Understanding Down Payment Documentation: What to Expect and Why It Matters

Tim Lyon • October 20, 2025

The part of mortgage approval nobody likes but everyone needs

Confirming your down payment is one of the most tedious (and sometimes invasive) steps in getting a mortgage approved. Unfortunately, it’s also one of the most important. Here’s why lenders require it, what documents you’ll need, and how I make the process as easy as possible for you.


Why lenders need to confirm your down payment

There are two main reasons:

  1. To confirm you have enough funds.
    Lenders must verify that you have enough money to cover both the         down payment and closing costs.
  2. To comply with anti–money laundering (AML) laws.
    Canadian lenders must follow federal AML rules enforced by         FINTRAC (the Financial Transactions and Reports Analysis Centre of Canada) and, for insured mortgages, CMHC. These rules ensure your down payment isn’t connected to criminal activity.

To meet AML requirements, we need to provide a complete 90-day history of your down payment funds. Any transactions over $1,000 must be explained. If money was transferred from another account, we’ll also need a 90-day history of that account.


How the documentation process works

It can be a bit of a paper chase—but I handle most of it for you.

Here’s what we do:

  • You provide bank statements showing your down payment funds.
  • I’ll review and highlight anything that needs clarification.
  • If we need to trace funds from another account, I’ll ask for those statements too.
  • I’ll prepare the explanations and notes the lender requires—you just supply the paperwork.


Other common down payment scenarios

1. Gifts from family

If a family member is helping you with your down payment, we’ll need to document it. Lenders typically allow borrowers to receive gifts from immediate family members (parents, siblings, grandparents). If you're receiving a gift from non-immediate family, let me know so we can discuss your options.

The lender will require a gift letter stating that the money is a gift and not expected to be repaid. Each lender has their own template, so once we determine which lender we're working with, I'll provide the letter for you and your family member to sign.


2. Funds from outside Canada

If your down payment is coming from outside Canada, whether it's your own funds held abroad or a gift from family overseas, let me know immediately. Depending on where the funds are coming from, there may be restrictions on how long they need to be in Canada before they can be used.


3. Investments as your down payment

If your down payment is currently invested (for example, in stocks, mutual funds, or a TFSA), you do not need to liquidate the investments just for verification purposes. We simply need a 90-day history of the investment account.

However, it's important to make sure your down payment isn't locked in an investment or account that you won't be able to access when you need it. Common examples include:

  • Employer RRSPs that aren't accessible
  • Non-cashable GICs that haven't matured yet

Make sure you'll actually be able to get the funds out when it's time to close.


4. Non-traditional sources

Unfortunately, cryptocurrency, cash, and other non-traceable assets are not typically accepted as sources for a down payment. If you're planning to use one of these sources, let me know as soon as possible so we can put together a plan to make it work.


Quick Summary

  • Lenders require 90 days of statements to verify your down payment.
  • Every transaction over $1,000 must be documented.
  • Gifts are allowed from immediate family and need a signed gift letter.
  • Foreign funds may have holding period restrictions.
  • Investments can count, but must be accessible when needed.
  • Cash and crypto are not accepted as down payment sources.
  • I’ll handle the lender explanations—you just provide the documents.


Next Steps

The key to making down payment documentation as painless as possible is getting ahead of it early. If you have any questions about your specific situation, or if you're unsure whether your down payment will meet lender requirements, reach out now so we can work through it together.

Book a consultation or call 778-988-8409.


Glossary

AML (Anti–Money Laundering):
Government regulations designed to prevent illegal funds from entering the financial system.

Closing Costs:
Fees and expenses due at the time of closing, separate from your down payment.

CMHC (Canada Mortgage and Housing Corporation):
A federal agency that provides mortgage default insurance for high-ratio (under 20% down) mortgages.

Down Payment:
The portion of the purchase price you pay upfront when buying a home.

FINTRAC:
Canada’s financial intelligence unit, responsible for enforcing AML compliance.

Gift Letter:
A form confirming that funds received from a family member are a gift and don’t need to be repaid.

