Down Payment Sources Are Being Reviewed More Strictly — What Buyers Must Prepare For

In today’s housing market, securing a mortgage is no longer just about showing you have the money. Lenders across Canada—especially major banks—are tightening their review of down payment sources. This shift is catching many buyers off guard, particularly first-time purchasers and families relying on gifts or overseas funds. Understanding these changes upfront will save you time, stress, and potential disappointment.

Why Lenders Are Becoming Stricter

Over the past two years, federal regulators and financial institutions have increased their focus on anti-money laundering (AML) compliance and borrower risk. With elevated home prices and interest rates creating a more cautious lending environment, banks want to verify that every dollar entering a mortgage transaction is legitimate, traceable, and aligned with the borrower’s financial profile.

This isn’t about suspicion — it’s about regulatory pressure and risk management. The result? A deeper dive into your bank statements, income history, and the origin of the down payment than buyers have been used to.

What Lenders Now Commonly Ask For

Expect the documentation process to feel more thorough. In most cases, lenders require:

1. Full 90-day bank statements

Any large deposits within that period must be explained and supported. A simple transfer isn’t enough; banks want a paper trail.

2. Proof of savings from regular income

If part of the down payment comes from your employment income, lenders look for consistent saving patterns, not sudden cash injections.

3. Gift letters — plus verification of the giver

Gifted down payments are still allowed, but lenders now want:

• A formal signed gift letter

• Confirmation of the donor’s relationship to you

• Evidence that the donor legitimately held the funds. Some lenders even request the donor’s bank statements.

4. Documentation for overseas funds

This category triggers the highest level of scrutiny. Buyers should expect to provide:

• International bank statements

• Currency exchange slips

• Legal documentation showing the origin of the money

• A clear timeline of when funds entered Canada

If the paper trail isn’t strong, approval can stall quickly.

How Buyers Should Prepare in Advance

If you’re preparing to buy in 2026, proactive planning is essential. Here’s what will put you in the best position:

Organize your financial story early. Before you even meet a mortgage broker, gather your statements, locate explanations for large deposits, and ensure you can verify every source.

Avoid unnecessary transfers .Moving money between accounts only complicates the review. Keep your down payment funds in one account whenever possible.

Document gifts immediately. If family support is part of your plan, complete the gift letter early and be prepared to show the donor’s account history. Surprises at the underwriting stage can cause delays.

Transfer overseas funds ahead of time. Do not wait until the offer is accepted. Move funds into Canada early so the 90-day history is clear and consistent.

Work closely with a mortgage professional. A strong broker will help you anticipate questions before the bank asks them, allowing you to avoid red flags that can impact approval.

Final Thoughts

For buyers entering the market, stricter down payment reviews might feel overwhelming, but with preparation, the process becomes much smoother. Transparency and organization are now more important than ever. Banks want clarity, and the buyers who provide it upfront will face fewer challenges during the approval process.

With these changes shaping the 2026 lending landscape, planning ahead is your greatest advantage. If you’re considering a purchase, take the time to prepare your financial documentation now—you’ll thank yourself later when the right home appears and your mortgage approval moves forward without friction.