How much can a contractor ask for as a down payment in California?
By Contractor Lookout · Updated November 3, 2026
On a California home improvement contract, the down payment can’t be more than $1,000 or 10% of the contract price, whichever is less. After that, the contractor can’t collect more than the value of the work already done, unless the license has a qualifying blanket performance and payment bond on file.
The rule is in Business and Professions Code section 7159.5(a)(3). It was last updated by SB 601, effective January 1, 2024.
How to work out your maximum down payment
Take 10% of the contract price. Compare it with $1,000. The smaller number is the most the contractor can ask for up front.
| Contract price | 10% of price | Maximum down payment |
|---|---|---|
| $4,000 | $400 | $400 |
| $8,500 | $850 | $850 |
| $10,000 | $1,000 | $1,000 |
| $25,000 | $2,500 | $1,000 |
| $90,000 | $9,000 | $1,000 |
Once the price reaches $10,000, the cap is $1,000 no matter how large the job. Below $10,000, 10% is the lower number.
The contract itself has to say this. BPC 7159 requires home improvement contracts to include the notice “THE DOWNPAYMENT MAY NOT EXCEED $1,000 OR 10 PERCENT OF THE CONTRACT PRICE, WHICHEVER IS LESS.” If your contract doesn’t have it, ask why.
Payments can’t run ahead of the work
The down payment cap is only half of the rule. Under 7159.5(a)(5), payments after the down payment can’t exceed the value of the work performed.
In practice, that means a payment schedule tied to stages of work:
- Down payment, within the cap, when you sign.
- A payment when a defined stage is finished, such as demolition or rough framing.
- Further payments as each later stage is completed.
- Final payment when the job is complete.
Before each payment, look at the work. If you’re being asked for money for work that hasn’t started, that’s a red flag worth asking about. Keep a copy of every invoice and receipt.
The blanket bond exception
Some contractors can lawfully take a larger deposit. Under 7159.5(a)(8), a contractor with a qualifying blanket performance and payment bond on file with CSLB is exempt from the down payment cap and the related payment rules in (a)(3) through (a)(5).
You can see this on the license record. CSLB’s license page for these contractors says: “License has a Blanket Performance and Payment Bond on file pursuant to Business and Professions Code Section 7159.5 (a)(8).” Our status hub lists the secondary statuses, including this one.
If a contractor asks for more than $1,000 up front and says they have a blanket bond, look the license up on CSLB’s Instant License Check and confirm the note is there. If it isn’t, the cap applies.
When the rule applies
These contract rules cover home improvement contracts. Under BPC 7159(b), the written contract requirements apply to home improvement contracts over $500 (amended by SB 517, effective January 1, 2026).
CSLB treats building an accessory dwelling unit as a home improvement project, so the same contract and down payment rules apply. Our ADU guide covers that.
We couldn’t find a separate down payment rule for swimming pools in the current text of 7159 or 7159.5. If you’re building a pool, check the current rules with CSLB before you sign.
Your right to cancel
Most home improvement contracts give you a short window to cancel after signing. Under Civil Code 1689.6:
| Situation | Time to cancel |
|---|---|
| Most home improvement contracts | 3 business days |
| Buyer is 65 or older | 5 business days |
| Repairs after a disaster | 7 business days |
The five-day rule for people 65 and older applies to contracts made on or after January 1, 2021. Civil Code 1689.5(f) sets the age at 65. The contract notice must use the heading “Three-Day Right to Cancel,” or “Five-Day Right to Cancel” for seniors (BPC 7159(e)(6)).
Read the cancellation notice in your contract and follow its instructions exactly. If you cancel, do it in writing and keep a copy.
Before you pay anything
- Check the license is Clear and the classification fits the job. Our license check guide explains how.
- Confirm the contractor’s bond and workers’ comp. See contractor bonds explained.
- Get a written contract with a payment schedule tied to the work.
- Pay by check or card, not cash, so you have a record.
Our hiring checklist puts all of these steps in order. If a contractor took more than the law allows or stopped work after being paid, see how to file a complaint with CSLB.
This is general information, not legal advice.
Sources
- BPC 7159.5: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=BPC§ionNum=7159.5
- BPC 7159: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=BPC§ionNum=7159
- CSLB license page with blanket bond wording: https://www.cslb.ca.gov/1005986
- Civil Code 1689.6: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV§ionNum=1689.6
- Civil Code 1689.5: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV§ionNum=1689.5
- CSLB ADU Fast Facts: https://www.cslb.ca.gov/Resources/GuidesAndPublications/2025/FastFacts_ADU.pdf