Can I Give Someone The Downpayment to Buy My House?

Marci • April 3, 2019

Although it might not always be this straightforward, the question “Can I give someone the downpayment to buy my house?” presents itself in many different ways. And the answer to all of them is no, well… except in one circumstance, but we will get to that later. Here are a few scenarios played out.

“I am selling my house on ComFree and I have someone who is interested in purchasing my property, but they don’t quite have the full downpayment, can I give them part of the downpayment to help them out? I REALLY need to sell my house! Does the bank really care where the downpayment comes from?” 

Let’s establish why the lender cares about where the downpayment comes from, there are 3 reasons.

Firstly by law, they have to. In order to prevent money laundering, lenders have to prove the source of the downpayment on the purchase of a home. Acceptable forms of downpayment are from own resources, borrowed (through an insured program called the FlexDown), or gifted from an immediate family member. To prove the funds are own resources, 90 days bank statements are required indicating the money has been in the account for 90 days or to show an accumulation of funds through payroll deposits.

Secondly, the lender cares about the source of the downpayment because it indicates the buyer is financially qualified to purchase the home. Obviously a downpayment from own resources is best, as it shows that the buyer has positive cash flow, is able to save money and manages their finances in a way that they will most likely make their mortgage payments on time. The bigger the downpayment the better (as far as the lender is concerned) because there is a direct correlation between how much money someone has as equity in a property to the likelihood they will/won’t default on their mortgage. To break that down… the more skin you have in the game, the less likely you are to walk away.

Thirdly and most important to this scenario, the downpayment establishes the loan to value ratio. Now, the loan to value ratio or LTV is the percentage of the property’s value compared to the mortgage amount. In Canada, a lender cannot lend more than 95% of a property’s value, or said in another way they can’t lend higher than a 95% LTV. This means that if someone is buying a home for $400k, the lender can lend $380k, and the buyer is responsible to come up with 5% or $20k in this situation.

So how does the source of the downpayment impact LTV?

Great question, and to answer this, we have to look at how a property’s value is established. Although we could go into a lot more detail here, very simply put, something is worth what someone is willing to pay for it and what someone is willing to sell it for. Of course within reason, having no external factors coming into play and when you are dealing with real estate, it’s usually compared to what people have agreed to in the past on similar properties.

So combining our scenarios, if you are selling your house for $400k and you give the $20k downpayment to the buyer, the actual sale price (the amount you agreed to sell for, and the amount the buyer pays) is actually $380k not $400k. So to take the purchase contract in to the lender and request a mortgage for $380k would actually be a 100% LTV and financing will be declined because the minimum LTV in Canada is 95%.

Now, despite how people attempt to rationalize or manoeuvre wording and money, its all smoke and mirrors, if the buyer isn’t coming up with the money for the downpayment independent of the seller, it impacts the LTV and financing will not be completed. Here are variations of this scenario played out in different ways.

“Can I increase the sale price of the property I’m selling and “gift” the downpayment to the buyer so they have a bigger downpayment and it looks more favourable to the lender?” 

Nope, again, this is a trick to try and manipulate the LTV.

“If the buyer wants my house really badly, but doesn’t have the full downpayment, can they borrow the money from somewhere and then we provide them with a cashback at closing to repay the debt?”

No. ANY cash back from the seller to the buyer when the purchase transaction closes is a no go. Just like on the front end of the purchase, any money refunded or given back on closing impacts the LTV and it would impact the mortgage lenders decision to lend.

“But what if the lender doesn’t know about it?”

This is called fraud. Having conditions to the sale of a property that are not disclosed to the lender is fraud. There is no 2 ways about it.

“You mentioned at the start of this article that there is one way to give someone the downpayment to buy a house, tell me more!”

As mentioned, there are 3 acceptable sources for a downpayment, one of them being a gift from an immediate family member. So if you are selling your property to an immediate family member, you are able to gift the equity to them on the purchase contract. You would write that condition on the actual purchase contract, that the downpayment is coming by way of a gift. You would then complete a gift letter indicating that the downpayment is a true gift and has no schedule for repayment.

So there you have it. If you are selling a house to someone you are not directly related to, you are not able to give them the money for your downpayment. Alternatively, if you are buying a house from someone you are not directly related to, you are not able to take money from them for the downpayment. If anyone tells you otherwise, they are misinformed. And if anyone ever presents a way to “get around the rules” regardless of how simple it sounds, it’s probably fraud.

