Gifted Down Payment Rules in Canada for 2027

By Jatin Dua · Broker of Record, RE/MAX Quantum Realty · Updated 2 November 2026 · 10 min read — Who can give you a down payment in 2027, what the gift letter must say, and the tax, family-law and title issues to settle first.

This guide is for GTA buyers whose parents or relatives want to help with the down payment, and for the family members giving the money. You will learn who can give a gift, what the gift letter must say, how much help a typical Toronto-area purchase needs in 2027, and the tax, family-law and title questions to settle before the money moves.

Can you use a gifted down payment in Canada in 2027?

Yes. A gift from family is an accepted down payment source for most Canadian mortgages. CMHC’s rules for insured home purchases list savings, the sale of a property, or a non-repayable financial gift from a relative as “traditional” down payment sources. Banks accept gifts on regular mortgages too.

The key word is non-repayable. If the money has to be paid back, it is a loan, and lenders treat it very differently. Each lender also sets its own paperwork and timing, so the rules below are the common pattern, not a promise from any one bank.

Who can give you a gifted down payment?

It depends on how much you put down.

• Less than 20% down (an insured, or “high-ratio,” mortgage). The gift usually must come from immediate family. TD, for example, says that for high-ratio mortgages the giver must be an immediate family member related to you by blood, marriage or common-law, or adoption.
• 20% or more down (a conventional mortgage). Some lenders also accept gifts from other relatives. TD says a gift on a standard mortgage could come from a relative outside that immediate-family list.

Money from the seller, or from anyone tied to the sale, is a different matter: CMHC requires even a borrowed down payment to be at arm’s length and not tied to the purchase. If the giver is anyone outside close family, ask your lender or mortgage broker for its exact list before anyone sends money.

What should a gift letter for a mortgage include?

The person giving the gift signs a letter. TD describes the core content: a clear statement that the money is a gift, not a loan, and never has to be repaid, plus the date of the gift, the amount and the relationship between the giver and the buyer. Most lenders use their own form. When you get it, ask your lender:

• Whether it needs the property address, and whether the buyer must sign as well as the giver.
• How many days before closing the money must be in the buyer’s account.
• Which bank statements it wants to see, for the giver, the buyer or both.

If the money is coming from outside Canada, expect more questions about where it came from. In my experience the cleanest files show one direct transfer from the giver’s account to the buyer’s account, with statements for both. My earlier post on gift letters and what lenders need covers the basics.

How much down payment help does a GTA buyer need in 2027?

The federal minimum is 5% of the first $500,000 and 10% of the part from $500,000 to $1.5 million. At $1.5 million or more, you need 20%. Here is what that means at real 2026 GTA median prices.

Source: Prices from TRREB MLS data via REALM, January to October 2026 (median sold price, city or district level). Down payment rules from the Financial Consumer Agency of Canada and CMHC.

Below 20% down, you also pay mortgage default insurance. CMHC’s premium is 4.00% of the loan at 90.01% to 95% loan-to-value, falling to 2.40% at 75.01% to 80%. Insured mortgages are only available on homes priced below $1.5 million. That is why a larger gift can save more than its face value. I break the premiums down in my post on what CMHC insurance costs.

Is it a gift or a loan, and why does it matter?

A loan has to be counted as debt, so it lowers how much mortgage you qualify for. A gift does not. That is the whole reason lenders ask for the letter.

There is a legal way to borrow part of a down payment. CMHC allows “non-traditional” down payments, such as an unsecured personal loan or line of credit, on 1 to 2 unit homes with less than 10% down, for borrowers with strong credit. The premium rises to 4.50% instead of 4.00%, and the payment on that loan counts against you.

If parents want to be repaid, TD’s advice is to set it up properly as a private loan or private mortgage, written up by a lawyer with the amount, interest rate and payments.

Do you pay tax on a gifted down payment in Canada?

