Gifted Down Payment Rules in Canada

With home prices where they are, many Canadian first-time buyers get a hand from family — a gifted down payment. It's completely legal and very common, but lenders have clear rules about who can gift, how the money must be documented, and when it has to land in your account. Here's exactly how a gifted down payment works in Canada.

Key takeaways

• A gifted down payment is money from a close family member that you do not have to repay.
• Lenders require a signed gift letter confirming the money is a true gift, not a loan.
• Gifts in Canada are generally not taxed to the giver or the receiver.
• Expect to show the gift deposited in your account and ready before closing.
• A gift can be combined with your savings, the FHSA, and the RRSP Home Buyers' Plan.

What is a gifted down payment?

A gifted down payment is money given to you by a family member to put toward buying a home, with no expectation of repayment. It's one of the most common ways first-time buyers bridge the gap between what they've saved and the down payment they need. Because the minimum down payment in Ontario starts at 5% of the purchase price (on homes under $500,000), even a modest gift can make a real difference.

The key word is gift. Lenders treat gifted funds very differently from borrowed funds, because a loan you have to repay adds to your monthly obligations and affects your debt service ratios. A true gift does not.

Who can gift a down payment?

Most lenders only accept gifts from an immediate family member — typically a parent, grandparent, sibling, or spouse. Some lenders extend this to other close relatives, but gifts from friends, employers, or business partners are generally not accepted for a down payment.

Why lenders limit who can gift

The rules exist to confirm the money is genuinely a gift and not a disguised loan or a payment that creates an undisclosed claim on the property. A family relationship makes a no-strings gift believable to the lender.

The gift letter and proof of funds

Lenders require a signed gift letter — a short document stating that the money is a true gift, that it does not need to be repaid, and that the giver has no stake in the property. The letter usually includes the giver's name, the relationship to you, the amount, and confirmation it is non-repayable.

On top of the letter, expect to provide proof the money actually moved: a bank statement showing the deposit in your account, and sometimes evidence of the funds in the giver's account. Lenders generally want gifted funds deposited and 'seasoned' in your account before closing, so don't leave it to the last day.

• Signed gift letter — confirms the funds are a non-repayable gift.
• Bank statement — shows the gift deposited in your account.
• Source confirmation — some lenders ask where the giver's funds came from.
• Timing — have the money in place before closing, not on closing day.

Tax on a gifted down payment

Good news: Canada has no general gift tax. Money gifted between family members for a down payment is normally not taxable — neither the person giving it nor the person receiving it pays tax on the gift itself. (Gifting certain appreciated assets like investments can trigger capital gains for the giver, so a parent selling stock to fund the gift should get tax advice first.)

Pair the gift with first-time buyer programs

A gift works alongside other tools. You can shelter your own savings in an FHSA (up to $8,000/year, $40,000 lifetime, tax-deductible) and withdraw up to $60,000 per person tax-free through the RRSP Home Buyers' Plan. Stack a gift on top and your down payment comes together faster.

How a gift fits your full down payment

Here's how the minimum down payment scales with price in Canada. A gift can cover all or part of these amounts — and remember, if you put down less than 20%, you'll also pay CMHC mortgage default insurance.

Not sure how big a gift you need? Map out your numbers with the HOMEH down payment calculator, and see what a smaller down payment means for insurance in our guide to CMHC mortgage insurance.

Where HOMEH fits in

A family gift gets you to the down payment — HOMEH helps you keep more once you buy. Eligible HOMEH buyers receive the industry's highest Cashback Rebate, money that can pad your down payment, cover closing costs, or simply stay in your pocket.

Stretch your down payment further

Combine a gifted down payment with HOMEH's Cashback Rebate, the industry's highest. Estimate yours with the cashback calculator, then plan the full picture in the first-time home buyer guide for Ontario.