How Do Deposits Work When Buying Pre-Construction Condos

The Deposit structure for purchasing a pre-construction condo varies by builder and project. Depending on the project’s deposit structure you can expect to put down between 5%-20% of the purchase price. Most builders require a total of 20% down. However, it is important to note that the 20% is not normally expected upfront in one payment. This allows a pre-construction condo purchaser to split up payments.

For example, let’s say you were interested in buying a pre-construction condo for $300,000.

• $2,000 deposit given when signing the offer
• $13,000 (balance of 5%) in the first 30 days (from signing)
• $15,000 (5%) in 120 days
• $15,000 (5%) in 270 days
• $15,000 (5%) in 540 days

This makes a total of 20% (or $60,000) of the $300,000 purchase price. Upon the condominium finishing construction and the Agreement of Purchase and Sale being completed, the mortgage on the new unit would now be $240,000.

Although most pre-construction condos will have a similar deposit structure, at times builders will offer different incentives or payment schedules when signing for a unit. For instance, a builder may offer $2,000 down when you sign, the balance of 5% in the first 30 days, and the balance of 15% on occupancy. This structure makes the 20% deposit more manageable and easier to plan for when arranging your finances.