When family abroad sends money for a Canadian house, gift vs loan decides the mortgage paperwork (gift letter vs disclosed debt) and the later tax and repayment story. Lenders typically want the funds sitting in your account about 90 days, and foreign transfers need a clear paper trail either way.
If your parents or relatives abroad are helping you buy a home in Canada, one question decides how it's handled: is the money a gift or a loan? The answer shapes your mortgage, your taxes, and — because the money crosses a border — the paperwork you'll need.
For many newcomers and first-time buyers, family abroad is the only way the down payment math works. That's completely normal and completely allowed — Canada lets you bring in foreign funds to buy property. But two systems are watching how the money moves: your mortgage lender (which cares whether it's a gift or a debt) and Canada's anti-money-laundering rules (which care that the money is traceable and legitimate). Get both right and it's smooth. Get them wrong and your closing can stall.
First: is it a gift or a loan?
This is the same fork as for any family down payment — the overseas part doesn't change it:
- It's a gift if your family never expects to be repaid. Your lender will want a signed gift letter stating the funds don't have to be paid back. A gift doesn't add to your debts, so it won't reduce how much mortgage you qualify for.
- It's a loan if your family expects the money back. That's real debt — it can lower how much you qualify for, and it should be set out in a written loan agreement. The lender must be told, so it's accounted for honestly.
You can read the full breakdown of how each affects your mortgage and taxes in our guide to family down payments: gift or loan. The short version: you can't have both at once on the same dollars, and you can't sign a gift letter for money that's secretly a loan.
The part that's different for overseas money: AML and the 90-day rule
Because the funds originate outside Canada, lenders apply extra scrutiny under anti-money-laundering (AML) rules overseen by FINTRAC. Expect the following:
- The 90-day "seasoning" rule. Foreign funds typically need to sit in your Canadian bank account for about 90 days before closing (versus roughly 15–30 days for money already in Canada). Plan early — wires and currency conversion take time.
- A clear paper trail. You must be able to show where the money came from: wire-transfer receipts, the sender's details, and often the donor's own 90-day bank history proving the funds were theirs.
- Large-transfer reporting. Banks report international transfers over $10,000 to FINTRAC. This is routine — not a problem — but it's why documentation matters.
- Source-of-funds proof. The burden is on you to show the money was obtained legitimately. Keep every record.
The most common overseas mistake
Wiring the money in too close to closing. A large foreign deposit a week before you need it can trigger an AML review and delay — or derail — your approval. Move the money early (90+ days ahead) and keep every receipt.
Does the CRA tax money sent from family abroad?
Generally, no — Canada has no gift tax, and a genuine gift from family (whether they live in Canada or overseas) is not taxable income to you. There's no limit on the amount. A few honest caveats:
- Income the money earns (if you invest it) is taxable in the normal way.
- If it's a loan used to invest, CRA attribution rules can apply unless the loan charges at least the CRA prescribed rate. For a home you live in, this usually isn't a factor.
- Tax in the sender's country is a separate question — some countries tax outbound gifts or large transfers. Your family abroad should check the rules where they live.
The AML documentation is about proving the money is clean and traceable — it is not a tax. Keeping good records protects you if the CRA ever asks how a large purchase was funded.
If it's a loan, document it — this is where it matters most
When family abroad lends rather than gifts, a written agreement does double duty: it records the real intention (a repayable loan, not a gift), and it protects the family's money across a border and across a relationship that might change. It states the amount, currency, repayment terms, and that both sides agreed. A clear loan agreement is also what lets you be honest with your lender instead of mislabeling the money.
Can my parents abroad loan me money for a down payment?
Yes. Parents living overseas can lend you a down payment. Treat it as a real loan: put it in a written agreement, expect the lender to require the funds in your account ~90 days ahead with full documentation, and tell your lender it's a loan so it's accounted for properly. The rules are the same across every province — the AML and 90-day requirements are federal — though the loan agreement itself is governed by your province's law.
Your province
The mortgage and AML rules above are federal and apply everywhere in Canada. The loan agreement itself is governed by your province's law — here are the province-specific guides:
Lending across borders? Put it in writing.
If family abroad is lending you the money, LendRight turns it into a clear agreement built for Canadian law you both sign digitally — from anywhere. Free to draft.
Create my loan agreement →This article is general information about Canadian mortgage, tax, and anti-money-laundering practice, not legal, mortgage, or tax advice. Requirements vary by lender, and tax rules in the sender's country are separate. Confirm timing and documentation with your mortgage professional, and consult a licensed lawyer or tax advisor for a large or cross-border arrangement. Sources include FINTRAC/AML guidance reflected in current Canadian mortgage-broker practice and the CRA's position that Canada has no gift tax.
We write plain-language guides on lending between family and friends in Canada, reviewed against current provincial and CRA rules. LendRight is not a law firm — this is general information, not legal advice.