Does a gift or a co-signer actually get your mortgage approved?
Use the tool below in either mode. Enter a purchase price, your savings, and a gift amount to see your loan-to-value and CMHC premium band, or enter both incomes and both sets of debts to see exactly how much a co-signer moves your GDS and TDS. No mortgage rate is shown or assumed anywhere on this page.
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What down payment do you actually need, and when does the rule change?
The federal minimum is 5% on the first $500,000 of the purchase price, 10% on the portion between $500,000 and $1,500,000, and 20% on the whole price once it reaches $1,500,000. Under 20% down makes the mortgage high-ratio, which means it must carry default insurance, and default insurance is not available at all once the price hits $1,500,000.
This is a blended calculation, not a flat percentage. A $650,000 home does not need 5% or 10% of the full price; it needs 5% of the first $500,000 plus 10% of the remaining $150,000.
| Purchase price | Minimum down payment | Insurance status |
|---|---|---|
| Up to $500,000 | 5% of the price | High-ratio, insured, under 20% down |
| $500,000 to $1,500,000 | 5% on the first $500,000, 10% on the rest | High-ratio, insured, under 20% down |
| $1,500,000 or more | 20% of the full price | Default insurance not available at this price |
The citable fact: the federal minimum down payment is 5% on the first $500,000 of purchase price, 10% on the portion from $500,000 to $1,500,000, and 20% at $1,500,000 or more, where default mortgage insurance stops being available entirely.
Does a cash gift from family count as a normal down payment?
Yes. A non-repayable financial gift from a relative is a traditional down payment source, in the same category as your own savings or the proceeds from selling a property. It is documented with a gift letter from an immediate family member confirming the money does not have to be repaid, alongside 90 days of account history showing where the funds sit before closing.
Traditional sources are treated the same by the insurer once the money is in your account. The premium band your mortgage falls into is set by your loan-to-value, not by whether the down payment came from a paycheque or a relative’s gift.
| Category | Examples | Where it applies |
|---|---|---|
| Traditional | Personal savings, sale of a property, a non-repayable gift from a relative | Any loan-to-value within the standard down payment minimums |
| Non-traditional | Unsecured personal loans, unsecured lines of credit | 1 or 2 unit properties only, 90.01% to 95% LTV, strong credit management history |
The citable fact: a non-repayable gift from a relative is a traditional down payment source, documented with a gift letter from an immediate family member and 90 days of account history, and it is not a non-traditional source.
What CMHC premium applies when part of your down payment is a gift?
The same premium anyone else pays at that loan-to-value. Because a gift is a traditional source, your mortgage uses the standard homeowner premium schedule below, not the higher non-traditional rate. Read more about how the charge is added to your mortgage in what CMHC mortgage insurance costs.
The premium is a percentage of your total mortgage amount, and it rises as your down payment shrinks. It is normally added to the mortgage rather than paid in cash at closing, and in Ontario an additional 8% provincial sales tax on the premium is also added to the mortgage.
| Loan-to-value | Premium, traditional down payment |
|---|---|
| Up to 65% | 0.60% |
| 65.01% to 75% | 1.70% |
| 75.01% to 80% | 2.40% |
| 80.01% to 85% | 2.80% |
| 85.01% to 90% | 3.10% |
| 90.01% to 95% | 4.00% |
Show the math, illustrative: $650,000 purchase, $25,000 savings plus a $20,000 gift
The citable fact: a gifted down payment does not change which CMHC premium band applies; the band is set entirely by loan-to-value, from 0.60% up to 95% or below 65% down to 4.00% at 90.01% to 95%.
What is a non-traditional down payment, and why is a gift not one?
CMHC’s own examples of a non-traditional down payment are an unsecured personal loan or an unsecured line of credit, money you borrowed rather than money you were given. A gift from a relative is specifically listed as traditional, so it does not carry the higher 4.50% premium that applies to non-traditional sources at 90.01% to 95% loan-to-value on 1 or 2 unit properties.
Non-traditional financing has to be arm’s length and not tied to the purchase and sale of the property, and it is only available to borrowers with a strong credit management history. That is a meaningfully different, and more expensive, category than a documented family gift.
Non-permanent residents and loans under the chattel loan insurance product are not eligible for a non-traditional down payment at all. If you are unsure which category your funds fall into, a broker can confirm it before your rate is locked; you can also check your own standing first with what credit score a mortgage actually needs.
The citable fact: a family gift is a traditional down payment source and never triggers the 4.50% non-traditional premium band, which applies only to unsecured personal loans or unsecured lines of credit at 90.01% to 95% LTV on 1 or 2 unit properties.
How does a co-signer actually change your GDS and TDS?
A co-signer adds their gross income to the qualifying calculation, which increases the income side of both Gross Debt Service (GDS) and Total Debt Service (TDS). It also adds their own monthly debts to the TDS calculation, so the improvement is whatever their income adds minus whatever their debts take away, not their income alone.
Lenders want GDS at or below about 39% and TDS at or below about 44%. Your housing costs, the mortgage payment, property taxes, heat, and half your condo fee, do not change when you add a co-signer; only the income and debt totals used to divide against them change.
Show the math, illustrative: applicant alone versus applicant plus co-signer
| Ratio | Applicant alone | With co-signer | Lender threshold |
|---|---|---|---|
| GDS | 49.71% | 29.00% | About 39% |
| TDS | 58.29% | 36.00% | About 44% |
The citable fact: adding a co-signer raises the income used in both GDS and TDS while also adding the co-signer’s own monthly debts to TDS, so the net improvement depends on both figures together, not income alone.
