How Much Deposit Should a Contractor Ask For in Minnesota?

For most residential projects with private contractors, Minnesota law does not set a strict percentage limit on the initial deposit. Some other states cap deposits at certain percentages, but Minnesota focuses on how the money is paid out during the job.

By default, payments are expected to be progress payments based on the percentage of work completed, and any “retainage” (money held back until the end) is usually kept to a small portion of the job total. In plain English: you’re supposed to pay as work gets done, not long before.

That also means there isn’t a magic legal line like “anything over 25% is illegal.” You and the contractor agree on the deposit in your contract—so you want to make sure that agreement actually protects you.

“Reasonable” depends on the size and type of job, but for many home projects across the U.S., deposits often land somewhere in the 10%–25% range. Some smaller or highly customized jobs go higher when materials are special-ordered or non-returnable.

A simple way to think about it:

• Small jobs (a few thousand dollars): It’s common to see 25–50% to get on the schedule, especially if materials are being ordered just for you.
• Medium projects (roof, siding, bathroom, driveway, etc.): Many contractors are comfortable with 10–30% down, then progress payments as work is completed.
• Big projects (major remodels, additions, whole-house work): A smaller percentage up front (10–20%) with clear progress draws is usually safer for everyone.

The real red flag isn’t just the percentage. It’s a big deposit plus a vague contract and no clear plan for how the rest of the money will be handled.

A contractor asking for a deposit is not automatically sketchy. But certain combinations of behavior should make your alarm bells go off, especially when money is involved.

Be extra cautious if you see any of these:

• They want 50% or more before any materials are on site, and the contract is only a one-line description.
• They insist on cash only “to give you a deal,” and won’t provide a clear, written receipt.
• They pressure you with lines like “I can only hold this price today if you pay now.”
• They get irritated when you ask how the deposit will be used or how future payments will work.

Once a large deposit is gone, your leverage drops fast. If they stall, disappear, or do poor work, getting that money back becomes an uphill battle.

Whether the deposit is 10% or 30%, it should be backed up by a contract that spells out how all the money moves. In a best-case scenario, payments are clearly tied to work completed, not vague dates on a calendar.

At minimum, your contract should clearly list:

• Total price and what’s included (materials, permits, cleanup, disposal, etc.)
• Deposit amount and when it’s due
• Progress payments tied to real milestones (“after rough-in inspection,” “after cabinets installed,” etc.)
• Final payment after work is complete and any inspections are passed
• Any retainage (small amount held until everything is done and punch-list items are fixed)

If the contract just says “50% now, 50% when we’re done” with no detail on what “done” means, you have almost nothing to stand on if the project drags out or quality is poor.

Every project is different, but here’s a clean pattern that works well for a lot of Minnesota homeowners:

• Small good-faith deposit to get on the schedule and cover initial materials (for example, 10–20%).
• Progress payments in two or three chunks tied to visible milestones: demolition/rough-in, major installation, and near-final work.
• Final payment plus a small retainage (for example, 5%) after inspection, final walkthrough, and punch-list items are complete.

You’re never fully paid up until the work is fully done, but your contractor isn’t floating the whole job out of pocket either. That balance is what keeps good projects friendly.

Before you write that first check or send that first transfer, run through this quick list:

• You’ve verified their license (if required) and insurance, and the business names all match.
• You’ve read at least a few recent reviews or talked to one prior customer.
• You have a written contract in plain language that lists scope, price, and payment schedule.
• You understand what happens if the project changes or runs into surprises.
• The deposit amount actually lines up with real upfront costs—not just “that’s what we always charge.”
• Your gut doesn’t feel rushed, bullied, or confused.

If any of those are missing, fix them before you pay. A good contractor will slow down and walk through the details with you. That’s the kind of person you want working on your house.