Experts Questions and Answers

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If there is ‘one’ thing that causes problems that can delay the closing of your house it’s verification of the Down Payment. Here’s why: To meet the Requirements of CMHC or GE, 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 a financial gift, as long as all of 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; and (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 GENCOR for mortgage loan insurance. The Approved Lender will verify the authenticity of the gift by obtaining a 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 C.M.H.C. or G.E. and the lender of accumulated savings from non-borrowed funds. This may be in the form of a copy of your bank book 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. 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.