CALIFORNIA · CONTRACT PAYMENTS
California contractor down payment limit
How California's general home improvement down-payment rule works, how to calculate the cap on a real job, and the one statutory exception worth knowing before you set a deposit.
Last reviewed: September 26, 2026
The general rule
If you charge a down payment on a covered home improvement contract, the ordinary cap is $1,000 or 10% of the contract amount, whichever is less. The actual amount goes in the contract under a Downpayment heading (§7159(d)(8)).
What counts as the contract amount? §7159.5 treats it as the entire cost of the contract, including profit, labor and materials, but not finance charges. See the current text of B&P §7159 and B&P §7159.5.
What that looks like in practice
| Contract amount | 10% | Ordinary cap |
|---|---|---|
| $5,000 | $500 | $500 |
| $10,000 | $1,000 | $1,000 |
| $50,000 | $5,000 | $1,000 |
Illustrative arithmetic under the general rule. It doesn't decide whether the rule applies to any particular project.
Special-order materials do not raise the ordinary cap
It's a common assumption that custom cabinets or special-order windows justify a bigger deposit. According to CSLB's current guidance, they don't: special-order materials are not an exception to the ordinary $1,000 or 10% down payment limit. The separate statutory exception below is a different matter.
The statutory exception
Under §7159.5(a)(8), a contractor who furnishes a performance and payment bond, lien and completion bond, bond equivalent, or joint control approved by the registrar, covering full performance and payment, is exempt from the restrictions in §7159.5(a)(3) through (a)(5). That can change the down payment and progress payment restrictions and allow payment before completion.
CSLB's consumer guidance also mentions a blanket performance and payment bond situation, which it calls rare. Before relying on any exception, check it against current CSLB records and guidance and the legal requirements for the project.
Why this matters when building the contract
- State the actual down payment in dollars and cents.
- Keep the contract price and the treatment of any finance charges clear.
- Do not build a payment schedule that assumes an exception unless it actually applies.
- Keep links to the current sources handy wherever contracts get built in your office.
How ContractBuilderAI fits
The down payment field and payment workflow can be structured in software, but whether a statutory exception applies is a legal question the software doesn't answer.
ContractBuilderAI can organize the payment workflow; the contractor remains responsible for confirming the legal rule that applies to the project.
Related California payment guides
Primary sources
Building California contracts should not start from a blank page.
ContractBuilderAI is opening a California private beta on November 1, 2026 for licensed home improvement contractors.
Apply for the California beta →