Gifted down payments in Canada: the rules, the letter, and the catches

Who's allowed to gift you money for a down payment

Immediate family, generally: parents, grandparents, siblings, or a spouse. Some lenders extend this slightly further, but the common thread is the money has to come from someone with a genuine family relationship, not a friend or business associate, and it can't come with any expectation of repayment.

What the gift letter actually needs to say

Lenders require a signed letter stating the amount, the relationship between giver and recipient, and confirmation that it's a true gift with no repayment expected and no interest owed. It sounds like a formality, and it mostly is, but missing or vague wording is one of the most common reasons closings get delayed at the last minute.

Timing matters more than people expect

Lenders generally want to see the gifted funds sitting in your account for a short period before closing, not showing up the day before. Moving the money early, alongside the signed letter, avoids the scramble that happens when a large unexplained deposit shows up right before your lawyer needs final numbers.

Does a gift affect how much you qualify for

The gift itself doesn't count as income, so it doesn't change your debt ratios directly. Where it helps is by increasing your down payment, which can reduce or eliminate default insurance and lower your monthly payment. It's worth mentioning early in the process so we can plan the paperwork around your closing date, not scramble at the end.