Guides / Hiring basics
Deposits and payment schedules
How and when you pay is one of your strongest protections. Paying as work is completed keeps everyone aligned and limits what you could lose.
What to know
- Keep the deposit modest
- A deposit covers scheduling and materials, not the job. Some states limit deposits; California, for example, generally caps home improvement down payments at 10% of the contract price or $1,000, whichever is less.
- Pay by milestones
- Tie payments to finished stages you can see, such as "framing complete" or "fixtures installed", not to dates.
- Hold back the final payment
- Keep a meaningful final payment until the job is complete, inspected, cleaned up and you have lien waivers.
- Pay traceably
- Pay by check or card, made out to the business, not cash to an individual. Get a receipt for every payment.
- Financing offers
- If a contractor offers financing, compare the APR and total cost with other options before you agree.
Questions to ask the contractor
- What does the deposit pay for specifically?
- Which milestones trigger each payment?
- Is the final payment due after inspection and cleanup?
Where to check
- Your state licensing board
- Many explain deposit limits and payment rules for home improvement contracts.
General information for US homeowners. Licensing, permit, contract and deposit rules vary by state and city, so check your local requirements. This isn't legal advice, and Stretch Nickels More isn't paid by any contractor, trade group or company mentioned here.