Gifted Down Payments in Ontario: What Buyers and Parents Should Know

Your parents offer to help with your down payment. Suddenly, buying your first home feels a little closer.

But before anyone transfers money, there’s an important question to answer: is that money a gift, or will you need to pay it back?

For a mortgage application, the difference matters.

A gifted down payment may be an acceptable source of funds, subject to the lender’s requirements. CMHC lists non-repayable gifts from immediate family among common down payment sources. Source: CMHC’s mortgage insurance FAQs.

For buyers in Hamilton and across Ontario, the best starting point is a conversation about how the family contribution will work.

What makes a down payment contribution a gift?

A genuine gift does not need to be repaid.

If your parents expect monthly payments, repayment when you sell, or their money back at a later date, explain that arrangement to your mortgage professional before applying. Don’t describe repayable money as a gift.

Start with one direct question: “Are we all clear about whether this money needs to come back?”

Having that conversation early helps everyone plan around the same understanding.

What is a mortgage gift letter?

A gift letter documents that the contribution does not need to be repaid. RBC, for example, provides a gift-letter process for parents helping a child buy a home. The exact requirements depend on the lender you use. Source: RBC’s guide to helping your child buy a home.

Before preparing documents, ask your mortgage professional:

• Does the lender require its own gift-letter form?

• Is the proposed donor acceptable under its rules?

• What evidence of the funds and transfer will it need?

• When must the money be available?

• Are there additional requirements if the money comes from outside Canada?

  
  

Getting the lender’s checklist first can save you from collecting the wrong paperwork.

Plan the entire purchase, not just the down payment

Imagine you have saved $40,000 and your parents offer a $30,000 gift. Together, that gives you $70,000 to work with.

Before treating the entire amount as your down payment, prepare a separate closing budget. Ask your lawyer and mortgage professional to identify the costs you’ll need to cover, then decide how much cash you want left after moving.

Use three separate lines in your plan:

• Money going toward the down payment.

• Money reserved for closing and moving.

• Savings remaining after you receive the keys.

  
  

This makes the family conversation more useful. You can explain exactly where the contribution fits instead of working from a rough purchase-price estimate.

Questions parents should answer before helping

Parents should also consider what the gift means for their own finances.

How much will remain available for emergencies? Does the contribution affect retirement plans? Will both the buyer and the donor feel comfortable with the arrangement a year from now?

Write down the agreed amount and intended timing. If expectations change, tell the mortgage professional promptly so the application reflects the actual arrangement.

Frequently asked questions

Can my parents provide only part of my down payment?

Ask your lender whether it accepts the proposed combination of personal savings and gifted funds, and what documentation it needs for each source.

Should I transfer the money before applying?

Ask for the lender’s instructions first. Confirm the required timing and evidence before moving funds between accounts.

What if my parents want to be repaid?

Explain that upfront. Your mortgage professional needs to assess the arrangement as proposed, including any repayment obligation.

Make a plan for your family’s contribution

Family help can make a meaningful difference. Clear expectations and organized documents help you put that support to work.

Buying in Hamilton or elsewhere in Ontario? Contact Mission35 Mortgages to review your proposed down payment, family contribution, and next steps.