For a simple cash gift from a parent to an adult child, the usual tax question is about the parent, not the child. A few points:

• No gift tax: TaxTips.ca explains that Canada has no gift tax, and a Canadian resident who receives a gift from family does not include it in income.
• Selling investments to raise the cash: the parent may owe capital gains tax on the sale. TD’s wealth team flags the timing and tax effect of selling assets as part of the plan.
• Giving investments or property directly: the giver is treated as selling them at fair market value, so any capital gain is taxed.
• Attribution rules: these catch gifts to a spouse or to related children under 18, not gifts to adult children.
• A giver who owes the CRA: TaxTips.ca flags extra complications, so sort out any tax debt first.

Rules depend on the facts, so the giver should speak with an accountant before selling anything.

What happens to a gifted down payment if the buyer separates?

This is the question families should ask before the money moves. Ontario’s Family Law Act normally excludes gifts from a third person received after the marriage when spouses divide property. But the exclusion does not apply to a matrimonial home, and money that can be traced into the matrimonial home loses the protection too.

In plain terms: if parents give a married child $100,000 and it goes into the home the couple lives in, the gift may end up shared on separation. TD’s article gives a similar warning. A marriage contract or cohabitation agreement is the usual tool to address this, and each partner should get independent legal advice. Common-law couples face different rules again, so ask a family lawyer.

Should parents give money or go on title?

Going on title gives parents an ownership share, but it has costs. Ontario’s land transfer tax refund for first-time buyers is split by ownership. Ontario’s guidance says that if a parent who is not a first-time buyer and a first-time buyer child each own 50%, the child can claim only 50% of the refund, so up to $2,000 instead of $4,000.

Where a lender insists that a parent be on title only for mortgage purposes, Ontario says the tax is paid at registration and the child can then apply for the refund with proof the parent holds title in trust. There are other options, such as a parent acting as guarantor or co-signer, which I explain in co-signer or guarantor on your first mortgage.

Can gift money go into an FHSA first?

Yes, with one rule. The CRA says only the holder can contribute to their own First Home Savings Account (FHSA). Parents cannot deposit into it directly, but they can give money to the buyer, who then contributes. The buyer gets the tax deduction, and a qualifying withdrawal for a first home is tax-free.

FHSA room is $8,000 in the year you open the account, with a $40,000 lifetime ceiling. If the gift will arrive in stages over a year or two, routing part of it through an FHSA can be worth real money at tax time. Compare it with the RRSP Home Buyers’ Plan in FHSA vs Home Buyers’ Plan.

What to do next

1. Ask your lender or mortgage broker for its gift letter form, who may give, and how far before closing the money must arrive.
2. Agree as a family, in writing, whether the money is a gift or a loan, and structure a loan properly if repayment is expected.
3. If the buyer is married or in a common-law relationship, speak to a family lawyer about a domestic contract before closing.
4. Have the giver talk to an accountant before selling investments to fund the gift.
5. Re-run your affordability with the gift included, and check your minimum down payment in my guide to the minimum down payment in Ontario.

Frequently asked questions

Sources

• CMHC: Mortgage loan insurance, homeownership purchase (down payment sources, premiums)
• TD Stories: Advice on how to help your kid buy a house
• Financial Consumer Agency of Canada: How much you need for a down payment
• CRA: Contributing to your FHSA
• Ontario: Land transfer tax refunds for first-time homebuyers
• Family Law Act, R.S.O. 1990, c. F.3, s. 4 (e-Laws)
• TaxTips.ca: When are gifts and inheritances taxable?
• Budget 2026, Chapter 3 (Government of Canada)

Related reading

• Biggest Condo Developers in Toronto: Track Records Buyers Should Check
• Is It a Good Idea to Buy a Condo in Toronto in 2027?
• Buying a House in Ontario on a Work Permit (2027): What the Foreign Buyer Ban Allows
• Can You Buy a House With No Down Payment in Ontario?