On the site we've talked about the different ways of buying a home (well the financing end of it anyway). There are those that buy their home with the minimum 5% down, those that want to avoid CMHC and Genworth by putting a minimum of 20% and then there are those that don't have the money, or at least not the full 5% downpayment required.
When you buy a home, if it is with a mainstream lender, it is required for the mortgage lender to verify where the down payment came from. They are verifying a couple of different things. First, that the money is had not come from any illegal activities. Second, they are verifying that the money is not coming from a borrowed source (ie. loan, credit card or line of credit). There are basically two options when it comes to the verifying the source of funds.
Depending on where the money is coming from the requirements are different:
Bank account: If the money is in a savings account or chequing account it will be required to show an accumulation of the funds from within your bank account for the most recent 90 day period. This means that you would be required to show your bank statements for the last 90 days. The account statements shown can be paper based or from your online bank account, however, they must have your name on them. If for some reason your name is not on them, you can show a void cheque (or something else) that shows your name and account number so that they can be cross-reference.
RRSP: If the money is sitting in some type of an invesment account (ie. RRSP, TFSA, etc) you will need to provide your most recent statement. No further documentation is usually needed.
When the money is being given to you by someone, that's okay but it must be an immediate family member (mother, father, brother or sister). In addition to them giving you the money, you need sign and have the donor(s) sign a gift letter saying that the money is a gift and not a loan. Once the letter has been signed stating how much they are giving, you must deposit that same amount of money into a bank account that you are an owner of. Once you have deposited the money, you must then print of a statement of account showing the money sitting in the account and the deposit.
By putting a 20% down payment on your house you can avoid paying CMHC and Genworth premiums (in most cases). Using a Gift from an immediate family member is a great way of avoiding these added fees.
I have worked with many people helping them to arrange mortgages both with and without gifts from family members. I understand how to programs work and am very familiar with the lenders that will participate in this program. Call me today, toll free at 1-866-257-0158.