Gifted Down Payment Rules in Canada: Who Can Gift, Gift Letters, and Timing (2026)

Can You Use a Gift as a Down Payment in Canada?

Yes. Canadian lenders and all three mortgage insurers (CMHC, Sagen, and Canada Guaranty) accept gifted funds as a down payment, and a gift can cover the entire down payment, not just part of it. You still need to meet the federal minimum: 5% on the first $500,000 of the purchase price and 10% on the portion above that, or 20% if the mortgage will be uninsured.

What changes with a gift is the paperwork. The lender needs to be sure the money is truly yours, that nobody expects it back, and that it came from an acceptable source.

Who Is Allowed to Give You the Money?

It depends on whether your mortgage is insured (less than 20% down) or conventional (20% or more down).

What Must the Gift Letter Say?

Every lender has its own template, and you should use theirs. The contents are nearly identical across lenders:

• The donor's full name, address, and phone number
• The donor's relationship to you
• The exact gift amount
• The address of the property being purchased
• A clear statement that the money is a true gift and never has to be repaid, in any form
• Signatures from the donor and the borrower

The "never has to be repaid" line is the one that matters. If the money is really a loan, it is a debt, and it has to be counted in your TDS ratio. Signing a gift letter for money you are expected to pay back is misrepresentation on a mortgage application.

How Long Does the Gift Need to Be in Your Account?

Lenders ask for proof that the gift has actually landed in your account before closing, usually 15 to 30 days ahead. Some also want a statement from the donor's account showing where the money came from.

For the rest of your down payment, lenders typically want a 90-day history of your own accounts. Large unexplained deposits in that window trigger questions, so a gift that shows up without a letter looks the same to the underwriter as an undisclosed loan.

Money coming from outside Canada is handled more strictly: expect lenders to want it deposited in a Canadian account earlier, often weeks ahead of closing, with a clear paper trail.

Gifts, the FHSA, and the Home Buyers' Plan

Parents often want to help in the most tax-efficient way. A few options that work alongside a direct gift:

• First Home Savings Account (FHSA): a parent can give an adult child money to contribute to their own FHSA ($8,000 per year, $40,000 lifetime). The child gets the tax deduction and tax-free withdrawal for a qualifying first home.
• RRSP Home Buyers' Plan: first-time buyers can withdraw up to $60,000 from their own RRSP for a down payment and repay it over 15 years.
• Canada has no gift tax, so a cash gift to an adult child is not taxed when given. Income earned on it later belongs to the child.

None of these replace the gift letter. If the funds pass through a gift at any point, the lender will still want the letter.

Common Reasons a Gifted Down Payment Gets Rejected

• The gift is from someone outside immediate family on an insured mortgage
• The money arrived after the lender's deadline, or is still in the donor's account at approval
• The gift was deposited as several cash deposits with no trail
• The donor expects repayment, or the arrangement shows up on the donor's side as a loan
• The donor wants to be on title without being on the mortgage, which most lenders will not allow

A broker will usually ask about the gift at the first conversation so the timing can be planned backwards from the closing date.

Gift vs Co-Signing: Which Helps More?

A gift increases your down payment. A co-signer increases the income used to qualify. They solve different problems: if you have enough income but not enough cash, a gift is the cleaner answer. If you have the cash but your debt ratios are too high, a gift only helps as far as the larger down payment reduces the mortgage amount.

A mortgage broker can model both before you ask family for help, which avoids asking for the wrong kind.