Mortgage Articles
Down Payment Requirements
Requirements of Canada Mortgage and Housing Corporation and the Major Lending
Institutions.
by Heather Paterson
The Mortgage Coach
On or before the issuance of a lending commitment you will be asked to provide
“Confirmation of Down Payment” from Non-Borrowed funds in one or more of the following
forms.
Down Payment from the Sale of an Existing Property
You will be required to provide a copy of the unconditional “Purchase and Sale
Agreement” on your existing property. This needs to be accompanied by a copy
of the statement of “Mortgage Balance” on any mortgages presently held against
the property. The difference between the sale price and the mortgages owing will
substantiate the funds available for your down payment.
Down Payment from a Gift
All or part of the minimum equity requirement may be provided by way of financial
gift as long as all the following conditions are met:
a) The donor is an immediate relative of the borrower
b) The Approved Lender has verified that the money is a genuine gift
c) The Approved Lender has verified that the funds are in the borrower’s
possession prior to the time of the application to CMHC or GE Capital for mortgage
loan insurance.
The Approved Lender will verify the authenticity of the gift by obtaining written
confirmation, signed by the donor and the borrower, which will include the following
points:
a) the money is a genuine gift from the donor and does not ever have to
be repaid
b) no part of the financial gift is being provided by any third party having
any interest (direct or indirect) in the sale of the subject property.
The Approved Lender is not required to forward this confirmation to CMHC, but
is expected to retain the information in its paper or electronic loan record.
Down Payment From Your Own Resources
You must supply verification satisfactory to CMHC or GE Capital and the lender
of accumulated savings from non-borrowed funds. This may be in the form of a
copy of your bankbook confirming a balance equivalent to your down payment including
the amount of deposit confirming the savings of said amount for a period of not
less than 3 months.
Should a substantial deposit have been made recently, the source of such funds,
i.e., Bonds, Stocks, G.I.C.’s or RRSP receipts will also be required.
**Borrowers are also required to confirm that they have an extra 1.5% of the
purchase price of the property to cover the closing costs of the transaction.
To avoid any delay in funding your transaction we suggest that you provide a
form of the above noted confirmation at least 14 days prior to your closing date.
If there is “one” thing that causes Problems which may delay the closing of your
house is Verification of the Down Payment!!
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