Many first-time buyers in York Region and Simcoe County get help from family. With the average GTA home selling for $993,410 in August 2026, according to the Toronto Regional Real Estate Board, a gift from parents or grandparents is often what turns saving into buying.
A gifted down payment is completely normal, but lenders have rules about it. Get them right early and the gift is a non-event at closing. Get them wrong and it can hold up a mortgage approval at the worst possible moment.
How much do you need?
In Canada, the minimum down payment depends on the purchase price:
$500,000 or less: 5% of the price.
$500,000 to $1.5 million: 5% of the first $500,000, plus 10% of the portion above $500,000.
$1.5 million or more: 20% of the price.
On a $900,000 townhouse in Newmarket or Aurora, that works out to $25,000 plus $40,000, or $65,000 at minimum. With less than 20% down, you will also need mortgage default insurance. A gifted down payment can be used for an insured mortgage.
Who can give the gift?
Most lenders accept down payment gifts only from immediate family: parents and step-parents, grandparents and siblings. Some will consider other relatives with extra paperwork. Gifts from friends or unrelated people are generally not accepted.
The gift letter
Your lender will ask for a signed gift letter from the person giving the money. It normally shows:
the names of the giver and the buyer, and how they are related;
the amount of the gift and the date;
the property address, if known;
a clear statement that the money is a true gift and does not have to be repaid.
That last line matters. If the money is really a loan, it has to be treated as debt, and that changes how much you can borrow.
Timing: get the money in early
Lenders want to see the gift sitting in the buyer's own account before closing, usually at least 15 to 30 days before. They will also ask for proof of where it came from, such as a statement from the giver's account and a record of the transfer. If the giver lives outside Canada or is not immediate family, some lenders want the funds in place for up to 90 days because of anti-money-laundering rules.
Our advice is simple: talk to your mortgage specialist before you start house hunting, and move the gift as soon as the pre-approval is in place. Last-minute transfers are the main reason we see gifts cause delays.
Other ways family can help
First Home Savings Account (FHSA). A first-time buyer can contribute up to $8,000 a year, to a lifetime maximum of $40,000, and withdraw it tax-free to buy a qualifying first home. Family can give the buyer money to contribute.
RRSP Home Buyers' Plan. First-time buyers can withdraw up to $60,000 from their RRSPs to buy a home and repay it over time.
Co-signing. A parent can go on the mortgage as a guarantor or co-borrower. That puts their own credit and borrowing on the line, so get independent legal advice first.
Buyers who combine an FHSA, the Home Buyers' Plan and a family gift can often get much closer to 20% down than they expect.
Before you close
A few practical points we share with every family in this position. The buyer's lawyer will want to see where every dollar of the down payment came from, so keep the paper trail. If the giver wants some protection, for example if a relationship ends, that is a conversation for a lawyer and should be settled before closing, not after. And if more than one family member is helping, each gift needs its own letter.
We have been helping families buy homes north of Toronto since 1989. If a family gift is part of your plan, call us at (905) 830-9111 and we will walk you through the timing and connect you with a mortgage specialist who deals with gifted down payments regularly.
This article is general information, not financial, tax or legal advice. Lender rules vary, so confirm the details with your mortgage specialist and lawyer.
