We often get a number of questions on what documents are required to confirm down payment. The majority of lenders require a 90-day history. All large deposits also need to be verified which could mean an additional 90-day history on a separate account. Here are the usual requirements: Savings/Non-registered Investments:
Recent statements or on-line printout showing the financial institution, client name and account number. Funds must be on deposit with a Canadian financial institution. If this is an investment account (TFSA, stocks, bonds, or mutual funds), lenders may also want to see the redemption of the investment and corresponding deposit to the chequing or savings account. RRSPs:
Recent statements or on-line printout showing the financial institution, client name and account number. Lenders may also want to see the redemption of the RRSP and corresponding deposit to the chequing or savings account. If the client is a First Time Home Buyer, then they are permitted to withdraw $35,000 from their RRSPs tax free. If the client is not a First Time Home Buyer, then withholding tax applies on the amount of RRSP being withdrawn. Sale of Existing Property:
Contract of purchase and sale along with recent mortgage statement or online printout. Ensure the online printout has the client’s name, mortgage number, and property address. Some lenders may also want the MLS for the property being sold. If the sale has already completed, then the lawyer statement of adjustments/order to pay showing the net sale proceeds will be required along with banking history showing deposit. Gifts:
Lenders accept gifts for down payment from immediate family members (parents, grandparents or siblings) for owner occupied purchases. Spousal gifts may be accepted on exception. Gifted down payments on rental property purchases is rare. Every lender requires their own form letter to be completed and signed stating the relationship of the giftor, the amount of the gift and that it is not to be re-paid. Banking history showing the deposit of the gift into the client’s bank account must be provided. If the giftor is providing funds directly to the legal professional, then confirmation from the legal professional showing receipt of funds is required. Some lenders may also want a statement from the giftor confirming the funds are available especially if the gift is received close to the funding date. Borrowed Funds (if allowed by the lender):
Copy of the loan agreement or line of credit showing funds available is required. The payment of the borrowed funds also has to be added to liabilities and debt serviced.
There may be other unique situations not discussed above.
Please reach out to us if you have any questions! |