Giving Your Child a Down Payment in BC: How a Gift Works After You Downsize

If you are selling a house and buying a smaller home, you may have money left to help an adult child or grandchild buy a first home. You can give the money, lend it, co-sign the mortgage, or buy the home together. Each choice changes what the lender asks for, which tax rules apply, and what happens if a relationship ends. This guide explains the published rules and the questions to settle in your family before any money moves.

What does a lender count as a gift?

A down payment is the money a buyer puts toward the price of a home. The Financial Consumer Agency of Canada (FCAC), a federal agency, says the lender deducts it from the price and the mortgage covers the rest.

Canada Mortgage and Housing Corporation (CMHC) sells mortgage loan insurance, which protects the lender if the borrower cannot make the payments. CMHC's rule on the source of a down payment is one sentence. It says traditional down payments "can come from sources such as savings, the sale of a property or a non-repayable financial gift from a relative."

Lenders check this with a gift letter, a signed letter from the giver that says the money is a gift and will never be repaid. CMHC tells buyers what to bring to a mortgage appointment: proof of the down payment and of where it comes from. If a family member pays part of it, the buyer also needs "a signed letter from them acknowledging the purpose of the gift, and that it is non-repayable." CMHC adds that requirements differ from one lender to the next.

TD says its letter gives the date, the amount and the giver's relationship to the buyer. TD also limits who can give. For a mortgage above 80 per cent of the home's price or value, TD says the gift "can only come from an immediate family member" related to the buyer by blood, marriage, common law or adoption. At or below that level, TD says the gift could also come from another relative. If you are a grandparent, ask your grandchild's lender in writing whether it accepts a gift from you.

Sign a gift letter only when the money is a true gift. CMHC lists misrepresenting the source of a down payment among its examples of mortgage fraud. If you expect to be repaid, the lender has to be told that the money is a loan. Our post on gift letters for buyers explains your child's side of the process.

How much does your child need for a down payment?

CMHC sets the minimum down payment for an insured mortgage. It is 5% of the price when the price is $500,000 or less. Above $500,000, it is 5% of the first $500,000 and 10% of the rest. CMHC insures a homeowner loan only when the price is below $1,500,000.

The table applies those rules to benchmark prices. A benchmark price is a real estate board's price for a typical home of one type. The prices come from the Fraser Valley Real Estate Board (FVREB).

Source: benchmark prices from the Fraser Valley Real Estate Board, September 2026. Minimum down payment rules from CMHC. The last two columns are our own arithmetic.

Here is the arithmetic for the townhome: 5% × $500,000 = $25,000, plus 10% × $245,300 = $24,530, for a total of $49,530. A benchmark describes a typical home, so the home your child chooses can cost more than the benchmark or less.

What changes at 20% down?

FCAC says that if the down payment is less than 20% of the price, the buyer will typically need to buy mortgage loan insurance, at a fee of 0.6% to 4.5% of the mortgage amount. In FCAC's own example, that fee is shown as "Not required" at 20% down.

Which programs can your child use as well?

Your child may qualify for programs for first-time buyers. Each has a page on our site: the First Home Savings Account (FHSA), the Home Buyers' Plan for withdrawals from retirement savings, and the first-time home buyers' exemption from property transfer tax. Our pages on saving a down payment and on first-time buyers cover the rest.

Two published facts matter to a giver. The Canada Revenue Agency (CRA) says you cannot participate in another individual's FHSA: only the holder can participate directly and claim the contributions as a tax deduction. And the Province of BC gives a qualifying first-time buyer a full exemption from property transfer tax, the tax a buyer pays when a purchase is registered, when the home's fair market value is $835,000 or less. The Province says the purchase price is generally considered the best indicator of fair market value in most cases.

Is a gift of money taxed in Canada?

The CRA publishes a list of amounts you do not have to report as income. The list includes "most gifts and inheritances". The same page adds a note: income earned on those amounts is taxable.

That page is written for the person who receives money. For you as the giver, the tax question is where the money comes from.

Money from the sale of your home

The CRA says that if the home was your principal residence for every year you owned it, you do not pay tax on the gain, which is the profit from the sale. In short, a principal residence is the home you live in and designate on your tax return. You still have to report the sale to the CRA. Our post on tax when you sell your home explains the conditions and the forms.

Property other than cash

A different rule applies when you give something that can rise in value. The CRA calls this capital property. Its examples include cottages, securities such as stocks and bonds, and land or buildings used in a rental operation.

The CRA says: "If you give capital property as a gift, you are considered to have sold it at its fair market value (FMV) at the time you give the gift." You include any taxable capital gain on your tax return for the year of the gift.

So the CRA treats the gift of a cabin, a rental condo or shares as a sale by you. Selling an investment to raise cash for a gift is a sale as well. Ask your accountant before you do either.

The CRA's income tax guide for 2025 says you may have to report income from property, including money, that you loaned or transferred to your spouse or common-law partner, or to a related minor under 18. Ask your accountant whether any rule of that kind applies to your gift.

Should you give, lend, co-sign or buy together?

There are four ways to help.

A gift

You give the money and keep no right to get it back. The lender needs the gift letter and proof of the money. Could you pay for your own retirement if this money never returned?

A loan

Your child must repay you, so a gift letter cannot be used. CMHC puts borrowed down payment money in a separate group that it calls "non-traditional", with its own conditions. TD says a parent who wants to be repaid can lend the money as "a private loan or private mortgage", with a written agreement drawn up by a lawyer. Will your child's lender accept a family loan as part of the down payment? How do the payments to you change the mortgage your child can get?

