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A gift letter is a signed statement from a donor — typically an immediate family member — confirming that funds given toward a down payment are a true gift with no repayment expected, which Canadian lenders require before counting gifted funds toward the purchase.
Lenders need to be confident that gifted funds aren’t a disguised loan, because an undisclosed liability would change the borrower’s real debt load and affect how much they can safely qualify for. The letter typically states the donor’s relationship to the borrower, the exact amount, the property address, and a statement that no repayment is required or expected.
Lenders also want to see the money move: a bank statement showing the funds leaving the donor’s account and landing in the borrower’s account, sometimes called sourcing or seasoning the funds. A gift letter without a matching paper trail is usually not enough on its own to satisfy underwriting.
Insured mortgages: CMHC, Sagen, and Canada Guaranty all require gifted down payment funds to be confirmed as non-repayable before they count toward the minimum down payment.
Common donors: lenders typically expect the gift to come from an immediate family member — parent, grandparent, sibling, or spouse — rather than an unrelated third party.
Paper trail required: underwriters generally want both the signed gift letter and bank records showing the transfer, not the letter alone.
Broker’s role: mortgage agents, submortgage brokers, mortgage associates, and courtiers hypothécaires collect gift letters as a standard part of down payment verification on every file that uses gifted funds.
Definitions reflect Canadian federal and provincial rules as of the “Updated” date above. Not advice for any specific file.
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