Gifted down payments: how family help works

Last reviewed October 30, 2026

Help from parents or other family members is one of the most common ways first-time buyers in Canada top up a down payment. Lenders accept gifts, but they have rules. Here's how to do it smoothly, and how both the giver and the receiver can protect themselves.

Who can give you a gift?

For an insured mortgage (less than 20% down), lenders and mortgage insurers generally require the gift to come from an immediate family member, typically a parent, grandparent or sibling. Some lenders accept a wider range of relatives. For uninsured mortgages, lender policies vary. Ask your lender or broker before the money moves.

The gift letter

Your lender will almost always ask for a signed gift letter. Most lenders have their own form. It typically states:

• The giver's name, relationship to you, and contact details
• The amount of the gift
• The address of the property, if known
• That the money is a true gift and does not have to be repaid
• Signatures from the giver and the buyer

Proof of funds

Lenders must verify where your down payment comes from, partly because of anti-money-laundering rules. Expect to provide:

• Proof that the gifted funds are in your account before closing, often by a set number of days before closing, depending on the lender.
• Sometimes a statement from the giver's account showing the funds leaving.
• A clear paper trail. Large cash deposits are difficult to verify and can delay your approval.

Gift or loan? It matters

If the money has to be repaid, it's a loan, not a gift, and lenders treat it very differently. A loan counts as debt in your qualification ratios and may not be allowed as a down payment source on an insured mortgage. Signing a gift letter for money that's actually a loan is misrepresentation to your lender. If your family wants to be repaid, be upfront with your lender about it.

Protecting the gift

Families sometimes worry about what happens to a gift if the buyer's relationship ends. In Ontario, family law has specific rules about property brought into a marriage, gifts, and the matrimonial home that can produce surprising results. If you're buying with a partner, consider:

• A cohabitation agreement or marriage contract that addresses the gift.
• Documenting the gift clearly, and to whom it was given.
• Getting independent legal advice, for both the giver and the buyers, before closing.

This is a legal area where the details matter. Talk to a family lawyer.

Tax considerations

Canada has no gift tax, so the recipient doesn't pay tax on a cash gift. The giver should consider their own situation. Selling investments to fund a gift can trigger capital gains, and giving away retirement savings can affect their own plans. A financial advisor can help the giver decide how and when to give.

Using a gift with the FHSA

Gifted money can be contributed to your own FHSA, within your available room. The contribution earns you the tax deduction, and the withdrawal is tax-free for a qualifying home. If you have unused FHSA room and family is helping anyway, routing the gift through your FHSA can make the same gift go further. See the FHSA guide and stacking programs.

Co-signing vs gifting

Some parents co-sign or go on title instead of, or as well as, gifting. Co-signing makes the parent responsible for the mortgage, can affect their own borrowing, and, if they go on title, can affect first-time buyer benefits such as the land transfer tax refund (which is reduced to the qualifying buyer's share). Get legal advice on which structure fits your family.

Talking about it as a family

It helps to agree, and ideally write down, a few things before money changes hands: whether it's an early inheritance (and how siblings are treated), whether the giver expects any say in the purchase, and what happens if plans change. Clear expectations up front avoid awkward conversations later.