Down Payment Sources

June 18, 2018 | Posted by: Holly Cochrane

Many families will have the dream of becoming homeowners.  The first step of being ready to buy a home is to have a down payment.

In Canada we are fortunate to have Mortgage Default Insurance Companies. This default insurance provides the lenders with security and allows qualified clients to have a down payment as low as 5% of the purchase price. 

Below are the traditional ways that clients gather or obtain a down payment to become first time homeowners.

Gifted down payment

If you are fortunate enough, your family may be a great source for a down payment.  This option allows direct family members to contribute towards a down payment as long as no repayment is required. 

The entire down payment can be gifted but the applicant is responsible to accumulate their own funds for closing costs. CMHC/GE/Canada Guaranty typically require 1.5% of the purchase price to be available for this purpose. A gift letter will need to be signed. 

RRSP withdrawals under the Home Buyers’ Plan. 

This program enables first-time homebuyers to withdraw up to $25,000 from their RRSPs ($50,000 as a couple) for a down payment. 

This is a tax-free, interest-free loan from your RRSP and funds must be repaid over a 15 year period.  

Personal savings/investments

Most buyers use savings or investments as the source of their down payments. Typically, lenders will require three months’ history or statements from your bank to prove the gradual accumulation of these funds.


It is important to work with a mortgage advisor when you are looking to buy a home. Your mortgage broker will guide you and let you know what paperwork is required from you to show the lender your down payment source. Your mortgage professional will be there with you every step of the way.  

The Cochrane Mortgage Team is available and ready to assist you! Give us a call if you are thinking of buying a home!



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