Yes — and it’s more common than you think.
Whether you’re buying now or planning ahead, you can use gifted funds for a down payment on a home in Canada. Here’s what qualifies and what’s required.
Many Canadians dream of owning their own home. But many also face affordability challenges, including difficulty saving for the down payment they need, especially for first-time buyers. 'Just stop buying coffee' is a running joke that pokes fun at how long it can take to amass enough funds.
More homebuyers are turning to outside funding support, like the bank of Mom and Dad, to jump-start their home-owning timeline and ideally buy a home before it's time to retire.
But who can gift the down payment, and how much can be gifted? A few rules and regulations surround this home-buying practice. Here's what you need to know.
A gifted down payment is an amount given to you, typically from an immediate family member, to put towards the purchase of a home or property in Canada. The funds must be a true gift and fully disclosed to the lender.
The gift can't come with any 'strings' attached, such as expected repayment (now or later), and the giver can't change their mind and ask for it back later — signing an agreement stating just that.
A gift of money towards a down payment can dramatically speed up the jump into homeownership.
It can help first-time buyers escape the lifestyle instability that can come with renting, and next-time buyers expand their real estate holdings to earn rental income, or for a vacation home or second home closer to a job.
A mortgage is typically a long-term financial commitment with a standard amortization, or loan length, of 25 years. So the sooner it starts, the sooner the home might be paid off during peak income years.
A down payment gift can be especially helpful in higher-priced housing markets, such as Vancouver and Toronto, where saving the required minimum down payment (which increases based on home price) can be even more challenging.
Based on February 2026 MLS® HPI composite home prices for a single-detached dwelling.
So, it's easy to see how outside financial support can shorten the time between not owning and owning.
Down payment gifts are now the norm, not the exception. Of the Canadian homebuyers responding to a CMHC 2025 survey:
Compare those numbers to a CIBC report showing that in 2015, only 20% of first-time buyers used a gift down payment, representing a 105% increase. And only about 9% of move-up buyers used a gift in 2015, a figure that has now risen by 122%.
| Insured (High-Ratio) | Uninsured (Conventional) | |
|---|---|---|
| Down payment % of home purchase price | 5% to 19.99% | 20% or greater |
| Who can gift? | Parents, step-parents, grandparents, legal guardians, spouses, siblings, sometimes extended family | Same as for insured mortgage, but may allow more flexbility |
| What sources can fund the gifts? | Examples: property sale, gifted equity, borrowed funds (e.g. line of credit), inheritance, savings, investments (taken out as cash) | Same as for insured mortgage |
| Mortgage rate | May be lower due to reduced lender risk from default insurance | May be higher due to increased lender risk |
| Insurance premium added to mortgage | Yes | No |
| Mortgage approval impacted by gift itself? | Gift size may help buyer qualify for more mortgage | Gift size may help buyer qualify for more mortgage |
The most obvious benefits of a down payment gift are affording a home sooner and the potential to have a smaller mortgage or more home. Here are a few more:
Most lenders will accept a gifted down payment from an immediate family member by blood, marriage, or adoption: parents, grandparents, legal guardians, spouses (including common-law), and siblings.
Extended family members, such as aunts, uncles, and cousins, may also be allowed, depending on the lender or default mortgage insurance provider. A gift from a close non-family connection might also be eligible, depending on the circumstances.
The gift giver will need to sign a Gift Letter (provided by your mortgage broker or the bank) stating that the funds do not have to be repaid.
Once the gifted funds are put towards the home purchase, the gift is considered official. If the gift giver changes their mind afterwards, it’s no longer a lender or home purchase issue — but it can become a personal or legal issue between the parties.
Gifted down payments are widely accepted by lenders for most products. Insured mortgages (less than 20% down) may have certain restrictions, with conventional (20% down or more) and alternative and private lending likely the most flexible.
A gifted down payment must be a true gift to the buyer, with no expectation of repayment.
A down payment loan from a family member or friend requires an agreement between the home buyer and the person lending, typically with an interest rate and repayment schedule set. To protect both parties, it's recommended to have a lawyer draft the loan agreement.
For a gifted down payment, the recipient isn't required to repay the gift even if the home is sold. The homeowner either keeps the home equity proceeds or uses them toward another home. In the event of a divorce or death, the home equity would likely be split between spouses or passed to beneficiaries — the gift giver would have no claim.
Yes, borrowed funds, for example, through a line of credit or personal loan, are an acceptable source for a down payment gift. In this case, however, the gift giver should consider their own debt load, especially if looking to retire soon.
In Canada, gifted equity is another way to help someone buy a home. It involves a transfer of equity rather than cash, from the gift giver (the home seller) to the buyer, with the gifted equity recorded in the mortgage contract based on the home's fair market value.
The home seller should consult a tax professional to understand any underlying tax implications for completing the sale.
Here are a few circumstances that can interfere with the whole gift thing.
Before finalizing the home purchase, the home buyer changes their mind. In this case, no legal ramifications would arise as long as the home is still in the 'conditional' phase of the purchase offer. Of course, the sale of the home then falls through, potentially causing distress to the sellers and the gift giver.
The lender isn't able to verify the source of the down payment or the identity of the gift giver. In this case, the concern is mortgage fraud, and the home purchase is in jeopardy.
The gifted down payment doesn't materialize from the gift giver. Ideally, it's best to have the funds in hand before getting a mortgage pre-approval or placing an offer on a home — just in case life gets in the way.
In a recent survey by True North Mortgage, conducted by Angus Reid, 21% of respondents reported that they plan to use a loan or gift from family or friends (among other sources beyond primary job income) to meet their monthly mortgage payment.
With Canada's higher home prices, rising costs, and ongoing uncertainty, it can take a village to help homeowners stay on track.
Source: Angus Reid Forum survey, Jan 14–27, 2026, n=1056 Canadians. MOE ±3.0%, 19 times out of 20.
But to be honest, we love the giving part — your best possible rate and perfect mortgage fit can save you thousands, term after term. Add that to your gifted down payment, and it's a home financing gift that keeps on giving.
True North's expert, salaried brokers are obsessed with providing exceptional service, from the beginning to the end of your buying process.
Need the best-ever First-Time Home Buyer's Guide? Download it for free here.
The down payment gift itself doesn't negatively reflect on the home buyer's mortgage application. Your income, credit score, and debt load are used to determine whether you can afford the home, taking into account the size of the down payment.
In Canada, cash gifts are usually not taxed — so the person receiving the gifted down payment typically isn’t taxed on the amount.
If the down payment gift comes from cashing out investments, there may be tax implications for the giver. For example, withdrawing from an RRSP is taxable income, and selling investments outside a registered account could trigger capital gains.
Gifted home equity may have capital gains considerations for the giver. It's best to check with a tax professional based on your situation.
A guarantor or co-signer can help a family member qualify for a mortgage by using their income and credit to strengthen the application.
However, compared with a gifted down payment, these options can entail greater legal and financial risk. A guarantor is typically added to the mortgage (not the home's title) and does not own the property, but is still responsible if payments are missed. A co-signer is added to the home's title as a co-owner and assumes the full risks of homeownership, including missed mortgage payments.
Exiting either role requires extra work. The primary borrower usually needs to requalify to remove a guarantor or co-signer from the mortgage, and if the co-signer is on title, legal steps and fees are required to transfer ownership.
A gifted down payment is generally the most hands-off option — it doesn't involve ownership or mortgage payment responsibility.
Get the best start and save a pile of cash with our mortgage experts.
Get a speedy process while saving cash. Here's what you need to know.
Want to buy a home? You'll need at least 5% down. But wait, there's more.
