Down Payment in Ontario: Acceptable Sources, Proof You’ll Need, and the Right Way to Handle Gift Letters
Your offer can be perfect—but the deal stalls if the down payment can’t be verified. This post keeps it simple: what counts as an acceptable source, how to prove it, and how to avoid last-minute delays.
Acceptable down payment sources (most lenders)
- Personal savings/chequing — Show account history to confirm funds and build-up over time.
- RRSP (Home Buyers’ Plan) — Withdraw up to the program limit if eligible; show RRSP statement and HBP withdrawal confirmation.
- Gift from an immediate family member — Use your lender’s official gift letter form (details below) and show funds arriving in your account.
- Proceeds from the sale of another property — Provide the firm sale agreement and lawyer’s statement of adjustments.
- Sale of a personal asset (e.g., vehicle) — Provide proof of ownership, sale receipt/bill of sale, and deposit trail.
- Employment bonus/RSUs matured — Provide pay advice or vesting statement and deposit trail.
- Inheritance — Provide estate documentation and deposit trail.
Note: Lenders need to see a clear paper trail. Large cash deposits without documentation are usually not acceptable.
What’s often not acceptable (or needs seasoning)
- Undocumented cash without receipts or history.
- Borrowed funds not disclosed (e.g., a private IOU). If borrowed, the payment usually must be included in debt ratios.
- Unverifiable crypto proceeds — Many lenders won’t accept unless converted and seasoned with full documentation.
- Third-party gifts from non-family, or gifts with strings attached (repayable).
The “90-day history” rule of thumb
Expect lenders to request 90 days of bank/statement history for any account contributing to your down payment. If there are big deposits, include a note and documents that explain the source. Clear trails = faster approvals.
How to document each source (quick checklist)
- Savings: 90 days of statements (PDFs), showing your name, account number, running balance.
- Gift: We will supply your lender’s official gift letter form. Upload the signed form, proof of transfer (e-transfer/wire/receipt), and your statement snapshot after funds arrive.
- RRSP/HBP: RRSP statement showing balance + HBP withdrawal confirmation.
- Property sale: Firm Agreement of Purchase and Sale + lawyer’s statement of adjustments on closing.
- Asset sale: Proof of ownership + bill of sale + deposit proof.
- Inheritance: Executor/estate letter + deposit proof.
Gift letter: use your lender’s form (what it includes)
Most lenders require their own official gift letter. We’ll provide the correct form once your file is submitted. The donor (e.g., a parent) completes and signs it, and you’ll provide proof that the funds arrived in your account.
What lender gift letters usually include:
- Donor’s full name and contact details
- Recipient/buyer’s full name
- Relationship to the buyer (e.g., parent, sibling, grandparent)
- Gift amount (CAD) and date of transfer
- Property address (if known)
- Non-repayable statement (no lien, no interest, no expectation of repayment)
- Signatures and dates (donor and recipient)
You’ll also upload: a receipt/screenshot of the transfer (e-transfer, wire, or bank receipt) and an updated statement showing the deposit in your account.
Tip: Move gift funds a little early (ideally 2–3 weeks before closing) to avoid bank holds and last-minute delays.
Timing tips (so nothing derails on closing)
- Move funds early (especially gifts and RRSP withdrawals) to avoid bank holds.
- Keep accounts stable near approval/closing—avoid large unexplained transfers.
- Use the same names across documents (no nicknames) and ensure addresses match ID where possible.
- Screenshot rules: When sending screenshots, include your name, account number (partially masked is fine), dates, and running balance.
Mini-FAQ
Do I need 20% down? No. Many first-time buyers use less than 20% down with an insured mortgage. We’ll weigh pros/cons for your situation.
Can I combine multiple sources? Yes—just document each source and keep the trail clean.
Is a gift taxable? In Canada, gifts aren’t typically taxed to the recipient, but always consult your own tax advisor for your circumstances.
Will a gift affect my approval? Gifts are commonly accepted for down payments. Lenders still assess income, credit, and the property.