Co-signing the mortgage

FCAC says a joint borrower is someone who signs a mortgage or loan agreement with one or more other persons, and that this "is also referred to as co-signing". A joint borrower becomes "equally responsible for repaying the unpaid balance". Could you make the full mortgage payment if your child could not?

RBC says that when a parent co-borrows, all applicants' names appear on the property's title. Title is the legal record of who owns a property. Ask your child's lender whether a co-signer must also be an owner, because ownership raises the tax questions below. Our post on a co-signer and a guarantor explains both roles.

Buying together

You become a registered owner of your child's home. Three published rules apply.

• Property transfer tax. The Province says a person who purchases or gains an interest in a registered property must pay the tax, unless an exemption applies.
• The first-time buyers' exemption. The Province says that if one or more of the purchasers do not qualify, "only the percentage of interest that the first time home buyer(s) have in the property is eligible." In the Province's example, two people buy an $835,000 home together and only one qualifies. The $8,000 exemption is multiplied by 50%, so the tax to pay is $14,700 minus $4,000, which is $10,700. One of the Province's conditions is that the buyer has never owned a principal residence anywhere in the world, which a parent who has lived in a home they owned cannot meet.
• Your own tax position. For 1982 and later years, the CRA says a family can designate only one home as its principal residence for each year, and a share of your child's home is a second property for you. Our post on tax when you sell your home explains that rule. Ask an accountant how it applies to your share.

Our post on joint tenancy and tenancy in common explains the two ways co-owners can hold title. What happens to your share if your child wants to sell, or when you die?

Source: CMHC, FCAC, TD, RBC and Province of BC pages linked in this guide. The questions are the FRIVE team's suggestions.

What happens to the gift if your child's relationship ends?

This is family law. We are real estate agents, so we report what the law says. A family lawyer explains what it means for your family.

BC's Family Law Act applies to married spouses. For dividing property, section 3 also counts two people who have lived together in a marriage-like relationship for a continuous period of at least 2 years. Section 81 says that on separation each spouse has a right to a half interest in all family property, unless an agreement or a court order provides otherwise. Under section 84, family property is all property that at least one spouse owns on the date they separate, apart from what section 85 excludes.

Section 85 lists "excluded property". In plain words, the list is:

• property a spouse acquired before the relationship began
• inheritances to a spouse
• "gifts to a spouse from a third party"
• certain awards for injury or loss, insurance payments and trust interests that the section describes
• property derived from anything on this list, or from disposing of it

Three other parts of the Act affect a gift:

• Section 84 counts as family property "the amount by which the value of excluded property has increased" since the relationship began or the property was acquired, whichever is later.
• Section 85 says the spouse who claims that property is excluded "is responsible for demonstrating" it. We suggest that your child keep the gift letter and the bank records of the transfer.
• Section 96 lists limited cases in which the Supreme Court may still divide excluded property.

How the law treats a gift that was used to buy a family home depends on the facts: who received the gift, how the home is owned, what the couple agreed, and which records exist. We cannot predict the result for your family. Our advice is that you and your child each see a family lawyer before the money moves. Ask whether the gift letter should name your child alone, and whether your child and their partner need a written agreement.

How do you keep a gift fair to your other children?

A gift to one child affects what the others receive, now or later. Answer these questions before you give.

• Will each child receive the same amount? On the same day, or when each one buys?
• If one child receives a gift now, should your will give the other children more later?
• What will you do for a child who never buys a home?
• Do all your children know what you gave, and why?

A lawyer who prepares wills can tell you how to record a gift so that your will matches your wishes. See that lawyer before you give.

How much can you afford to give, and when?

Work out what you need first

This part is the FRIVE team's opinion. A gift cannot be taken back, so decide what you need before you decide what to give.

1. Find out what your house would sell for. You can ask us for a free home value.
2. Enter that price and the price of your next home in the downsizing calculator. It subtracts the costs of selling and buying, and shows the money left over.
3. From the money left over, set aside a reserve for yourself: living costs above your pension income, repairs, health costs, and the monthly fees of the new home.
4. Give from what remains.

We suggest waiting until your own sale and purchase are both firm, which means every condition has been removed in writing. Review the reserve with a financial planner before you name an amount to your child.

Put the dates in order

If the gift comes from your sale, three events must happen in this order: your sale completes, the gift reaches your child's account, and your child's purchase completes. BC Financial Services Authority says the completion date is the day ownership transfers to the buyer in exchange for the price.

Your child's lender asks for proof earlier. CMHC tells buyers to bring financial statements for the past several months when they apply. National Bank says that in most cases "the funds must have been in your account for at least 90 days prior to the mortgage application", where "your account" means the buyer's. Your child should ask a mortgage broker, the person who arranges a mortgage with a lender, three things early: what proof the lender needs, by which date, and whether a signed gift letter with your sale contract is accepted until the money arrives.

If your child's purchase completes before your sale, the gift has to come from other savings, or one of the dates has to change. Our post on selling first or buying first explains how completion dates are set, and the downsizing checklist puts every step in order.

This guide is general information about published rules. Confirm tax questions with your own accountant, legal questions with your own lawyer, and lending questions with your child's mortgage broker before any money moves.

Next step

A gift starts with one number: the money you will have left after you sell and buy. Ask us for a free home value. Then enter that price in the downsizing calculator, along with the price of the home you want. You do not have to sell with us. The rest of our downsizing guide covers tax, strata fees and six Fraser Valley cities.