A Gift of Down Payment
 August 16 2016     Posted by Mary Poburan

Down payment in many cases can come from a gifted source. You will still need to have some of your own money saved for closing costs such as legal fees, tax adjustments and moving. Lenders dont want you to be flat broke when buying a home.

It is not uncommon for down payment funds to come from a gifted source. In most cases the donor needs to be an immediate family member. Each lender has its own version of a gift letter template and will require the donors information and signature acknowledging the money is a gift that does not have to be repaid. Depending on the lender and/or the size of the gift, we may also need to prove where the money was BEFORE is was gifted. This would be done via a bank statement from the donors account. If you are getting a gift please set the expectation that this information may be required so your benefactor is not offended when asked.

If the gift is coming from another country, extra due diligence will be needed to confirm the source and the donor.Again depending on the lender, the moeny will need to be in Canada anywhere from 15-30 days before posession of the home. Copies of wire transfers and statements confirming where the funds were prior to arriving in Canada will also be required.

In all cases when receiving gifts, please try to ensure that the deposit amounts match the amount of the gift. If you lump it in with another deposit for example, it may be harder to track properly.  The easier it is for the lender to understand, the more likley it is to be acceptable to them. Not all of us have a Daddy Warbucks in the family but if you are fortunate to have one, be grateful and take the necessary steps to ensure your gft is put to good use.