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Understanding Acceptable Sources of Downpayment for Mortgages in Canada




When purchasing a home in Canada, it's crucial to know the acceptable sources of downpayment to ensure a smooth mortgage application process. Here are the key sources you can consider:

  1. Personal Savings: The most common source, including savings accounts, Tax-Free Savings Accounts (TFSAs), and other liquid assets.

  2. Gifted Funds: A monetary gift from an immediate family member can be used as a downpayment. The donor must provide a signed letter stating the funds are a gift and not a loan.

  3. Registered Retirement Savings Plan (RRSP): The Home Buyers' Plan allows you to withdraw up to $35,000 tax-free from your RRSP to buy or build a qualifying home, provided you repay the amount within 15 years.

  4. Investment Income: Earnings from stocks, bonds, or mutual funds can be used, provided you can liquidate them without penalty.

  5. Sale of Existing Property: Proceeds from selling your current home can be used towards the downpayment of a new property.

  6. Borrowed Down Payment: It is possible to borrow from a secured or unsecured line of credit. The monthly repayment amount is considered a liability on your application.

  7. Inheritance: Inherited funds can also be used, provided they are readily available and not tied up in probate.

  8. Down Payment Assistance Program: There are some federal and provincial programs available for first time home buyers. Ask your mortgage broker for more details.



It's important to have a clear understanding and proper documentation for your downpayment source to ensure a smooth mortgage approval process. Always consult with your mortgage broker to confirm the acceptability of your downpayment source.


Contact The Mortgage Missus Inc. today to learn more!


Tonia Mercer | The Mortgage Missus Inc.



About the author,

Tonia Mercer is an independent mortgage broker. She has been in the industry for 15 years, in 2021 she launched her own brokerage The Mortgage Missus Inc. 

Tonia is passionate about financial education and believes that working with independent experts is the best way to get unbiased, professional advice. She has joined forces with local independent home and auto, financial advisor, legal, appraiser and real estate service providers.Effectively creating a concierge service for all things financial and real estate.

Tonia donates a portion of all mortgage revenue to Mercer's Mission, a street dog and cat feeding mission in the Dominican Republic. https://www.facebook.com/mercersmission 


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