SOURCE OF FUNDS — WHAT LENDERS NOW REQUIRE

Down payment rules have tightened dramatically due to Canada’s ongoing fight against money laundering. Lenders must now verify where every dollar of your down payment came from — and the review is far more detailed than most buyers expect.

Here’s what lenders look for and how to prepare properly 👇

1️⃣ Lenders must verify where your down payment came from

Federal regulations require lenders to collect 30–90 days of transaction history for every account used for your down payment.

✔️ full 90-day history is standard

✔️ all large deposits over $1,000 must be explained

✔️ any account used for transfers must also be reviewed

This is not optional — lenders must document the legitimacy of your money.

2️⃣ Multiple accounts mean multiple statements

If you move money between your own accounts, the lender must review each one.

✔️ chequing → savings transfers

✔️ TFSA or investment withdrawals

✔️ e-transfers to yourself

✔️ cash deposits

Every movement creates a documentation trail the lender must track to ensure funds are legitimate.

3️⃣ Cash deposits are red flags

Cash is the hardest source to verify and always requires explanation.

✔️ lenders rarely accept unexplained cash

✔️ large cash deposits must have proof

✔️ undocumented sources may be declined

If cash cannot be traced to a legitimate source, the lender must exclude it from your down payment.

4️⃣ Income must match savings

If your income doesn’t support your accumulated savings, lenders can request a full year of history.

✔️ recent grads with unusually high savings

✔️ large deposits inconsistent with income

✔️ sudden unexplained increases in balance

Lenders must confirm your savings are reasonable for your financial profile.

5️⃣ These rules come from federal anti-money-laundering laws

Lenders are not being “difficult” — they are legally required to verify funds.

✔️ FINTRAC rules

✔️ anti-money-laundering compliance

✔️ audits of lender files

✔️ mandatory verification of large deposits

If a lender cannot prove your funds are legitimate, they cannot approve the mortgage.

💬 Final Thought

Source-of-funds rules are strict, and they’re not going away. The more organized your accounts are before buying, the smoother your approval will be. Proper preparation prevents delays, stress, and last-minute surprises.

If you want help structuring and documenting your down payment correctly, message The Frontline Mortgage Group and we’ll guide you step-by-step.