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

> What qualifies as a gifted down payment in Canada, the gift letter standard, source-of-funds requirements, and the tax treatment that trips up both giver and receiver.

Category: Purchase
Last verified: 2026-04-20
Source: https://ratellow.com/scenarios/gifted-down-payment-canada-rules

## 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.

## Summary
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.

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

## Sources
- Gifts and Income Tax — https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/p113.html