Who Can Give a Gift
Most lenders only accept down payment gifts from immediate family members, such as parents, grandparents, or siblings. Gifts from friends or extended family are usually not accepted under standard mortgage rules.
The Gift Letter
You will need a signed gift letter confirming the money is a true gift with no expectation of repayment, including the donor's name, relationship to you, and the amount given. Lenders will not accept the funds without this document.
- Donor's name and relationship
- Confirmation it is non-repayable
- Amount and date of the gift
Proving the Money Has Landed
Lenders typically want to see the funds deposited into your bank account before closing, along with a bank statement showing the transfer from the donor's account. This paper trail helps confirm the source of funds.
Can the Gift Cover the Whole Down Payment?
In many cases yes, especially for insured mortgages where the full minimum down payment can come from a gift. Some conventional mortgage programs may require you to contribute some funds from your own savings, so check with your lender.
Tax Considerations
In Canada there is no gift tax, so receiving a down payment gift from family does not create a tax bill for you or the giver. Still, it is wise to keep records in case questions arise later.
Frequently asked questions
- Can grandparents give a down payment gift?
- Yes, most lenders accept gifts from immediate family including grandparents.
- Do I have to pay tax on a gifted down payment?
- No, Canada does not have a gift tax on money given for a down payment.
- What if the gift arrives after my mortgage is already approved?
- You will still need to show proof of the funds landing in your account before closing, so let your lender know as soon as possible.