Saving for a down payment is an incredible feat in today’s market. To prevent anti-money laundering, lenders would like to verify your down payment sources prior to full approval.
Depending on the source of down payment, documents may vary:
Own Savings / Investments
90-day history of any source accounts used for your down payment, such as Savings Account, TFSA, or Investment account
Your Statement should clearly state your full name and account number. And expect to explain the source of any large deposits outside of your normal contributions. If you transferred money between accounts, you will need to show a record of the money leaving one account and arriving at the other.
Gifted Down Payment
You will need a Gift Letter from your family member that states that the funds are indeed a gift and not repayable. (Don’t worry, just let us know and we’ll have a form ready for you)
Depending on the circumstance, lenders may accept gifted down payment from immediate family members such as parents, grandparents, or siblings. The funds should show up in your account no less than 15-days prior to closing and once again, the banks will require a record of the funds being transferred from your immediate family’s account into yours.
Registered Retirement Savings Plan (RRSP)
90-day history of the funds in your account with your name and account number appearing on the account statement
As a first time home buyer, you can withdraw up to $35,000 from your Registered Retirement Savings Plan for your down payment. You must complete a T1036 to withdraw funds without penalty.
Funds arriving from out of Canada
Funds coming from Canada must be deposited into a Canadian Financial Institution at least 30 days prior to the expected closing date. You must also provide a 90-day history of the funds in your source account.
Proceeds from the selling of your existing home
Fully executed purchase and sale agreement between you and the buyer of your home
Got a mortgage? You will also need to show an up-to-date mortgage statement
Of course, the list doesn’t end… Most lenders would also like to see closing costs equivalent to a minimum of 1.5% of the purchase price in your bank account.
Are you ready? Contact me to start the mortgage approval process!