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Purchase•Verified 2026-04-20

Using a Gifted Down Payment in Canada — Rules, Documentation, and Tax

Canadian lenders accept gifted down payments from immediate family provided the funds are a true gift (not a loan) and documented with a gift letter plus proof that the money landed in the buyer's account before close. Tax-wise, gifts of cash from family members are not taxable in Canada for either giver or receiver — but related capital-gains consequences can apply if the gift is an asset rather than cash.

Who this is for

First-time and repeat buyers receiving down-payment help from immediate family — typically parents, grandparents, or siblings — in amounts from $20k to a full down payment.

Worked example
Assume parents gift $80k toward a $110k down payment. The remaining $30k is the buyer's savings accumulated over 15 months. Lender requires the gift letter, proof of transfer, and 90-day source history for the buyer's own $30k.
Allowed gift portion of down payment
Up to 100% of own contribution can be gifted
Gift letter standard
Stating amount, giver, relationship, and 'not repayable'
Proof of funds received
Bank statement showing deposit, pre-closing
Tax to receiver (cash from family)
Zero in Canada

Framework

Documentation lenders require

A gift letter signed by the giver stating (1) the amount, (2) the relationship to the buyer, (3) that the funds are a gift not a loan and no repayment is expected, and (4) the source of the funds. Most lenders have their own gift letter template. The lender also needs to see the money arrive — a bank statement showing the deposit in the buyer's account is standard, ideally 15+ days pre-close.

Who counts as immediate family

Immediate family is the lender standard: parents, grandparents, siblings, children, and in some cases spouses of those relatives. Aunts, uncles, cousins, and friends are usually not accepted as gift sources — funds from them are treated as loans, which count against debt-service ratios and often disqualify the file. A few lenders accept extended family or partner's immediate family with additional documentation.

Key considerations

  • The giver should transfer funds from their own account, not a joint or corporate account, unless additional documentation is provided.
  • If the gift comes from abroad, lenders require a 90-day source trail from the originating foreign account and often a sworn affidavit.
  • In Quebec, notary fees apply and gift documents may be handled within the closing package.
  • Some lenders prefer the gift to hit the buyer's account 15-30 days pre-close rather than the week of closing — the latter can delay wire confirmation.

Common mistakes

  • Calling it a 'loan from parents' informally — even if the intent is a gift. Lenders will treat ambiguous language as a loan and add it to your debt-service calculation.
  • Depositing large cash gifts the week of close without documentation. The fund trail becomes a problem, not the amount.
  • Assuming giver's home equity withdrawal (HELOC) has no impact. The giver is taking on debt, which is their problem, not the lender's — but the buyer's lender will sometimes ask for source documentation.

Action steps

  1. 01Ask your broker for the lender's specific gift letter template before the giver signs anything.
  2. 02Move the funds at least 15 days before close, from the giver's personal account.
  3. 03Keep your own down-payment contribution (if any) documented with 90 days of account history.

Adjacent situations

Purchase

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

A foreign-source gift is legally permissible as a down payment in Canada, but it triggers a materially heavier documentation burden than a domestic gift — lenders must satisfy both their own anti-money-laundering (AML) obligations under FINTRAC and CMHC's source-of-funds requirements before the funds can count toward the down payment. The core challenge is not the gift itself but proving the full chain of funds from the donor's foreign account to the borrower's Canadian account, with 90 days of seasoning strongly preferred. Borrowers who plan ahead and document the wire trail in advance close without incident; those who wire funds days before closing routinely face last-minute declines or delays.

Purchase

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

A foreign-source gift is legally permissible as a down payment in Canada, but it triggers a materially heavier documentation burden than a domestic gift — lenders must satisfy both their own anti-money-laundering (AML) obligations under FINTRAC and CMHC's source-of-funds requirements before the funds can count toward the down payment. The core challenge is not the gift itself but proving the full chain of funds from the donor's foreign account to the borrower's Canadian account, with 90 days of seasoning strongly preferred. Borrowers who plan ahead and document the wire trail in advance close without incident; those who wire funds days before closing routinely face last-minute declines or delays.

Sources

Last verified: 2026-04-20