How Much Deposit Should a Contractor Ask For? Canada and US Rules, 2026
The deposit is the first money a homeowner sends you, and it sets the tone for every payment after it. Ask for too little and you are financing their kitchen with your credit line. Ask for too much and you are the contractor every consumer guide warns them about. Here is what is typical, what the rules actually say in Ontario, the rest of Canada and the US, and how to structure the whole payment schedule so the job funds itself.
The short answer
Ten to fifteen percent on most residential renovations, stated in the estimate and the contract, paid on signing, and covering the materials you order before you start. A larger, itemised materials deposit only where the job genuinely needs custom, non-returnable items ordered early — cabinets, windows, a specialty countertop — priced against the supplier's quote. Then the rest of the money arrives in stages as the work does, with holdback where the law requires it.
That is not the most a contractor can get away with. It is the number that stays close to the guidance homeowners are reading (Ontario recommends no more than 10 percent), funds your material orders, and still says the job is real.
What deposits are for
Two things, and it helps to be able to say both out loud to a client.
- Materials ordered before work starts. The tile that takes three weeks, the vanity that is special order, the lumber package. A deposit that covers these is easy to justify because you can show the supplier invoice.
- A real start date. A signed contract with no money behind it is a reservation. The deposit is what lets you turn other work away for that week with confidence.
What a deposit is not for is paying for the last job, and homeowners know it. A contractor who needs half the money up front is telling the client something about their cash flow, and Ontario's advice to homeowners says it plainly: “Never let a contractor talk you into making a large down payment.”
What is typical
The official guidance in Canada points to about 10 percent. Ontario tells homeowners to keep down payments to a minimum: “we recommend no more than 10%” (ontario.ca). The Canadian Home Builders' Association's guidance is that deposits should not generally exceed 10 percent of the cost of the work, with an exception for custom, non-returnable materials. Many contractors ask for more on signing; we found no official Canadian source that sets a higher typical range. In the US, a few states put a number on it.
What the rules say
Ontario
Ontario does not set a hard statutory cap on renovation deposits, but its Consumer Protection Act and the province's own guide for home renovation and roofing businesses shape what you can do around them:
“You must have a written agreement for any contract worth more than $50.” “We recommend that deposits are not more than 10% of the total project cost.” “A customer has the right to a 10 day cooling-off period if they sign a contract at their home.”
- Written contract for anything over $50, with a work schedule including start and completion dates.
- Ten-day cooling-off period on agreements signed at the customer's home, during which they can cancel for any reason without a fee, and any deposit must be refunded within 15 days. Order custom materials on day eleven, not day one.
- The 10 percent estimate rule, which is about the final price, not the deposit: if the contract includes an estimate, the final price cannot be more than 10 percent above it unless the customer has agreed to new or different work — which is what a signed change order is for.
- Holdback under the Construction Act: 10 percent of each progress payment retained until the lien period after completion has passed. It applies to the draws, not the deposit. On a contract that runs past its first anniversary, the Act has also required an annual release of holdback since 1 January 2026 (progress billing has the detail).
The rest of Canada
Every province has consumer protection legislation with cooling-off rights for agreements signed at home, its own builders' lien act with holdback rules, and in some cases licensing requirements for renovators. Quebec has its own civil-law regime. The CHBA's 10 percent guidance is national. The safe assumption everywhere: keep the deposit modest, itemise anything larger, put the payment schedule in the contract, and check your province's consumer protection office before you rely on a number.
The United States
Deposit rules are set state by state, and some states cap them. California limits a home improvement contract deposit to the lesser of 10 percent of the contract price or $1,000. Other states set different limits, require specific contract language, or leave it to the market. Your state's contractor licensing board publishes the rule; find it before the number goes into your contract template.
Sources, as read on 7 September 2026; links checked 15 October 2026
- Government of Ontario, Guide for home renovation and roofing businesses (ontario.ca) — the $50 written-contract threshold, the 10 percent deposit recommendation, the cooling-off period and refund timing, and the estimate rule.
- Ontario Consumer Protection Act, 2002 (s. 10, the estimate rule; ss. 41 to 43, written direct agreements and the 10-day cooling-off period) and O. Reg. 17/05 (s. 34, the $50 threshold, which applies where the total payable exceeds $50; s. 79, refund within 15 days).
- Government of Ontario, Your rights when starting home renovations or repairs (ontario.ca, updated 6 August 2026) — no more than 10 percent down, cash and receipts, written contracts, large down payments.
- Canadian Home Builders' Association, Contracts: Get it in writing (chba.ca) — deposits "should not generally exceed 10%" of the total cost of the work, except for custom, non-returnable materials the contractor must pre-pay.
