Jeff MacKinnon

Honest, hard working and thorough

How to give a downpayment as a gift


When it comes to down payments for purchasing a home, there are a few options available to be able to make the down payment. Mortgage requirements state that at least a 20% down payment needs to be put on the home. This down payment acts as a safe guard to the lender if the mortgage is defaulted on.

In the event the 20% down payment is not available, then mortgage insurance through CMHC would be the next step. With CMHC, a 5% down payment is only required, while the mortgage insurance protects the lender.

Gift as down payment: Lenders will allow a gift of a down payment from a family member to help secure a mortgage. However, a gift from a friend or co-worker will be considered as a loan and expected to be repaid. If you require mortgage insurance through CMHC, you can only receive the down payment gift from an immediate relative and only for a 1-4 unit property.

Home Buyer’s Program: The government allows you to withdraw from your RRSP penalty free to provide a down payment for a home providing the amount that was withdrawn is paid back into your RRSPs within 15 years.

Non-registered investments: If you have non-registered investments, you can use that for a down payment, but, be aware, there will most likely be tax implications for withdrawing the funds.

Borrowing the money: Some lenders will provide a down payment loan; however, the credit of the home buyer must be in excellent standing and not fall out of the limits of the debt ratios.

Cash back: If the bank is offering a mortgage product with a cash back option attached to it, then the cash back can be used toward the down payment. 


Comments:
No comments

Post Your Comment:

Data supplied by CREB®’s MLS® System. CREB® is the owner of the copyright in its MLS® System. The Listing data is deemed reliable but is not guaranteed accurate by CREB®.
The trademarks MLS®, Multiple Listing Service® and the associated logos are owned by The Canadian Real Estate Association (CREA) and identify the quality of services provided by real estate professionals who are members of CREA. Used under license.
The trademarks REALTOR®, REALTORS®, and the REALTOR® logo are controlled by The Canadian Real Estate Association (CREA) and identify real estate professionals who are members of CREA. Used under license.