Mortgage Broker Company - Difference between a deposit and a downpayment

When you are buying a house, and working through the process of an Agreement of Purchase and Sale, the real estate agent will ask you for a deposit. This is what is called “good faith” money. It shows the real estate agent that you are in the position financially to purchase the property.

The deposit can be any amount usually 1,000. The deposit will be kept in a trust account until the day of closing. The amount will then be deducted from the purchase price.

Your down payment is a percentage of the purchase price of the house. There are many different programs offering 5%, 10%, 20% down. So if you purchase a home for $200,000 and you put $10,000 down than at closing you pay $9,000 because your deposit of $1,000 is already there.