If you have any questions about this or anything else mortgage related, I would love to talk with you!

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Getting a Mortgage Shouldn’t Be Stressful—We Can Help

By Marci Deane • December 31, 2025
Buying a Home? Follow These 6 Key Steps for a Smooth Experience Buying a home is likely one of the biggest financial decisions you’ll ever make. It’s exciting—but it can also be overwhelming, especially when it comes to understanding how mortgage financing works. To help make the process smoother (and far less stressful), here are six essential steps every homebuyer should follow: 1. Start With a Mortgage Professional—Not MLS It’s tempting to start your home search by scrolling through listings and booking showings—but the real first step should be speaking with an independent mortgage professional . Unlike a bank that offers only one set of products, an independent mortgage expert has access to multiple lenders and options . That means better advice, better rates, and a better chance of finding a mortgage that truly fits your needs. 2. Build a Personalized Mortgage Plan Unless you’re buying your home with cash, you’ll need a solid financing strategy. That means: Reviewing your credit score Running affordability calculations Exploring different mortgage types, terms, and features Understanding down payments and closing costs The sooner you start planning, the more confident you’ll feel. Don’t wait until you’ve found the “perfect” property— get ahead of the process now . 3. Figure Out What You Can Actually Afford What a lender says you can borrow doesn’t always match what you can comfortably pay each month. Take a close look at your budget, lifestyle, and spending habits. Think about how your mortgage payments, property taxes, utilities, and other costs will fit into your everyday cash flow. Avoid the stress of being house-poor by knowing your real-life affordability , not just your paper pre-approval. 4. Get Pre-Approved the Right Way A true mortgage pre-approval isn’t just entering numbers into an online calculator. It means: Completing a mortgage application Submitting all your required documentation Having a mortgage professional fully assess your file When you’re officially pre-approved, you’ll shop for homes with confidence , knowing what you qualify for and that you’re financially ready. 5. Submit Your Documents Promptly and Stay Flexible Once you find a property and your offer is accepted, time is of the essence. That’s when all the upfront work you’ve done really pays off. Be ready to: Provide additional documentation if requested Respond to your mortgage professional quickly Stay flexible and proactive throughout the approval process Your lender needs to verify everything before finalizing the loan, so staying organized is key. 6. Don’t Make Big Financial Changes Before Closing Once you’ve secured financing and waived your conditions, freeze your finances until after you get the keys. Seriously—don’t: Change jobs Apply for new credit Take out a loan Make a large withdrawal Even small changes can throw off your approval. Keep everything status quo until you officially take possession. Recap: 6 Steps to a Smooth Home Purchase Connect with an independent mortgage professional Create a mortgage plan early Know what you can afford (not just what you qualify for) Get fully pre-approved Stay on top of documentation Avoid major financial changes before possession Ready to Buy with Confidence? If you’re thinking about buying a home—or just want to know what’s possible—let’s talk. I’ll help you map out a personalized plan that makes your homebuying journey feel simple, strategic, and stress-free. Reach out anytime. I’d love to help you get started.

