Key Takeaway

Canadian lenders accept gifted down payments from immediate family members, but they require three essential documents: a signed gift letter confirming the money is non-repayable, proof the funds have been transferred to your account, and verification of the donor’s relationship to you. Most lenders also require that you contribute at least 5 per cent of the purchase price from your own savings, even when receiving a gift for the remainder of the down payment.

The Gift Letter Requirement

Every Canadian lender requires a formal gift letter signed by the donor. The letter must state the exact dollar amount, confirm that the money is a true gift with no expectation of repayment, and identify the relationship between the donor and the borrower. According to the Canada Mortgage and Housing Corporation, acceptable donors are typically immediate family members such as parents, grandparents, siblings, or spouses (CMHC, 2026).

The gift letter must be notarized or witnessed, depending on the lender’s policy. Some lenders provide a standard template, while others accept a letter written by the donor as long as it includes all required elements. The letter becomes part of your mortgage application file and may be reviewed during the underwriting process.

Proof of Transfer and Source Documentation

Lenders require documented proof that the gifted funds have actually moved from the donor’s account to yours. This typically means providing bank statements showing the withdrawal from the donor’s account and the deposit into your account. The Financial Consumer Agency of Canada emphasizes that lenders verify the source of all down payment funds to ensure compliance with anti-money-laundering regulations (FCAC, 2026).

You may also need to provide proof of the donor’s ability to give the funds, such as recent bank statements showing the donor had sufficient savings or assets. If the donor sold investments or withdrew from a registered account to provide the gift, documentation of that transaction may be required. The lender wants confirmation that the gifted money came from a legitimate source and was genuinely available to the donor without creating financial hardship.

Minimum Borrower Contribution and CMHC Rules

Most lenders require that you contribute at least 5 per cent of the purchase price from your own verified savings, even when a family member gifts the remainder of the down payment. This minimum borrower contribution rule applies particularly when the total down payment is less than 20 per cent and mortgage default insurance through CMHC is required. As foundational texts such as Principles of Finance explain, lenders assess borrower commitment partly through the amount of personal funds invested in the purchase.

Read also: First-Time Home Buyer’s Guide to Getting a Mortgage in Canada

When your down payment is below 20 per cent, you must purchase mortgage default insurance from CMHC, Sagen, or Canada Guaranty. The insurance premium is calculated as a percentage of the mortgage amount and is typically added to your mortgage balance. CMHC allows 100 per cent of the minimum required down payment to be gifted in some cases, but individual lenders often impose stricter requirements. Verify your lender’s specific policy on gifted funds and minimum borrower contribution before finalizing your purchase agreement.

Next Steps

Before accepting a gifted down payment, contact your lender or mortgage broker to confirm their exact documentation requirements and any minimum contribution rules. Arrange for the gift letter to be prepared and signed well before your mortgage application deadline, and ensure the funds are transferred to your account at least 30 days before closing to simplify verification. Keep copies of all gift documentation, transfer receipts, and communication with your lender in your mortgage file.

Disclaimer: This article provides general educational information about mortgage down payment gifts in Canada and is not personalized financial, legal, or lending advice. Lender requirements for gifted down payments, gift letter formats, minimum borrower contribution rules, and acceptable donor relationships vary by lender, mortgage insurer, and your individual circumstances. Provincial and territorial regulations may also apply. Consult a licensed mortgage broker or your financial institution for guidance specific to your situation before accepting a gifted down payment.