If you’re planning to buy a home, one of the first things you’ll need to consider is your down payment. Lenders and the federal government have strict rules about where your down payment can come from, and ensuring it meets these requirements is crucial to securing mortgage approval.
As a mortgage broker in Ontario, I work closely with clients to make sure their down payment sources are eligible, documented, and aligned with lender requirements. Here’s a breakdown of what can—and can’t—be used for your down payment.
✅ What CAN Be Used for a Down Payment
1️⃣ Savings (Personal Funds) – Money in your bank account for at least 90 days to prove it wasn’t borrowed.
2️⃣ RRSP Withdrawal (Home Buyers’ Plan) – If you’re a first-time homebuyer, you can withdraw up to $35,000 ($70,000 per couple) from your RRSP, tax-free. Just remember, you have 15 years to pay it back!
3️⃣ Gifted Funds – A financial gift from an immediate family member (parents, grandparents) is accepted, as long as you have a signed gift letter confirming it’s not a loan.
4️⃣ Investments (Stocks, Bonds, Mutual Funds) – You can use funds from selling investments, but you’ll need to provide documentation of the transaction.
5️⃣ TFSA (Tax-Free Savings Account) – Withdrawals from a TFSA can be used without tax implications.
6️⃣ Sale of an Asset – Selling a car, jewelry, or other valuables? As long as you have proof of the sale, these funds can be used.
7️⃣ Equity from Another Property – If you’re selling your current home, the proceeds can go toward your down payment on a new one.
8️⃣ Government Programs – First-time buyers can access programs like the First-Time Home Buyer Incentive, which provides shared-equity contributions.
What CANNOT Be Used for a Down Payment
1️⃣ Borrowed Money (Unsecured Loans or Credit Cards) – Most lenders won’t accept personal loans or credit advances for your down payment.
2️⃣ Undocumented Cash Deposits – Any large cash deposits with no clear source (e.g., inheritance, legal asset sale) will raise red flags.
3️⃣ Unsecured Line of Credit – Unless secured against an asset (like a HELOC), lenders won’t accept funds from an unsecured line of credit.
4️⃣ Gifted Money from Non-Family Members – Most lenders only allow gifts from immediate family—not friends or distant relatives.
5️⃣ Illegal or Undocumented Funds – If the source of funds can’t be verified, it won’t be accepted.
How I Can Help
Choosing the right down payment strategy can make all the difference in securing a mortgage. I’ll help you:
✔ Confirm Your Down Payment Eligibility – Making sure your funds meet lender requirements.
✔ Access First-Time Buyer Programs – Exploring government incentives to boost your buying power.
✔ Match You with the Right Lender – Different lenders have different rules—I’ll connect you with the best fit.
Final Thoughts
Your down payment is a crucial step in buying a home, and ensuring it comes from legal, traceable sources is key to mortgage approval. If you’re unsure whether your funds qualify, I’m here to help! Let’s make sure you’re set up for success and ready to take the next step toward homeownership.
Let’s Chat About Your Down Payment!
If you have any questions about your down payment or need help navigating the mortgage process, I’m here to help. Feel free to reach out to me directly:
Call me at: 905-929-1199
Email me at: lamalfi@tmacc.com
Let’s make sure your down payment is all set and ready to go so you can move forward confidently with your home purchase!