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:

1. Federal Regulation: Proving your down payment is not just a lender’s requirement but a federal regulation.
2. 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.
3. 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.
4. What’s Acceptable?:
   • Consolidate savings into one account for clarity.
   • Before shifting funds, remember you’ll need to validate each transfer.
5. 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.
6. 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.
7. 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.
8. 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.