As the cost of living in Vancouver continues to rise, it is becoming increasingly common to see home buyers (especially young first-timers) receiving financial help.
This usually comes in the form of gifted money. And although this is entirely legal, it is important to know the requirements for gifted down payments.
- The gift must come from an immediate relative, defined as mother, father, brother, sister & grandparents.
- The lender will require that the giftor and the mortgage applicant sign a gift letter. The gift letters vary with each lender, so have your mortgage broker supply.
- The lender will call the giftor to verify that they are gifting the indicated funds.
- The gift should be deposited into the applicant's account at the time of writing and offer. The lender will require that the applicant show that they have received the gifted funds.
- Depending on the gift amount and the lender, there may be a requirement to show where the gifted funds came from. This could be bank statements, investments statements, or a Home equity line of credit statement.
- If the gifted funds are coming from outside Canada, the funds must be onshore and in the applicant's account 45 days before the purchase completion date. Please note that there are some countries that lenders will not accept gifted funds from.
- Gifted down payments are not acceptable by most lenders for the purchase of a revenue property.