Gifted down payments are entirely normal in Canada and a large share of Toronto-area first-time buyers use one. Lenders accept them — with rules. Who can gift Lenders want an immediate family member: parents, grandparents, siblings, and in most cases a spouse or common-law partner. Some lenders extend this to aunts, uncles and adult children. Gifts from a friend, an employer or an interested party in the transaction (the seller, the builder, the agent) are generally not accepted. The gift letter Every lender requires a signed letter, and it must state: The donor's full name and their relationship to you The exact dollar amount in CAD The property address That the funds are a true gift with no expectation of repayment Signatures from both the donor and the recipient If the money is a loan, it must be disclosed and it will be counted in your TDS ratio — which usually reduces what you qualify for. Proving the funds Lenders trace the money end to end: The gift lands in your account before closing — most lenders want it there at least 15 days ahead. You provide a bank statement showing the deposit. Many lenders also ask for the donor's statement showing the withdrawal. Funds coming from outside Canada face extra scrutiny under anti-money-laundering rules; expect to document the source and allow more time. The general rule is 90 days of history for all down payment funds. Money that appears without a paper trail will stall your approval. How much of the down payment can be gifted On an insured purchase (less than 20% down), the entire down payment can be gifted as long as the funds are documented. The minimums still apply: 5% on the first $500,000, 10% on the portion between $500,000 and $1,500,000, and 20% above the $1.5M insurable limit. Tax treatment Canada has no gift tax, so the recipient does not report a gifted down payment as income. The donor may trigger capital gains if they sell an asset — investments or a second property — to fund the gift. Gifts to a child who later separates can also become an issue in a family law claim, which is why some families use a documented loan or a written agreement instead. Both sides should get their own advice. Practical tips Get the gift into your account early; last-minute transfers cause closing delays. Keep the gift in one clean transfer rather than several small deposits. Tell your broker up front — the gift changes the document list, not your eligibility. See what the gift makes possible with our affordability calculator and closing costs calculator. Ready to Get Started? Contact us today for personalized mortgage advice and competitive rates. Get Pre-Approved Call (416) 822-7357 Frequently Asked Questions Can my parents gift my entire down payment? Yes. On an insured purchase the full down payment can be gifted from an immediate family member, provided you supply a signed gift letter and can document the transfer. Do I pay tax on a gifted down payment? No. Canada has no gift tax, so the recipient reports nothing. The donor may face capital gains if they sold an asset to fund the gift. Can a friend gift me a down payment? Most lenders require an immediate family member. A small number of alternative lenders will consider other donors, usually with additional documentation. How long does the gift need to be in my account? Most lenders want the funds deposited at least 15 days before closing, with a bank statement showing the deposit and, often, the donor's withdrawal.