Tim Lyon

Mortgage Consultant

Mortgage Renewal vs. Refinance: Understanding the Key Differences

By Tim Lyon • January 28, 2026
If you own a property with a mortgage, you've probably heard the terms "renewal" and "refinance" thrown around. While both involve obtaining a new term for your mortgage, there are some important differences to understand. Let's break down what each one means and when you might use them. Understanding Mortgage Basics In Canada, when you take out a mortgage, the payments are typically spread over 25 to 30 years. This period is known as the amortization. However, unlike in the U.S., Canadians do not keep the same interest rate and payment terms for the entire amortization period. Instead, you have an initial term, usually 3 to 5 years, after which you need to renew into a new term. For example, if you have a 25-year mortgage with 5-year terms, you will need to renew your mortgage four times throughout its lifespan. It's also common to have a mix of different term lengths over the course of your mortgage. What is a Mortgage Renewal? A mortgage renewal occurs at the end of your mortgage term. When you renew, you start a new term with a new interest rate while keeping the remaining details of your mortgage the same. The key element here is that the mortgage charge registered on your property's title remains unchanged. A renewal is straightforward and typically does not involve any significant changes to your mortgage agreement other than a new interest rate. Think of it as hitting the "continue" button on your mortgage, but at new rates. What is a Mortgage Refinance? A mortgage refinance is different. When you refinance, you are making changes to your original mortgage agreement. This means paying off your existing mortgage and registering a new one on your property's title. Essentially, you are taking out a completely new mortgage for the same property. People commonly refinance to: Access the equity in their home for investments or major purchases Consolidate high-interest debt into their lower-rate mortgage Extend the amortization period to reduce monthly payments and improve cash flow Make significant changes to their mortgage structure It's important to note that refinancing is not allowed for insured properties (those with less than a 20% down payment at purchase). This means the maximum loan amount in a refinance is 80% of your property value. What About Switching Lenders? If you want to keep everything the same but switch lenders for a better rate, this is known as a transfer. A transfer is a type of renewal where the original mortgage charge is transferred from one lender to another. Depending on the lenders involved, you might be able to make minor changes (like extending the amortization or changing borrowers) without needing a full refinance. Why Timing Matters Your mortgage maturity date is when your current term ends. This is the ideal time to either renew or refinance. If you refinance or switch lenders before the maturity date, you will face a prepayment penalty. If you refinance, renew or transfer at maturity, there is no penalty. Real-World Example A homeowner with a $450,000 mortgage is reaching the end of their 5-year term. Their lender offers a renewal rate, but they also have $40,000 in high-interest credit card debt. Option 1: Renewal They accept the new term. Their mortgage stays the same. Their debt remains separate at high interest rates. Option 2: Refinance at Maturity They consolidate the credit card debt into the new mortgage. Their total monthly payments drop significantly, even after accounting for the new mortgage balance. In this situation, refinancing provides better cash flow and a simpler payment structure. Quick Summary Mortgage Renewal: Starts a new term for your existing mortgage Mortgage charge on your title stays the same Keeps all other terms the same aside from interest rate Can switch lenders at renewal through a transfer No penalty when done at maturity Mortgage Refinance: Pays off current mortgage and creates a new one New mortgage charge registered on your title Often resets the amortization period Can access equity or make structural changes Maximum 80% of property value for uninsured mortgages Incurs penalty if done before maturity Next Steps Understanding the difference between renewal and refinance helps you make informed decisions about managing your mortgage. If you have a renewal coming up or are considering accessing your home equity, now is a good time to explore your options. Whether you're looking to renew, refinance, or switch lenders, I'm here to help you navigate the process and find the best solution for your situation. Need help with your mortgage? Book a consultation or call 778-988-8409 . Glossary Amortization: The total time period over which you'll pay off your mortgage, typically 25-30 years in Canada. Insured Mortgage: A mortgage where the down payment was less than 20%, requiring mortgage default insurance to be added. Maturity Date: The end date of your current mortgage term, when you need to renew or refinance. Mortgage Charge: The legal registration of your mortgage on your property's title. Pre-payment Penalty: A fee charged by your lender if you pay off your mortgage before the end of your term. Refinance: Replacing your existing mortgage with a new mortgage, often with different terms or to access equity. Renewal: Starting a new term for your existing mortgage, typically just updating the interest rate. Term: The length of time your current mortgage contract is in effect, typically 3-5 years in Canada. Transfer: Moving your mortgage from one lender to another at renewal without changing other terms.

25 Year vs 30 Year Amortization: A Practical Guide

By Tim Lyon • January 25, 2026
Trying to choose between a 25 and 30 year mortgage amortization? Learn how each affects your payments, interest, and flexibility so you can decide with confidence.