Down Payment
A down payment is the amount of money you pay up front and represents a percentage of the purchase price for the property you purchase, with the remaining amount being financed through a mortgage . The down payment required depends on the type of property (ie owner-occupied, rental, vacation, commercial) you are purchasing, the type of mortgage you are applying for and your personal circumstances. The minimum down payment required is 5% of the purchase price.
What lenders require for down payment confirmation
IMPORTANT
Due to the Canadian Anti-Money laundering rules lenders have to be compliant and adhere to the policy requirements.
What lenders require for down payment confirmation
- If your down payment is coming from savings or investments you will need to provide a 3 month history (Canadian Anti-Money laundering rules). If you do internet banking you can print out a 3 month history and if your name is not on the printout please provide an older statement to match up the accounts. Alternatively an online “summary of accounts” should have your name on it allowing us to match up the 3 month history account to your name. Please note some investment statements are issued quarterly so please provide most recent quarterly statement and online statement reflecting up to date balance.
- If your down payment is coming from the sale of a property the lender will require a copy of the sale contract, along with addendum that subjects have been removed or a copy of the “Order to Pay” you would have received at the lawyer’s or notary, and a copy of the most recent mortgage statement.
- Any “gifted funds” may only come from a direct family member. The lender will require a gift letter along with confirmation of the gifted amount being deposited into the purchaser’s account and the lender can request confirmation of the source of funds. Please note the amount being deposited into the account must match up to the amount stated on the gift letter. Most lenders have their own gift letters therefore I will provide the gift letter. The gifted funds should be deposited into your bank account a minimum of two weeks before the completion date.
IMPORTANT
- If the statement shows larger deposits (ie $2000 or more depending on the lender) into the account then lenders typically require a 3 month history of the source of funds. For example if you provide a 3 month history from January 1st to March 31st and $5000 is deposited February 1st, the lender will require a history for source of funds dating back three months prior to February 1st deposit.
- If recent transactions show funds being transferred from different accounts lenders will require a paper trail so whenever possible it is best to keep the funds in the same account for three months if you are planning to purchase a property.
- If there are multiple large deposits and recent transactions showing funds being transferred from different accounts it can create a lot of extra work for you as the home buyer and the lender who has to review all the statements and match up the deposits and accounts.
- If the down payment is coming from overseas the lender will typically require confirmation that it is coming from legitimate sources.
Due to the Canadian Anti-Money laundering rules lenders have to be compliant and adhere to the policy requirements.
