Whether this is your starter home or your dream home, buying property can be exciting. After your offer has been accepted, you’ll need to get approval for a residential mortgage. A key factor in securing a mortgage is the down payment. Your lender, though, will want to know where you got the money for your down payment. Therefore, it’s important that you demonstrate the money was not borrowed. Here are some ways that you can prove the source of your down payment and get your residential mortgage approved.

1. Savings and investments

Most homebuyers use savings and investment money for their down payment. These funds are built up over time with hard work, dedication, and sacrifice. To prove that you’ve been able to save all of this money up, lenders will want to see several months of bank statements that include your name, account number, balance, and transaction history.

If you’ve deposited some extra funds, you’ll need to explain to your lender where the money came from. This includes vehicle sales, bonuses from work, etc. It can be helpful if you have documents that verify the source of the funds.

2. Gifts

Sometimes, your family will give you extra money for the down payment and you’ll need to prove it was a gift and not a loan. One way to do this is to have a signed letter confirming the money is a gift.

Lenders may also ask to see the transaction details on your bank statement. When accepting these gifts, it is important that there are no strings attached. If you are expected to pay the money back, then that won’t count as a gift, but it will be considered a loan.


Did you know that you’re able to use some of your RRSP funds to buy a home? In Canada, the Home Buyer’s Plan for first-time buyers allows you to borrow up to $35,000 from their retirement savings. However, you’ll need to pay it back within 15 years.

A lender will expect you to include a copy of the Home Buyer’s Plan withdrawal forms and bank statements showing the money has been transferred to your account. Some lenders will want to see that the money has been in your account for at least 90 days.

4. Previous property sale proceeds

Selling your previous home and using the money towards a down payment is another common way that people buy a new home. To show lenders that this is your source for the down payment, you’ll need to give them documents that show how much you made on the sale of your previous home. This can include a statement of adjustment, signed sale agreement, and your bank statements.

If you are interested in learning more about getting a residential mortgage in Toronto or anywhere in Canada, then call Northwood Mortgage at 888-492-3690 or contact us here.