- Ontario Construction Act — 10 percent holdback (s. 22) and the 60-day lien period (s. 31).
- California Business and Professions Code — home improvement contract deposit limit, as summarised by the Contractors State License Board.
How to structure the whole payment schedule
A modest deposit only works if the rest of the money arrives as the work does. One invoice at the end starves your cash flow and gives the client eight weeks to forget what they agreed. The schedule below is a common shape for a $27,000 basement bathroom; the percentages move with the job, and the holdback line is there because Ontario requires it — leave it out where your province does not.
| Stage | When | Share | Amount |
|---|---|---|---|
| Deposit | On signing, after any cooling-off period | 15% | $4,050 |
| Draw 1 | Rough-in inspection passed | 40% | $10,800 |
| Draw 2 | Tile complete | 35% | $9,450 |
| Completion | Walkthrough done, deficiencies listed | 10% | $2,700 |
| Holdback release | Lien period ended (Ontario: 60 days after completion) | 10% of each draw, billed last | retained from the above |
Two rules make it work. Tie every draw to a milestone the client can see — an inspection passed, the tile done — rather than a calendar date. And invoice each stage the day it is reached, with a due date and a way to pay on the invoice itself. Deposits, draws and holdback, explained in full.
How to word it on the estimate
Put the deposit and the schedule on the estimate, not just in the contract, so the client has seen it before they say yes. Plain words:
Payment schedule: 15% deposit on acceptance ($4,050), which covers the tile and fixtures ordered before we start; 40% when the rough-in inspection passes; 35% when tiling is complete; balance on completion. A 10% holdback is retained from each payment and released 60 days after completion as required by the Ontario Construction Act. Work outside this estimate is priced by written change order before it begins.
Say what the deposit buys. "Which covers the tile and fixtures ordered before we start" is the sentence that turns a demand into an explanation.
What homeowners are being told to watch for
Read the consumer guides your clients read, because they set the terms of the conversation. Ontario's page for homeowners, for one, says: keep down payments to a minimum, no more than 10 percent; avoid cash deals, and get a detailed, signed receipt if you do pay cash; if it isn't written in the contract, you may not get it; and be wary of a door-to-door seller who says the contract has to be signed right away to get the special price. None of that is aimed at a contractor who asks for a modest deposit on a written estimate, explains what it covers, and takes it by card or e-Transfer with a receipt. All of it is aimed at the one who asks for half in cash. Be the first one, visibly.
If the client will not pay a deposit
Ask why, because the two reasons need different answers. If it is trust — they have been burned before — offer to hold the deposit against specific material orders and send them the supplier invoices when the order is placed. Most people find that reasonable. If it is cash — they cannot pay 15 percent today — the job may not be funded, and finding out now is a favour to both of you. Offer a later start date rather than a smaller deposit.
Where Estiquik fits
The payment schedule goes on the estimate as a schedule, not a paragraph: deposit, draws and completion as stages with percentages, an optional holdback that is retained from each stage and billed as a final release invoice, and one invoice per stage generated when you reach it. Deposit invoices carry a Pay by card button through your own Stripe account, and e-Transfers are recorded as payments. The free estimate template has the same payment schedule block if you would rather do it on paper.
Questions contractors ask
How much deposit should a contractor ask for?
Enough to cover materials ordered before work starts and to make the start date real: 10 to 15 percent on most renovations, with an itemised materials deposit only for custom, non-returnable items. Ontario and the CHBA both recommend keeping it around 10 percent.
Is there a legal limit on deposits in Ontario?
No hard cap, but the province recommends no more than 10 percent, requires a written contract over $50, gives a 10-day cooling-off period on contracts signed at home with deposits refunded within 15 days, and caps the final price at 10 percent over the estimate unless the customer signs off on changes.
Do any US states cap deposits?
Some. California limits home improvement deposits to the lesser of 10 percent or $1,000. Check your state's licensing board.
Is a 50 percent deposit a red flag?
To most homeowners, yes. If you genuinely need custom items ordered early, itemise them as a materials deposit against a supplier quote rather than asking for half the contract.
Does holdback affect the deposit?
No. Holdback is retained from the progress payments and released as a final invoice after the lien period. In Ontario it is 10 percent, and on a contract that runs past its first anniversary it has also had to be released annually since 1 January 2026.
What if the client refuses?
Ask why. Trust problems are solved by tying the deposit to supplier invoices; cash problems mean the job may not be funded, and a later start is a better answer than a smaller deposit.
Related: estimate vs quote vs bid — which document you are sending, and Ontario's 10 percent rule on estimates.
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