• Acceptable Down Payment Sources

    November 28, 2016
  • Acceptable down payment sources from your Trusted Mortgage Knowledge Professional

    Down PaymentEntering into the Vancouver real estate market is one of the biggest challenges facing people these days. And as any first-time home buyer knows, every little bit helps!

    In the best-case scenario, the entirety of a first-time home buyer’s down payment has been in one account for 90 days or more. In this case, all that would be required is their bank statements from the past 90 days. Although for most first-time home buyers today, it is more common to accumulate a down payment from a combination of sources.

    No matter where your down payment comes from, your lender will need to verify your down payment prior to full approval. Because of this, a common question I hear from my clients is:

     

    “What documentation do I need to provide to verify my down payment?”

     

    How to verify your down payment source

    Here is a list of the most common down payment sources and how each is to be verified. You can use a combination of them, but you must provide the necessary verification for each.

    Savings

    All savings accounts must be verified by a 90-day history. Your accounts will need to clearly show your name and account number. Outside of your normal contributions, any large deposits will need to be explained. If you transferred money from one account to another, you will need to show a record of the money withdrawn from one account and deposited into another.

    Tax Free Savings Account

    Your TFSA must be verified by a 90-day history. Your accounts will need to clearly show your name and account number. Outside of your normal contributions, any large deposits will need to be explained. If you transferred money from one account to another, you will need to show a record of the money withdrawn from one account and deposited into another.

    Registered Retirement Savings Plan

    If you’re a first-time home buyer, you may qualify to use up to $25,000 from your RRSP to put towards your down payment. To see if you qualify, contact me today. Your RRSP must be verified by a 90-day history. Your account statements will need to clearly show your name and account number.

    Gift

    If you receive money as a gift from an immediate family member, you will need a signed gift letter stating that the money is a gift and it is not expected to be repaid at any time. You will need to provide proof that the money has been deposited into your account. In some cases, they will also want to see a record of the money withdrawn from your family members’ account and deposited into your account.

    Loan

    Through certain lenders, you can use borrowed funds towards your down payment. The lender will need to verify the terms of the loan to ensure you can afford for it and your mortgage.

    Credit Card/Line of Credit

    This source is similar to that of the one above, but here you usually only have to prove you can afford the payments for both the loan and the mortgage.

    Sale of Asset

    You can sell anything you own and put the money towards your down payment. But you will want to ensure the sale is documented properly. A bill of sale, copy of the cheque and proof that it has been deposited into your account will be adequate.

    Gifted Equity

    If you are purchasing a home from a family member, they have the option to gift you the equity of the home. This can then be used as your down payment.

    Inheritance

    This will need to be verified through documents from the lawyer. You will need to show the corresponding deposit to your account.

     

    If you have any further questions about acceptable down payment sources and how to prepare for an upcoming first-time home purchase, feel free to contact your local Tri-Cities Mortgage Broker, Milka Lukacevic of The Mortgage Centre TMK Team.