What is a reasonable deposit for a home renovation?

A reasonable deposit for home renovation work in Toronto typically ranges from 10-25% of the total project cost, with most reputable contractors requesting 15-20% to secure materials and schedule the work.

The deposit amount depends significantly on your project scope and contractor requirements. For smaller renovations under $10,000, many contractors will ask for $1,000-$2,500 upfront. Medium projects ($10,000-$50,000) commonly require $2,000-$10,000 deposits, while larger renovations may need $10,000-$25,000 to cover initial material orders and permit applications.

Material-heavy projects often require higher deposits because contractors need to order custom items like kitchen cabinets, windows, or specialty tiles before work begins. A kitchen renovation might require 20-25% upfront to secure appliances and cabinetry, while a bathroom renovation typically needs 15-20% for fixtures and tiles. Projects requiring significant permits, like basement finishing or additions, may also require higher deposits to cover permit fees and engineering costs.

Red flags to avoid include contractors demanding 50% or more upfront, requesting full payment before starting, or asking for cash-only payments. In Ontario, Consumer Protection Act regulations limit deposits to reasonable amounts, and contractors should provide detailed contracts explaining what the deposit covers. Never pay large sums to door-to-door contractors or those pressuring you to "sign today."

Toronto-specific considerations include the seasonal rush for contractors (spring bookings often require deposits by February), and the fact that licensed contractors typically have established payment schedules. ESA-licensed electricians and TSSA-certified gas technicians usually follow industry-standard deposit practices, while unlicensed contractors may demand unusual payment terms.

Professional guidance suggests getting multiple quotes before paying any deposits, ensuring your contractor is properly licensed and insured, and confirming the deposit amount is clearly outlined in your written contract. The deposit should cover materials and initial labor, not the contractor's overhead or profit margins.

Next steps: Request a detailed breakdown of what your deposit covers, verify the contractor's credentials through appropriate licensing bodies, and ensure you have a written contract before making any payments. Consider paying deposits by credit card or cheque rather than cash for better financial protection.