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20 Meg Dr
London, ON, N6E 2X9
Canada

519-649-2834

We have been proudly serving the mortgage and financial needs of individuals in London, Ontario and all across Canada for more than a decade.

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Using a Gift as a Down Payment

Mindy Small

Gift for Down Payment

It’s not uncommon, especially for first-time homebuyers, to get some extra help in coming up the amount of cash needed for a down payment.

In BC, for instance, where real estate prices are through the roof, a lot of young homebuyers’ only hope for getting into the real estate market is to receive a gift as a down payment. It happens so often that it’s commonly referred to as getting money from “the bank of mom and dad.” Receiving a gift of money to go towards your down payment on a house or apartment is a way to top up what you’ve already saved for your real estate purchase.

But, before you get too excited at the prospect of getting some extra cash from your family member, here are a few things to keep in mind:

  • Mortgage brokers sometimes require there to be a letter that accompanies the gift that states certain things like the recipient’s name, the amount and the fact that the amount is not a loan.
  • You’ll need to deposit the money into your bank account to prove that it’s actually available liquid (available to use towards the down payment).
  • You may need the person who is gifting you the money to show financial history, as well.

These are just a few of the things that may be required to accompany the use of a gift towards your downpayment. Get in touch with us directly to learn more. Whether you decide to take more time to save up your own funds for a down payment or reach out to family to ask for a gift is up to you. Remember, putting a little bit more down up front can save you a bit in the monthly mortgage payments. It’s a personal decision that has to be weighed. Just be sure that if you do receive a gift to go towards your down payment that you have an open discussion with the other party to distinguish whether it’s actually a gift with no strings attached. Some parties structure the gift as a loan, but they aren’t really supposed to as this actually would count towards your debt-to-income ratio during the mortgage pre-approval process. The last thing you want is miscommunication. A lot of parents naturally expect to help out with their child’s first real estate venture, but not all situations are alike.


Are you a first-time homebuyer and curious about how much you can get approved for? Head over to our online pre-approval to get started or get in touch with us directly to get started on your no-obligation application.

Thanks for reading!

Mike De Sousa and Mindy Small