ACCEPTABLE DOWN PAYMENT SOURCES

Documenting your down payment is one of the strictest parts of the mortgage process, and lenders now require clear proof of where every dollar comes from. Understanding the rules early helps you avoid delays and unnecessary stress.

Here’s what lenders accept and how to document it properly.

1️⃣ Why lenders demand so much documentation

Lenders must verify that your down payment is legal, traceable, and compliant.

✔️ Anti-money-laundering requirements

✔️ insurer and investor guidelines

✔️ borrower qualification rules

They need proof that funds are legitimate and stable before approving the mortgage.

2️⃣ Anti-fraud and legal compliance requirements

Large financial crimes have forced lenders to tighten verification.

✔️ unusual deposits investigated

✔️ paper trail required

✔️ 90-day history mandatory

Stricter rules protect lenders and borrowers from fraud and legal issues.

3️⃣ Lenders must prove responsible underwriting

Banks must show they assessed your ability to repay.

✔️ insurers may audit files

✔️ investors require proof

✔️ OSFI enforces compliance

If you default, lenders must prove they followed every guideline.

4️⃣ What documentation you must provide

Lenders require a complete 90-day account history.

✔️ full statements

✔️ your name and account number

✔️ all incoming deposits

Any deposit over $500 must have a documented and acceptable source.

5️⃣ Minimum funds required to buy

You need more than just the down payment.

✔️ minimum 5% down

✔️ 1.5% for closing costs

✔️ additional savings encouraged

Lenders want evidence you can handle surprises such as job loss or illness.

6️⃣ Savings as a down payment source

Savings are the most common and easiest source.

✔️ 90-day bank history

✔️ traceable deposits

✔️ steady account activity

All funds must be fully sourced and verified.

7️⃣ TFSA as a down payment source

TFSA withdrawals are acceptable if documented.

✔️ 90-day transaction history

✔️ withdrawal confirmation

✔️ deposit to chequing account

The paper trail must link the TFSA to your main account clearly.

8️⃣ RRSP withdrawals including HBP

RRSP funds must be verified and tracked properly.

✔️ 90-day RRSP statements

✔️ redemption forms

✔️ deposit confirmation

Lenders require proof the funds were yours and withdrawn properly.

9️⃣ Gifted down payment from family

Gifts from immediate family are acceptable.

✔️ signed gift letter

✔️ proof of deposit

✔️ sometimes source statement

Gifts must be non-repayable to qualify.

1️⃣0️⃣ Borrowed down payment

Some lenders accept borrowed funds.

✔️ loan agreement required

✔️ must fit debt-to-income guidelines

✔️ repayment must be affordable

You must qualify for both the loan and the mortgage.

1️⃣1️⃣ Credit card or line of credit funds

Borrowed down payment can also come from revolving credit.

✔️ must show statements

✔️ proof of limit and balance

✔️ affordability confirmed

Lenders ensure your payments won’t exceed allowable ratios.

1️⃣2️⃣ Sale of personal assets

You can sell items you own if properly documented.

✔️ bill of sale

✔️ copy of cheque

✔️ proof of deposit

Lenders must see the full paper trail from sale to deposit.

1️⃣3️⃣ Gifted equity from a family member

Equity can be used instead of cash in family transactions.

✔️ agreement of purchase showing reduced price

✔️ letter confirming equity gift

✔️ appraisal supporting value

This option reduces the cash needed for a down payment.

1️⃣4️⃣ Inheritance funds

Inheritance is fully acceptable when documented.

✔️ lawyer’s documents

✔️ estate paperwork

✔️ proof of deposit

The source must be clearly connected to you.

1️⃣5️⃣ What is NOT acceptable

Cash without a paper trail cannot be used.

✔️ mattress money

✔️ untraceable cash deposits

✔️ unverifiable transfers

Funds must sit in a verifiable account for 90 days to become acceptable.

💬 Final Thought

Down payment rules may feel strict, but they protect both you and the lender by ensuring everything is fully verified and compliant. Proper documentation keeps your approval smooth and avoids last-minute surprises.

If you want help preparing your down payment paperwork, message The Frontline Mortgage Group. We’ll review everything and make sure it meets lender standards.