For a home improvement contract valued at $19,800, what is the maximum down payment a contractor may collect?

For a home improvement contract valued at $19,800, what is the maximum down payment a contractor may collect?

• A. $500
• B. $1,000
• C. $1,500
• D. $2,000

Answer: (B)

The amount a contractor may take as a down payment on a home improvement contract is limited to the lesser of 10% of the contract price or $1,000. For a $19,800 contract, 10% equals $1,980, which exceeds the $1,000 cap. Therefore, the maximum down payment is $1,000. This rule protects homeowners from large upfront payments while still allowing a small initial amount to start the work. If the contract were smaller, the 10% portion could be less than $1,000, and that smaller amount would then be the limit.

The amount a contractor may take as a down payment on a home improvement contract is limited to the lesser of 10% of the contract price or $1,000. For a $19,800 contract, 10% equals $1,980, which exceeds the $1,000 cap. Therefore, the maximum down payment is $1,000. This rule protects homeowners from large upfront payments while still allowing a small initial amount to start the work. If the contract were smaller, the 10% portion could be less than $1,000, and that smaller amount would then be the limit.