How much deposit should I pay a contractor?

As little as the contractor needs to start, and never the full amount. The Federal Trade Commission tells homeowners not to pay the full price up front, to check with their state or local consumer agency about down payment limits, and to treat a contractor who asks for everything in advance or cash only as a warning sign (FTC, How To Avoid a Home Improvement Scam). Two states put a number on it. In California the down payment on a home improvement contract may not exceed $1,000 or 10% of the contract price, whichever is less, and later payments may not run ahead of the work done (CSLB, Learn About Home Improvement Contracts). In Maryland a contractor may not take any payment before the contract is signed and may not take a deposit of more than one third of the price (Md. Code, Bus. Reg. 8-617). Texas sets no cap in the statutes cited on this page, so the schedule is what you negotiate, and the schedule should follow the work.

Why the deposit matters more than the total

A quote can be fair line by line and still be a bad deal if the money moves before the work does. Once a contractor holds half the price, your leverage is gone: a slow job, a substitution, a crew that stops showing up, and the only tool you have left is a lawyer. The deposit is where you decide who carries the risk. A contractor who has been in business for years has credit with suppliers and can start a job on a small deposit; a contractor who needs half the price to buy the shingles is telling you about their finances.

What the rules say, state by state

Other states have their own home improvement statutes with deposit limits, escrow rules or registration requirements. The FTC's advice to check with the state or local consumer agency is the right first step wherever you are.

A payment schedule that follows the work

The honest shape of a schedule is that each payment buys something you can see. A small deposit at signing, which in California is at most $1,000 or 10%. A payment when materials are delivered to the site, against the delivery ticket. A payment at a defined stage, such as tear-off complete and dry-in, or first coat on. The balance when the work is complete, the site is clean, the permit is closed if there was one, and you have a lien waiver from the contractor and, where subcontractors or suppliers were used, from them. Hold the final payment until the punch list is done; that is the only moment in the job when you have leverage without a dispute.

Write the schedule into the contract with the amounts and the triggers, not "50% down, 50% on completion." If a contractor proposes a large deposit for custom materials, ask for the supplier's order confirmation and pay the supplier's amount, not a round number.

Warning signs around the deposit

• Full payment or most of it before any material arrives (FTC).
• Cash only, or a discount for cash, which leaves you without a record (FTC).
• A deposit demanded before the contract is signed, which Maryland forbids outright (Bus. Reg. 8-617) and which is a bad idea anywhere.
• A deposit that is a round percentage unrelated to any cost the contractor will incur before starting.
• Pressure to pay today to "lock in" a price, which is the subject of the contractor says the price is only good today.

Our Quote Check reads the payment terms on the quote and, when a deposit is large for the trade or the state has a limit, puts the question in the letter with the statute beside it. We are paid by homeowners only and take no fee from contractors. Check a quote from $39.

Questions

Is a 50% deposit normal for a contractor?

It is common, but it is not required and in California it is unlawful for a home improvement contract, where the down payment may not exceed $1,000 or 10% of the price, whichever is less. In Maryland the deposit may not exceed one third. Elsewhere, tie each payment to work you can see.

What is the maximum down payment on a home improvement contract in California?

$1,000 or 10 percent of the contract price, whichever is less, and later payments may not exceed the value of the work performed, according to the Contractors State License Board.

Can a contractor ask for money before the contract is signed?

In Maryland, no: Business Regulation Section 8-617 bars any payment before the home improvement contract is signed. Elsewhere it is a warning sign, and the FTC advises getting a written contract before paying anything.

When should I make the final payment?

When the work is complete, the site is clean, any permit is closed and you hold a lien waiver. Hold the final payment until the punch list is done; it is your only leverage without a dispute.

Sources

Every figure above links to the public record it comes from. The wage, import, margin and markup figures are the ones our reports use, published as USCCDB v1.0 under CC BY 4.0. Statutes and city pages are quoted as published on September 27, 2026; check the source for changes.

1. Federal Trade Commission, consumer advice: How To Avoid a Home Improvement Scam
2. California Contractors State License Board, Learn About Home Improvement Contracts (down payment limit, progress payments)
3. Maryland Code, Business Regulation, Section 8-617 (no payment before the contract is signed; deposit not more than one third)
4. Federal Trade Commission, Cooling-Off Rule, 16 CFR Part 429

Related guides

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