Process and paperwork
Gift letter
A signed statement from an immediate family member confirming that down payment money is a gift with no repayment expected.
Lenders accept down payment gifts from immediate family, and they need paperwork for them. The gift letter names the giver and the recipient, states the amount and the relationship, confirms the money is a gift and not a loan, and is signed and dated.
The letter alone isn't enough. The lender also wants to see the money arrive in your account, so expect to show a bank statement with the deposit and often the transfer record from the giver's side.
A loan presented as a gift is mortgage fraud. It's also easy to spot, because an undisclosed repayment shows up in bank statements and credit reports. If the money is a loan, say so. Some lenders will accept it and count the repayment in your debt-service ratios.
Get the gift letter signed early. Chasing a relative in another time zone for a signature in the last week before closing is a common way to miss a possession date.
Related terms
Down payment
The cash you put into the purchase: 5% up to $500,000, 10% on the portion to $1.5M, and 20% above that.
Closing costs
The cash you need on possession day on top of the down payment, including legal fees, registration fees, adjustments, insurance and inspections.
Total debt service ratio (TDS)
All your monthly debt payments as a share of gross income, including housing. The insured guideline is 44%.
This definition describes how the term is used in Canadian residential mortgage lending. It’s general information, not advice on your file. Rules, thresholds and rates change. Where a figure is quoted, it’s current as of the date shown on the related guide.
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Ask Daniel about this term
Daniel De Sousa, Mortgage Associate, can walk you through it before you sign anything. Or get a rate quote: 6 questions, about two minutes, and no credit check to start.
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