Contract Deposit vs Down Payment in NYC: The Real Difference
Back to the NYC Real Estate Blog
A contract deposit is the cash a buyer wires when signing the purchase contract, customarily 10% of the price in NYC and technically negotiable. The down payment is your total cash contribution toward the price. The contract deposit is part of the down payment, so it can never exceed the down payment. Any remaining down payment is paid at closing.
We represent NYC buyers, and this is one of the first terms that trips people up. They’re related numbers, not competing ones.
Think of it as one payment split in two: some now, to sign, and the rest at the closing table.
Contract deposit vs down payment
The down payment is what your lender and the seller care about as a percentage: 20% for a co-op, 10% for a condo. The contract deposit is the first slice of that money, handed over weeks earlier when you sign.
Same money, mostly, just handed over in two acts. Say your down payment is 20% and your contract deposit is 10%. You wire 10% at signing and bring the other 10% to closing. If both are 10%, you’ve already paid it all and only owe closing costs at the table.
| Total down payment | Contract deposit at signing | Balance due at closing |
|---|---|---|
| 10% | 10% | 0% of the price |
| 20% | 10% | 10% |
| 25% | 10% | 15% |
| 20% | 5% (negotiated) | 15% |
Our down payment and credit hub covers how big the down payment needs to be. For the co-op and condo minimums, see the average down payment on a NYC apartment.
How much is a contract deposit in NYC?
Ten percent, and the seller’s lawyer is already holding out a hand. That’s the customary figure across New York City, and most sellers expect it.
You can negotiate a smaller deposit, say 5%, but in a competitive market, it weakens your offer. A seller reading two similar bids will usually take the one with 10% down at signing. A larger deposit signals a buyer who won’t walk away. In a bidding war, offering less than 10% is often a non-starter.
Where does the contract deposit go?
Your deposit goes into an escrow account you cannot touch, and neither can the seller, mostly. In New York, that account is almost always held by the seller’s attorney, not by a neutral title or escrow company, as it does in much of the country.
The money sits there untouched until closing, when it’s credited toward the purchase price. The seller’s attorney can’t spend it, and you can’t get it back on a whim. It’s released only per the contract: to you if the deal falls apart for a covered reason, to the seller if you default. Running your numbers with a buyer rebate in them first tells you whether the 10% is comfortably within reach.
Is a contract deposit refundable?
Yes, right up until the moment it very much is not. Before both parties sign the contract, nothing is binding, and your deposit is returned if you change your mind.
Once the contract is fully signed, the deposit is at risk. If you walk away without a reason permitted by the contract, the seller can keep the entire 10%. What protects you is the set of contingencies written into the contract:
- Financing contingency: if your mortgage is denied despite a good-faith application, you exit and recover the deposit. Buyers waive this in bidding wars, which puts the 10% on the line if the loan dies.
- Other contingencies: inspection, sale of your current home, or a specific board-approval clause, if negotiated in.
Our guide to the full NYC buying process covers how the contract and contingencies are negotiated.
Earnest money and the NYC version of it
If you’ve bought elsewhere, you know this as earnest money. The rest of the country calls it earnest money and keeps it smaller, often 1% to 3% of the price, held by a title company.
New York’s version is bigger, held by a lawyer, and taken more seriously as a commitment. The function is the same: it shows the seller you’re real, and it’s the money you lose if you back out for no valid reason.
What we watch on the deposit
For a client, the contingency is the only thing standing between your 10% and the seller. So we make sure the financing contingency language is tight, and any board-approval protection is in the contract before you sign. Georges’ rule holds here: “It’s all about the numbers and the execution.”
We also confirm your mortgage pre-approval is solid before the deposit goes out. A weak pre-approval that turns into a denial, after you’ve waived financing, is how buyers lose six figures. If you want a broker watching that line and a rebate at closing, that’s what we do.
Common questions
What is a contract deposit? The cash a buyer pays when signing the purchase contract, customarily 10% of the price in NYC. It’s the first portion of the down payment, held in escrow until closing.
What’s the difference between a contract deposit and a down payment? The down payment is the total cash you put toward the price. The contract deposit is the portion paid at the time of contract signing. The balance of the down payment is paid at closing.
Is a contract deposit refundable? It’s fully refundable until both parties sign the contract. After that, you get it back only if a contract contingency, usually the financing contingency, lets you exit. Otherwise, the seller can keep it.
How much is a contract deposit in NYC? Customarily, 10% of the purchase price. It’s negotiable, but a lower deposit weakens your offer, and most NYC sellers won’t accept less than 10% in a competitive market.
Who holds the contract deposit in New York? The seller’s attorney, in an escrow account. This differs from many other states, where a neutral title or escrow company holds it.
Nicole Fishman Benoliel co-founded NestApple in 2017. She's a lawyer admitted to the New York bar - her law degree is from La Escuela Libre de Derecho in Costa Rica, with further study at IE Business School in Madrid and an LLM from Fordham in New York. She does not act in a legal capacity at NestApple; every client is referred to an attorney who handles real estate deals full time.