Get Unbiased Advice: Work with an Independent Mortgage Pro

By Marci Deane • December 24, 2025
Why Work With an Independent Mortgage Professional? If you’re in the market for a mortgage, here’s the most important thing to know: Working with an independent mortgage professional can save you money and provide better options than dealing directly with a single bank. If that’s all you read—great! But if you’d like to understand why that statement is true, keep reading. The Best Mortgage Isn’t Just About the Lowest Rate It’s easy to fall for slick marketing that promotes ultra-low mortgage rates. But the lowest rate doesn’t always mean the lowest cost . The best mortgage is the one that costs you the least amount of money over time —not just the one with the flashiest headline rate. Things like: Prepayment penalties Portability Flexibility to refinance Amortization structure Fixed vs. variable terms …can all affect the true cost of your mortgage. An independent mortgage professional looks beyond the rate. They’ll help you find a product that fits your unique financial situation , long-term goals, and lifestyle—so you’re not hit with expensive surprises down the road. Save Time (and Your Sanity) Applying for a mortgage can be complicated. Every lender has different rules, documents, and policies—and trying to navigate them all on your own can be time-consuming and frustrating. When you work with an independent mortgage professional: You fill out one application They shop that application across multiple lenders You get expert advice tailored to your needs This means less paperwork , less stress , and more confidence in your options. Get Unbiased Advice That Puts You First Bank specialists work for the bank. Their job is to sell you that bank’s mortgage products—whether or not it’s the best deal for you. Independent mortgage professionals work for you. They’re provincially licensed, and their job is to help you: Compare multiple lenders Understand the fine print Make informed, long-term financial decisions And the best part? Their services are typically free to you . Mortgage professionals are paid a standardized fee by the lender when a mortgage is placed—so you get expert guidance without any out-of-pocket cost. Access More Mortgage Options When you go to your bank, you’re limited to that bank’s mortgage products. When you go to an independent mortgage professional, you get access to: Major banks Credit unions Monoline lenders (who only offer mortgages) Alternative and private lenders (if needed) That’s far more choice , and a much better chance of finding a mortgage that truly fits your needs and goals. The Bottom Line If you want to: Save money over the life of your mortgage Save time by avoiding unnecessary back-and-forth Access more lenders and products Get honest, client-first advice …then working with an independent mortgage professional is one of the smartest decisions you can make. Let’s Make a Plan That Works for You If you're ready to talk about mortgage financing—or just want to explore your options—I'm here to help. Let's connect and put together a strategy that makes sense for your goals and your future. Reach out anytime. I’d be happy to help.

Is Alternative Lending the Right Choice for Your Mortgage Needs?

By Marci Deane • December 17, 2025
Alternative Lending in Canada: What It Is and When It Makes Sense Not everyone fits into the traditional lending box—and that’s where alternative mortgage lenders come in. Alternative lending refers to any mortgage solution that falls outside of the typical big bank offerings. These lenders are flexible, creative, and focused on helping Canadians who may not qualify for traditional financing still access the real estate market. Let’s explore when alternative lending might be the right fit for you. 1. You Have Damaged Credit Bad credit doesn’t have to mean your homeownership dreams are over. Many alternative lenders take a big-picture approach . While credit scores matter, they’ll also look at: Stable employment Consistent income Size of your down payment or existing equity If your credit has taken a hit but you can demonstrate strong income and savings—or have a solid explanation for past credit issues— an alternative lender may approve your mortgage when a bank won’t. Pro tip: Use an alternative mortgage as a short-term solution while you rebuild your credit, then refinance into a traditional mortgage with better terms down the line. 2. You're Self-Employed Being your own boss has its perks—but mortgage approval isn’t usually one of them. Traditional lenders require verifiable, consistent income—often two years’ worth. But self-employed Canadians typically write off significant expenses, reducing their declared income. Alternative lenders are more flexible and understanding of self-employed income structures. If your business is profitable and your personal finances are healthy, you may qualify even with lower stated income. Even if interest rates are slightly higher, this option is often worth it—especially when balanced against tax planning and business deductions . 3. You Earn Non-Traditional Income Today’s income sources aren’t always conventional. If you earn through: Airbnb rentals Tips and gratuities Rideshare or delivery apps (like Uber or Uber Eats) Commissions or contracts You might face challenges with traditional lenders. Alternative lenders are often more willing to work with these non-standard income streams , especially if the rest of your mortgage application is strong. Some will consider a shorter income history or evaluate your average earnings in a more flexible way. 4. You Need Expanded Debt-Service Ratios Canada’s mortgage stress test has made it harder for many borrowers to qualify with big banks. Alternative lenders can offer more generous debt-service ratio limits —meaning you might be able to qualify for a larger mortgage or a more suitable home, especially in competitive markets. While traditional GDS/TDS limits typically sit at 35/42 or 39/44 (depending on your credit), some alternative lenders will go higher, especially if: You have a larger down payment Your loan-to-value ratio is lower Your overall financial profile is strong It’s not a free-for-all—but it’s more flexible than bank lending. So, Is Alternative Lending Right for You? Alternative lending is designed to offer solutions when life doesn’t fit the traditional mold . Whether you're rebuilding credit, running your own business, or earning income in new ways, this path could help you get into a home sooner—or keep your current one. And here’s the key: You can only access alternative lenders through the mortgage broker channel . Let’s Explore Your Options Not sure where you fit? That’s okay. Every mortgage story is unique—and I’m here to help you write yours. If you’re curious about alternative mortgage products, want a second opinion, or need help getting approved, let’s talk . I’d be happy to help you explore the best solution for your situation. Reach out anytime. It would be a pleasure to work with you.