Down Payment Gifted From Family Abroad — Documentation and Lender Rules in Canada

Canadian federally regulated financial institutions (FRFIs) operate under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, administered by FINTRAC. Any large incoming wire from a foreign jurisdiction triggers enhanced due diligence obligations — the lender must be able to demonstrate the funds are not proceeds of crime. A domestic gift from a Canadian parent involves a bank account the lender can cross-reference against Canadian AML records; a foreign wire cannot be verified the same way. CMHC's underwriting standards layer on top: for insured mortgages, the source of every dollar of down payment must be documented and traceable. The result is a two-layer compliance requirement — FINTRAC-driven AML and CMHC source-of-funds — that a domestic gift does not face to the same degree.

Most prime lenders and CMHC-insured underwriters apply an informal but near-universal 90-day seasoning standard: if the funds have been sitting in the borrower's Canadian account for 90+ days, the lender typically requires only the bank statements showing the opening balance and the wire receipt — not the full foreign-source documentation trail. Below 90 days, the lender must trace the funds back to their origin, which means foreign bank statements, wire confirmations, and donor documentation. Practical implication: wire the gift at least 95–100 days before your anticipated closing date. This single step eliminates the most common documentation failure on foreign-gift files. Note that seasoning does not eliminate the gift letter requirement — it only reduces the depth of source-of-funds tracing.

Regardless of seasoning, every foreign-gift file requires:

1. Gift letter — signed by the donor, stating the amount, the relationship to the borrower, that the funds are a gift with no repayment obligation, and the donor's foreign address and contact information. Most lenders have a prescribed form.

2. Proof of donor's ability to give — 3 months of the donor's foreign bank statements showing the funds existed before the wire. Statements must be translated to English or French if in another language (certified translation preferred by most lenders).

3. Wire transfer confirmation — the SWIFT confirmation from the sending bank, showing the originating account, the amount, and the receiving account.

4. Borrower's Canadian bank statements — 90 days showing the wire landing and the funds remaining in the account.

5. Donor identification — a copy of the donor's passport or government-issued ID. Some lenders require notarization.

If the funds passed through an intermediary account (e.g., a currency exchange platform like Wise or a foreign correspondent bank), documentation for each leg of the transfer is required.

For CMHC-insured mortgages (down payment under 20%), the source-of-funds requirement is explicit in CMHC's underwriting guidelines: all down payment funds must be verified as the borrower's own savings, a documented gift, or other acceptable sources. A foreign gift qualifies as an acceptable source provided the documentation stack above is complete. The insured premium tiers are unchanged by the gift source — a 10% down payment on a $750,000 purchase attracts the same 3.10% premium whether the funds came from Toronto or Seoul.

For conventional (uninsured) mortgages (20%+ down), lenders have more discretion. Some apply the same 90-day seasoning standard; others are more flexible on timing but equally strict on documentation. A handful of alternative lenders (Equitable, Home Trust) will accept a shorter seasoning window with a stronger documentation package, but this is lender-specific and should be confirmed before submission.

Incoming international wires above CAD $10,000 trigger a Large Cash Transaction Report (LCTR) or an Electronic Funds Transfer Report (EFTR) filed by the receiving Canadian financial institution with FINTRAC — this is automatic and does not require any action from the borrower. It is not a flag or a problem; it is standard compliance. However, structuring — splitting a large transfer into multiple smaller transfers to avoid the $10,000 threshold — is a federal offence under the PCMLTFA and will result in an immediate file decline and potential referral. Wire the full amount in a single transaction. Currency conversion costs (typically 1.5–3% at retail bank rates, or 0.3–0.8% via a regulated FX provider) should be factored into the gift amount so the net CAD figure meets the required down payment after conversion.

Not all prime lenders handle foreign-gift files with equal comfort. Among the Big Six, TD and RBC have dedicated AML review teams that process foreign-source files routinely; some credit unions and smaller monolines have less experience and may apply inconsistent standards or request redundant documentation. Brokers with volume in newcomer and international-buyer segments will know which lenders process these files efficiently and which create friction. Submitting a foreign-gift file to a lender without that experience can result in unnecessary delays even when the documentation is complete. The rate difference between lenders on these files is typically negligible — the selection criterion should be processing reliability, not rate.