Is there a difference between a deposit and down payment? If so at what point in the process is each paid?
The deposit is money that you would put down to secure the property that you are purchasing when subjects are removed. This helps prove that you are serious about buying the property. The deposit can be any amount, when writing an offer it will need to be included in the contract. The amount will depend on the purchase price and and how quickly you close the sale. The deposit then becomes part of the down payment and is then applied against the purchase price of the property. However, if the sale does not close, your deposit will be lost.
A down payment is the money you put up front when purchasing a property. Down payments typically go from 5-20% of the total value of the property. As of February 2016, the minimum required to buy any properties below $500k is 5% and anything above that would be 10%.
There can be different down payment requirements though when buying. employees can put 5%, self employed people must put atleast 10% and for rental and investments or properties above 1 million dollars you need a minimum of 20% down.
Hope this helps clear things up! If you have anymore questions please feel free to leave them in the comments section. 🙂
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