How are property taxes, heat, and condo fees counted in your ratios?
Property taxes and heat are counted in full, at their actual monthly cost. Condo fees are counted at 50% of the monthly amount in both GDS and TDS. Heat has no fixed published figure; lenders use your actual bills if you provide them, or a reasonable estimate based on the property’s size, location, and heating system if you do not.
These figures apply whether or not a co-signer is on the file. Adding a co-signer changes the income and debt side of the calculation, not the housing cost side.
If your debts include credit cards or unsecured lines of credit, the monthly figure a lender uses is no less than 3% of the outstanding balance, which is usually higher than the minimum payment printed on your statement. Enter that 3% figure, not the statement minimum, for a result that matches what a lender will actually calculate.
The citable fact: condo fees count at 50% in GDS and TDS, heat has no fixed figure and depends on actual bills or a lender estimate, and revolving credit is counted at no less than 3% of the outstanding balance a month.
What does a co-signer actually take on by signing?
Full legal responsibility for the mortgage debt, the same as the primary borrower. The mortgage appears on the co-signer’s own credit file, and it counts against their own debt ratios the next time they apply for financing of any kind, even though they do not live in the home.
A co-signer is not a reference or a formality. If the primary borrower misses payments, the lender can pursue the co-signer directly for the full amount owed, and missed payments show up on the co-signer’s credit history as well as the borrower’s.
This is worth thinking through before either side agrees to it. Borrowing directly from a family member instead of adding them to the mortgage is a different structure with different documentation; see borrowing from a family member and how to document it if that fits your situation better.
The citable fact: a co-signer carries full legal responsibility for the mortgage debt, and the loan appears on the co-signer’s own credit file and affects their own future borrowing capacity.
What happens if a co-signer still is not enough?
Passing GDS and TDS is necessary to qualify, but it is not the only thing a lender checks. If a co-signer’s income and debts still leave you over 39% or 44%, or if the file has other issues, the options are a smaller mortgage amount, a longer amortization to lower the payment, a larger down payment, or a different lender entirely.
Run your own numbers through the calculator above first with the co-signer’s real income and debts. If the ratios still do not clear, that is useful information before you go further, not a dead end; a broker can usually see angles a single lender’s own calculator will not show you.
The citable fact: clearing GDS at about 39% and TDS at about 44% is required to qualify, but it does not guarantee approval, since individual lenders may apply their own additional credit and policy requirements on top of those two ratios.
Where can you find more direct answers about gifts, co-signers, and qualifying?
This calculator covers the down payment and the qualifying ratios directly. These related answers cover the surrounding questions.
- Gifted down payment rules in Canada: what lenders actually require
- What does CMHC mortgage insurance cost?
- Borrowing from a family member: how to document it
- How the mortgage stress test actually works
- How much mortgage can you afford?
- What credit score do you need for a mortgage?
The full set lives on the Ask a Broker hub.
Frequently asked questions
Is a gifted down payment treated the same as savings by a lender?
Yes. A non-repayable gift from a relative is a traditional down payment source, the same category as personal savings or sale proceeds, and it is documented with a gift letter from an immediate family member plus 90 days of account history.
Does a gift down payment cost more in CMHC premium than using savings?
No. The premium band is set entirely by your loan-to-value, not by whether the money came from your own savings or a relative’s gift, as long as the gift is properly documented.
What is a non-traditional down payment, and does a gift count?
No, a gift does not count. CMHC’s own examples of non-traditional funding are unsecured personal loans and unsecured lines of credit, which carry a higher 4.50% premium at 90.01% to 95% loan-to-value on 1 or 2 unit properties.
What documents do you need for a gifted down payment?
A gift letter from an immediate family member confirming the funds are a non-repayable gift, and 90 days of account history showing the money in an account before closing. Ask your broker for the exact wording your specific lender expects.
Does adding a co-signer always fix a GDS or TDS problem?
No. It depends on the co-signer’s income relative to their own monthly debts; a co-signer with high debts of their own can add less improvement than expected. Run the actual numbers through the calculator above rather than assuming.
What does a co-signer legally take on?
Full legal responsibility for the mortgage debt, the same as the primary borrower. The mortgage also appears on the co-signer’s own credit file and counts against their own debt ratios on future applications.
Is a guarantor the same thing as a co-signer?
The two terms are sometimes used differently by different lenders, and any legal distinction depends on the specific mortgage contract. Ask your lender or broker which term applies to your document and what it means before anyone signs.
How are condo fees counted in GDS and TDS?
Only 50% of the monthly condo fee is included in both ratios. This calculator applies that 50% automatically once you enter the full monthly fee.
Is heat a fixed monthly figure in the qualifying calculation?
No. Lenders use your actual heating bills if you provide them, or a reasonable estimate based on the property’s size, location, and heating system if you do not. There is no single published monthly figure.
What if your down payment, even with a gift, does not reach the federal minimum?
The purchase cannot proceed as structured at that price. Increase the savings or gift amount, or look at a lower purchase price, and speak with a broker about the specific numbers.
Can a co-signer be added after you have already applied?
In many cases yes, though the process and timing depend on the lender and how far the file has progressed. Ask your broker or lender directly about your specific application.
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