THE QUICK ANSWER
A genuine, non-repayable gift may be an acceptable down payment source, subject to the lender and insurer’s rules. Expect to document the gift and its transfer. If repayment is expected, tell your mortgage agent: borrowed money should not be described as a gift.
Be clear about what the money means
Have the family conversation before the mortgage paperwork. Is the money being given without repayment, lent with monthly instalments, or provided in exchange for an ownership interest? These arrangements have different implications. A gift letter should reflect the actual agreement, not simply the wording someone thinks a lender wants.
RBC describes a gifted down payment supported by a signed letter confirming no repayment is required. Its guidance is an example of one bank’s process, not permission to assume every donor or arrangement will be accepted by every lender. RBC: helping a child with a home purchase
Ask for the lender’s documentation requirements
Before moving funds, ask which gift form to use, what information the donor must provide and how receipt will be verified. RFA’s published gift letter, for example, identifies the gift amount and purpose and notes that supporting source documentation may be requested. RFA: gift letter and supporting documentation
Keep a simple record of the agreed amount, expected transfer date and accounts involved. If several relatives are contributing, list each contribution separately. Avoid passing funds through unnecessary intermediate accounts; a clear explanation is easier to prepare when the path is straightforward.
Coordinate the gift with purchase timing
Your offer deposit, final down payment and other closing expenses may have different deadlines. Ask your real estate lawyer and mortgage agent which amounts must be available at each stage. A promise of support is useful for planning, but it is not the same as money available for an immediate deadline.
If the donor’s funds are invested or held outside Canada, raise that early. Ask the relevant financial institutions about their transfer process and leave room for verification questions. Do not assume all transactions are instant, or that a screenshot alone will satisfy the requested records.
A hypothetical gift scenario
Imagine a buyer has saved $35,000 and a parent proposes a $25,000 gift. Together those amounts create a $60,000 starting pool for the purchase. Before describing all $60,000 as a down payment, the buyer sets aside a separate estimate for closing expenses and confirms the source requirements with the lender.
If the parent instead expects the $25,000 to be returned after closing, the buyer should disclose that arrangement and ask how it will be assessed. Signing a non-repayable gift letter while privately agreeing to repayment would misrepresent the facts. The example is about documentation, not eligibility.
What lenders may consider
The gift does not answer every mortgage question. Your application still needs an acceptable income and debt picture, credit assessment and property review. The total down payment requirement also depends on the purchase. FCAC explains that minimum down payments vary with price and that mortgage default insurance is typically required below 20%. FCAC: minimum down payment
For your own planning, ask how much of your funds will remain after the purchase. A larger contribution may reduce borrowing, but retaining a sensible emergency reserve is also worth discussing. Do not let the gift conversation obscure the ongoing household payment.
Common mistakes to avoid
Do not label a repayable family loan as a gift, assume any relative or friend automatically qualifies as an acceptable donor, or use a generic online letter before checking the lender’s form. Make sure everyone understands the terms they are signing. If the arrangement involves ownership, ask a lawyer about it.
Avoid making last-minute transfers without retaining the requested evidence. Also avoid sending banking records through a website chat to “get things moving.” Use the secure channel arranged for your mortgage file. An early, accurate explanation usually leaves more room to resolve questions than a rushed explanation just before closing.
A FEW MORE QUESTIONS
Frequently asked questions
Can a gift cover my entire down payment?
Ask the lender about the specific product and donor. The answer is not established solely by the amount of money available; eligibility and documentation still need review.
Can gifted money come from outside Canada?
Raise the source and transfer route early. Ask which donor, source-of-funds, currency and receipt records are required for your proposed mortgage. Do not assume all foreign gifts are accepted.
Does a gift letter prove the money has arrived?
No. It describes the arrangement. Ask what separate evidence of transfer and receipt is needed, and when the lender and lawyer need it.
Sources are linked beside the relevant explanations. Checked September 15, 2026. Examples are hypothetical and do not describe actual clients. General Canadian information; your application requires an individual lender review.
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