How To Provide Proof Of Downpayment
For most, buying a home is one of the biggest financial decisions in life. One of the primary requirements for securing a mortgage is providing a down payment. Here’s a breakdown of what you should know:
- Federal Regulation: Proving your down payment is not just a lender’s requirement but a federal regulation.
- Bank Statements:
- 90-day transaction history is needed, including the most recent transactions to the present day.
- Required from all accounts you’ll use for the down payment (Savings, chequing, RRSP, TFSA, investments).
- All large transfers between these accounts within the last 90 days need to be substantiated.
- Organization is Key:
- To simplify the process, use one main savings account.
- Ensure a clear ‘paper trail’. Any transfers or large deposits must be traceable.
- What’s Acceptable?:
- Consolidate savings into one account for clarity.
- Before shifting funds, remember you’ll need to validate each transfer.
- For First Time Home Buyers:
- You can withdraw up to $35,000 from your RRSP without immediate tax implications for 15 years.
- This amount needs to be paid back at 1/15th annually.
- Retain all documents linked to this withdrawal for tax purposes. You’ll need to start with Form T1036.
- Other Valid Down Payment Sources:
- Sale of Your Previous Home: A valid source of funds. Required documents include the offer and mortgage statement or the statement of disbursement from the lawyer.
- Gifts: Gifts from immediate family members are accepted. A signed gift letter and proof of deposit are typically required.
- Verification is Crucial: All significant deposits into your account within the past 90 days must be verified.
- Selling a car? Provide a bill of sale.
- Got a year-end bonus? A pay stub will do.
- Income tax refund? You’ll need the Notice of Assessment.
- Unacceptable Funds:
- Gifts from friends, sale of goods without proper documentation, unexplained deposits, loan repayments from friends, or cash tips (like those for servers) are not accepted.
Remember: Transparency and organization are essential. Each deposit should be traceable, making the process smoother and faster.
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