How Much Deposit Should a Contractor Ask For? (Payment Schedules That Get You Paid)

July 31, 2026 - Every contractor has a version of this story: the job where the client went quiet at the final invoice, and the last 20% of the contract, which was all of the profit, took four months and three awkward phone calls to collect.

Deposits and payment schedules are how you prevent that story. They are also one of the most common places contractors either scare off good clients (by asking for too much up front) or finance the client's project out of their own pocket (by asking for too little). Here is what to ask for, how to structure the schedule, and what the law allows.

Quick answer: For most residential jobs, ask for a 10 to 30% deposit at signing, break the rest into progress payments tied to milestones, and keep the final payment at 10 to 15% due on completion. Small jobs (under about $10,000) commonly run 30 to 50% up front; large projects run 10 to 20%. Check your state first: some states cap deposits by law, California at 10% or $1,000 (whichever is less) for home improvement contracts. Put the full schedule in the proposal the client signs, and never let the value of completed work get ahead of the money collected.

Why the deposit exists (and what it is not)

A deposit does three jobs:

1. It commits the client. A signed proposal with money behind it is a real project; a signed proposal without money is a strong maybe. Deposits kill tire-kicker cancellations.
2. It covers early out-of-pocket costs. Materials, permits, and scheduling commitments start costing you money before the first hammer swings.
3. It filters payment risk. A client who balks at a normal deposit on a normal job is showing you how the final invoice conversation will go.

What a deposit is not: profit, and not a loan to fund your previous job. If you need this client's deposit to pay for the last client's materials, the problem is pricing or cash-flow management, and a bigger deposit only postpones it.

How much to ask for, by job size

Special cases that justify more up front:

• Custom or non-returnable materials (cabinets, windows, specialty stone): collect their full cost before you order, as its own line in the schedule if needed.
• Long permit or lead-time gaps: a modest deposit at signing plus a second payment when work actually starts keeps you from holding the slot for free.

Know your state's deposit law before you quote

Several states cap what home improvement contractors may collect before starting work, and the caps are much lower than industry habit:

• California: 10% of the contract price or $1,000, whichever is less, for home improvement contracts.
• Nevada: deposits limited to 10% of the aggregate contract price or $1,000, whichever is less, unless the contractor posts a bond.
• Maryland: home improvement deposits capped at one third of the contract price.
• Several other states regulate deposit timing, escrow, or disclosure rather than amount.

If you work in a capped state, structure around it legally: a small deposit at signing, then a substantial first progress payment due on the first day of work or on delivery of materials. That is compliant and gets money moving before you are deep into the job. This is general information, not legal advice; check your state's contractor licensing board, because violating a deposit cap can mean fines or license discipline.

Building the progress payment schedule

The principle that makes every schedule work: payments follow completed milestones, and collected money stays slightly ahead of your incurred cost, never behind it.

A worked example for a $60,000 kitchen remodel:

At signing (deposit)                       15%     $9,000
Cabinet/countertop order placed            20%    $12,000
Demo complete, rough-in done               25%    $15,000
Drywall, paint, flooring complete          25%    $15,000
Substantial completion                     10%     $6,000
Final walkthrough / punch list done         5%     $3,000
                                          100%    $60,000

Rules that keep a schedule honest and collectible:

• Tie every payment to an observable event, not a date. "Rough-in complete" is checkable; "week four" pays you for time whether or not the job moved.
• Keep the final payment small: 10 to 15%. A 30% final payment makes the client your biggest creditor at the exact moment their leverage peaks and their urgency disappears. If the punch-list holdback is small, disputes stay small.
• Never get ahead of the client, never fall behind. If you have collected 40% but completed 70% of the work, you are financing the job. Front-loading in reverse (collecting 70% at 40% done) is what makes clients nervous and regulators write deposit caps.
• Invoice the moment the milestone hits, with a short due window (on receipt to net 7 for residential). The milestone is fresh, the client is happy, pay speed follows.
• State the consequence of nonpayment in your terms: work pauses after X days past due. Enforce it politely on the first late payment; a paused job collects faster than a finished one.

Put the schedule in the proposal, not in a later conversation

The payment schedule belongs in the document the client signs, next to the scope and the price, not in an email after they accept. When it is part of the signed proposal:

• The deposit conversation never happens; they agreed to it when they signed.
• Each invoice is expected, because it maps to a line they already read.
• Disputes shrink to "was the milestone met," which a photo usually settles.

This is also the strongest argument for proposals with built-in e-signature: the client reviews scope, price, and payment schedule in one place and signs once, and the deposit invoice can go out the moment the signature lands, while commitment is at its peak.

Red flags and how to handle pushback

• "We'll pay it all at the end." Decline, or price the financing risk in. You are a contractor, not a lender.
• "Can you start without the deposit? The money's coming." The money that is coming before the job starts is called the deposit. Start date follows cleared deposit; say it warmly and hold it.
• Client wants a huge deposit discount for cash. Discounts, fine. Off-the-books arrangements: that money is unprotected for both of you.
• You want a bigger deposit because cash is tight. Fix the schedule spacing instead: more, smaller milestones smooth cash flow without raising the up-front ask that loses bids.

Frequently asked questions

Is it normal for a contractor to ask for 50% up front?
On small jobs (a few thousand dollars), yes, especially where materials are a big share of the price. On a $60,000 remodel, a 50% deposit is above market norms and a red flag to informed clients, and it is illegal for home improvement work in states with deposit caps. Mid-size jobs usually run 10 to 30% down with progress payments.

Should the deposit cover all the materials?
Only for custom or non-returnable orders, where collecting the full material cost before ordering is standard and fair. For stock materials, the deposit plus the first progress payment should keep you cash-positive without asking the client to prepay the whole job.

What do I do when a progress payment is late?
Send a friendly reminder the day after the due date, and pause work per your terms if it is not resolved within your stated window. Pausing feels drastic once; it is far better than being three milestones of labor deep into a client who has stopped paying.

Can I charge interest on late payments?
Usually yes if your signed contract states the rate, subject to state limits (1 to 1.5% per month is common). Its real value is deterrence; the schedule design (small final payment, work-pause clause) does more than the interest ever collects.

What is retainage and does it apply to residential work?
Retainage is a percentage (commonly 5 to 10%) withheld from each progress payment until project completion, standard in commercial and public work. Residential clients rarely impose formal retainage, but your own small final payment serves the same function in reverse: it is the client's assurance the punch list gets done.

Payment schedule in, signature on, deposit invoiced

Takeoff Convert builds your payment schedule into the proposal itself: scope, itemized price, deposit, and milestones in one branded link your client reviews and e-signs online. You get notified the moment they sign, so the deposit invoice goes out while the yes is still warm.

Your first proposal is free, no credit card required. Get the money conversation out of your voice and into the document.