Contractor Payment Schedule: How Remodelers Get Paid and What Each Payment Costs

TL;DR

A contractor payment schedule splits a job into a small deposit, progress payments tied to finished work, and a final payment held until the punch list is done. In California the deposit cannot be more than $1,000 or 10% of the contract, whichever is less, and no progress payment can run ahead of the work. How you collect each payment matters more than most contractors think: on a $40,000 bathroom, taking every payment by card costs about $1,320 in fees, while the same five payments by ACH bank transfer cost $25 to $50.

How contractors get paid

Almost every residential remodel is paid in three kinds of payment:

• Deposit. Paid at signing to hold the slot on your calendar. It is not meant to fund the job.
• Progress payments. Paid as stages of the work are finished: demolition and rough-in, inspection, tile, fixtures. Each one should match work the homeowner can see.
• Final payment. Usually the last 10%, released when the punch list is closed and the space matches what was signed.

A schedule built on milestones instead of calendar dates protects both sides. The homeowner never pays for work that has not happened, and the contractor gets paid as soon as a stage is done instead of waiting for the end of the month. Renology's guide to the home renovation contract shows how that schedule is written into the contract itself, with each payment released only when the previous milestone is verified.

The California rules

California is the strictest large state on this, and the rules are in Business and Professions Code section 7159.5:

• The down payment cannot exceed $1,000 or 10% of the contract price, whichever is less. On a $40,000 job that is $1,000. On an $8,000 job it is $800.
• The contract has to state each payment in dollars and cents and tie it to a specific amount of work.
• A contractor cannot ask for or accept a payment that is more than the value of the work performed or materials delivered.

Special-order materials are not an exception. If a vanity or a slab has to be ordered up front, the usual approach is to schedule a payment for "materials delivered to site" rather than collecting it in the deposit. Other states have looser rules or none, but a schedule that follows California's will hold up almost anywhere.

Worked example: a $40,000 bathroom

Renology's breakdown of a $40,000 bathroom remodel puts 40% to 50% of the cost in labor and most of the rest in cabinetry, fixtures, tile, countertops and electrical. A schedule that follows the work, and the California deposit cap, could look like this:

What each payment method costs

Here is what it costs the contractor to collect those five payments, using each provider's published U.S. rates as of November 3, 2026.

Disclosure: provider links below go through our referral tracker, and we may earn a fee if you sign up. It does not change the numbers.

Two notes on the table. The Helcim card figure assumes interchange of about 1.70% on online card payments, which is what we use in our 2026 processor ranking; a homeowner paying with a premium rewards card will cost more. And the Stripe ACH figure is only $25 if you collect through a payment link or your own invoicing tool. Stripe's own invoicing product adds 0.4% of each paid invoice on its Starter plan.

The gap is the point. On a single bathroom, card versus capped ACH is about $1,300. A contractor running twenty jobs like this a year is choosing between roughly $26,000 and $1,000 in payment fees.

Do contractors accept credit cards?

Most do, and homeowners increasingly expect it. Card payments clear fast, the homeowner earns points, and some homeowners simply will not pay a large invoice any other way. But cards bring three costs beyond the fee:

• Disputes. A homeowner can dispute a card payment with their bank, typically for up to 120 days, and longer when the work is finished later than charged. A disagreement over the tile stage can freeze money you already spent on materials. ACH and check payments are much harder to reverse after they clear.
• Holds on large payments. Flat-rate processors watch for payments that are much larger than your usual ticket. An $11,000 card payment on an account that normally sees $500 can be held for review.
• Premium cards. Large remodels are exactly where homeowners reach for high-reward cards, which carry the highest interchange.

A practical middle ground: take the deposit and progress payments by ACH, and accept a card for smaller change orders or the final payment if the homeowner insists.

Can you charge the homeowner the card fee?

Card network rules allow a credit card surcharge of up to 3% with notice and disclosure, and the pending Visa and Mastercard settlement would make those rules more flexible. State law is the harder limit. In California, the 2024 honest pricing law (SB 478) requires the price you advertise or quote to include mandatory fees. The Attorney General's guidance says charging less than the advertised price, such as a discount, does not violate the law, but whether a card fee the homeowner can avoid by paying another way counts as optional is still argued in court.

The safer approach for a California contractor is to quote one all-in price and offer a lower price for ACH or check, rather than adding a card fee on top. If you want a separate card fee line, have a California consumer-protection attorney look at the wording first.

Where customer financing fits

For jobs where the homeowner cannot pay the schedule in cash, the third option is a financing program: a lender pays you and the homeowner repays the lender. It costs the contractor more than any method above, from about 3.9% of the financed amount on standard plans to well over 10% on long 0% promotions. We break down the three pricing models in our guide to contractor financing for customers.

A setup that keeps fees low

1. Write the milestones and dollar amounts into the contract, with the deposit at or under the legal cap.
2. Send every payment as an invoice with ACH as the default and a capped ACH fee. Make the bank-transfer option the first thing the homeowner sees.
3. Keep card acceptance on, but on interchange-plus pricing if card payments are a regular part of your volume. Our best processors for contractors list compares the options.
4. Tell your processor before a large card payment, so it is not held for review.
5. Offer financing only on jobs where cash is the obstacle, and price its cost into the quote.