes that is scheduled to take effect on January 1, 2027. Until then, a freehold agreement binds you when you sign it, which makes the lawyer review condition you negotiate up front the only exit you may get.

After the cooling-off period, deposits are only refundable in specific situations: the builder cancels the project, fails to close, or a condition in your agreement fails. Changing your mind is not one of them.

Extended deposit structures and launch incentives

Deposit terms are one of the main levers builders pull to move units. In slower stretches we regularly see extended structures (the same 15 to 20% stretched over three or more years), 5% total deposits on select inventory, and deposit instalments deferred until occupancy. These offers tend to show up first in the VIP window before a public launch, alongside price lists and floor plans.

Two cautions. First, a lighter deposit does not shrink the purchase price or the mortgage you will need at closing. Second, incentives change project by project and week by week, so verify the current structure in writing rather than relying on a months-old flyer.

How deposits connect to your mortgage

Your deposits are your down payment, paid early. If you put down 20% in instalments during construction, you arrive at final closing with 20% already in and you mortgage the remaining 80% of the original purchase price. Two planning points follow from that.

First, the mortgage is arranged near closing, years after you sign, at whatever rates and qualification rules exist then. A pre-approval at signing is a sanity check, not a rate hold that survives a three year build. Budget your closing numbers with room for higher rates than today's.

Second, lenders base their appraisal on the home's value at closing, not your contract price. If values have risen, nothing changes. If they have fallen, you may need to cover the difference in cash on top of your deposits. This is not a reason to avoid pre-construction, but it is a reason to buy with a cushion rather than at the absolute edge of qualification.

What to check before you hand over a cheque

• The full schedule, in dollars and dates, not just percentages
• Who holds the money: the builder's lawyer in trust, or the builder
• What happens on default, and whether there is any cure period
• Whether development charge and levy caps are in the agreement (they hit at closing, after your deposits are all in)
• The builder's HCRA licence and history in the Ontario Builder Directory
• On freehold: how far the schedule runs past Tarion's protection caps

A buyer's broker costs you nothing here. We are paid by the builder, we represent you, and we review the deposit structure and agreement in plain terms before you commit. If you want deposit structures and price lists for upcoming launches in cities like Brampton and Mississauga before the public launch, register for pre-construction alerts. And if you are budgeting the full purchase, our HST rebate guide covers the tax side of a new home purchase.