Acceptable Down Payment Sources: Where Your Money Can Come From

Saving for a down payment—or piecing one together from multiple sources—requires knowing exactly what lenders accept and the documentation you'll need. Every dollar must be traceable, and some sources that seem reasonable won't qualify.

Why Sources Matter

Lenders carefully scrutinize down payment sources to:

• Prevent fraud and money laundering
• Ensure funds aren't borrowed secretly
• Verify you can handle homeownership costs

Every dollar must be traceable.

Traditional Savings

Bank Accounts

• 90 days of statements showing accumulation
• Clear source of deposits
• No large unexplained deposits

Investments

• RRSP (first-time buyers via Home Buyers' Plan)
• TFSA
• Non-registered investments
• Statements showing ownership and balance

Gifted Funds

Gifts from immediate family are common and accepted:

Who Can Gift

• Parents and grandparents
• Siblings
• Sometimes aunts/uncles

Requirements

• Gift letter: States no repayment expected
• Proof of donor's funds: Their bank statements
• Transfer documentation: Evidence of transfer

Learn more about gift documentation requirements.

Ready to Put Your Down Payment to Work?

Get pre-approved and we'll guide you through documenting your down payment sources properly.

RRSP Home Buyers' Plan

First-time buyers can withdraw:

• Up to $35,000 per person ($70,000 for couples)
• Tax-free if repaid over 15 years
• Must be first-time buyer (or not owned in last 4 years)
• Funds must be in RRSP for 90+ days

First Home Savings Account (FHSA)

The newer program offers:

• Annual contribution limit: $8,000
• Lifetime maximum: $40,000
• Tax-deductible contributions
• Tax-free withdrawals for home purchase
• Can combine with HBP

Equity from Existing Property

If you own property:

• Sale proceeds from current home
• HELOC from existing property
• Refinance of rental properties

What's NOT Acceptable

Lenders won't accept:

• ❌ Borrowed funds (unless secured against assets)
• ❌ Cash with no paper trail
• ❌ Gifts from friends or employers
• ❌ Undocumented sources
• ❌ Recent large deposits without explanation

Documentation Tips

Keep clear records of:

• All deposits over $1,000 (explain each)
• Gift transfers (letter + statements)
• Investment redemptions
• Property sale proceeds
• Pay stubs matching regular deposits

FAQ

Q: Can I use a personal loan for my down payment?
A: Generally no. The monthly payment would count against your debt ratios, and lenders view borrowed down payments negatively.

Q: What if I received money from selling a car?
A: Acceptable if documented. Keep the bill of sale and bank deposit record.

Q: Can foreign funds be used?
A: Yes, with proper documentation of source and currency conversion records.

Q: How far back do lenders look?
A: Typically 90 days. Large deposits in that period need explanation.

What's Next

Get pre-approved and we'll help you document your down payment properly. Proper preparation prevents delays at closing.