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General 1 year ago

Financial Gifts From Family Give Many First-time Homebuyers a Competitive Edge

Enter a room full of people in their late 20s or 30s and chances are high that you’ll overhear at least one of them talking about how difficult it is to afford a home in Toronto these days — especially for the average first-time buyer. 

Increased interest rates combined with decades of high inflation (which haven’t been offset by a similar boost in wages) make landing a home in the city, where, as of February 2023, the average price of a detached house sits just below $1,500,000, a financial impossibility for many would-be buyers. 

So what’s the solution? 

According to a recent study from CIBC, for a fortunate 30% of first-time homebuyers, their saving grace has been a gift from the bank of mom and dad (and/or other family members), more commonly known as “family gifting.”

And for Toronto buyers in particular, the average gift was significantly more than for other new homeowners across Canada — over $130,000 vs. approximately $85,000. 

But first-time buyers aren’t the only homeowners receiving help from family: Repeat buyers are also getting financial gifts. While just 9% of upgraders receive funds, the amount tends to be bigger — approximately $128,000 Canada-wide and $200,000 across Toronto.

The rise in family gifting is relatively new — and tax-efficient.

Between 2016 and 2026, families are expected to pass down over $1 trillion in wealth to their children and grandchildren, much of it in the form of gifts, which are one of the most tax-efficient ways to transfer wealth since, in Canada, there’s no cap on financial gifts and they’re tax-free.

Financial gifts are ideal for down payments.

Generally speaking, making a larger down payment and/or deposit on a home makes it easier to qualify for a mortgage and increases the competitiveness of your offer. 

EXPERT TIP: Gifts should be deposited as early as possible (at least 14 days ahead of a property’s closing date or 30 days if the money originates from outside the country)

If funds aren’t deposited within that time frame, the bank/lender may not accept the funds as proof of down payment, which could impact the purchase or closing date and be costly to deal with. 

Every gift should also be sent along with a letter from the giftor that outlines their name and relationship to the recipient, the gift amount, the recipient’s name, an explicit statement that the money doesn’t have to be repaid (because loans are not considered gifts), and signatures from all parties confirming this.

Remember that everyone’s situation is different, though.

It’s important to understand that the ins and outs of family gifting — especially when it comes to real estate transactions, which can be complex — will vary depending on your unique situation, including where the giftor lives, where the recipient lives, where they’re planning to purchase property, and more. So while the above information can serve as a general guide, please speak to your real estate and financial advisors to help plan for any future family gifts you plan to give or receive. 

This blog was written in collaboration with Joanna Lang, Managing Partner at Outline Financial, a boutique Toronto-based mortgage and insurance brokerage that pairs new and soon-to-be homeowners with great mortgages, the right insurance plans, and expert advice. If you have any specific questions about home financing or family gifting, please contact us at or email Joanna at