Short answer
The letter explains the donor, relationship, purpose and non-repayable nature of the gift. Bank records show where the money came from and that it reached the buyer. One document does not replace the other.
The family concern behind the question
A buyer deposits a large gift days before closing but cannot show the donor account or transfer history. The family feels the lender is questioning a legitimate gift rather than verifying it.
What the verified guidance says
CMHC’s application guidance says a family gift requires a signed letter acknowledging its purpose and that it is non-repayable. Lenders also verify down-payment funds and source-of-funds history under their underwriting and compliance processes.
Where the answer can change
There is no single 90-day statement rule imposed by FINTRAC on every mortgage. Statement periods, donor relationships, gift forms and proof vary by lender and insurer. Cash without a traceable source creates a different risk from an electronic transfer between documented accounts.
A practical Ontario example
Illustration only: A parent transfers $80,000 from a maturing investment account to the child. The lender requests the parent’s investment statement, transfer receipt, buyer’s deposit record and gift letter. Providing the full chain early prevents the transaction from looking like an unexplained last-minute deposit.
Practical steps before anyone signs
Move funds through traceable accounts, avoid unnecessary transfers and keep statements showing each step. Tell the broker about every large deposit during the review period and provide the explanation before underwriting asks.
Five questions the family should answer
- Who will own the property, and in what percentages or title structure?
- Who is legally responsible for the complete mortgage and other housing costs?
- Is family money a genuine gift, a loan, shared equity or an ownership contribution?
- How will this affect each person’s credit, future borrowing, tax and estate plan?
- What is the documented route for removing support, buying someone out or selling?
Rajiv’s broker perspective
Family help can turn a decline into an approval, but approval is only the first test. I would look at both households after closing, not only the buyer’s qualification today. The lender’s documents decide who owes the mortgage. The title documents decide registered ownership. A family agreement can organize responsibilities between the parties, but it cannot reduce the lender’s rights. We should compare a lower purchase price, larger gift, co-signing, co-ownership, insured or conventional A lending, alternative/B lending and an equity solution only after the legal and cash-flow consequences are clear.
Related: Mortgage declined? Start here · Mortgage Knowledge Centre · Real Estate Centre · Updates & Rules Centre
Considering a parent, relative or friend on the mortgage?
Before anyone signs, send Rajiv the purchase price, down payment source, income gap, intended ownership and future removal plan. He can compare mortgage structures in plain language and identify the legal and lender questions that need answers.
Book a family-assisted mortgage strategy session Ask for an Ontario co-ownership lawyer referral