Down Payment Loan Agreement

The gift-letter fork in the road

Every family down payment hits the same fork. The mortgage lender asks where the money came from, and there are only two honest answers: a gift (sign a letter saying it never comes back) or a loan (disclose it, and let it count in the debt ratios). The expensive mistake is the third path — signing “gift” while privately expecting repayment. That contradiction can undermine the mortgage file and the repayment claim at the same time.

Choose deliberately, once. If the answer is “loan,” this page’s document is how you make it real.

What the agreement locks down

• That it’s a loan at all — stated plainly, dated before closing, signed by both sides. Courts weigh evidence from the time of the advance far more heavily than recollections years later.
• A repayment shape that fits a new homeowner: modest monthly amounts, a start date after closing costs settle, or repayment on a future sale or refinance — all expressible in the builder.
• Divorce insulation. If the buyer’s relationship ends, a documented family debt generally comes off the top before assets divide; an undocumented “gift” stays in the pot. Half of an undocumented $150,000 is a painful arithmetic lesson.
• Estate clarity. The balance can later be collected, deducted from an inheritance, or formally forgiven — keeping siblings even either way.

Free to draft, $29 to sign — before a closing-cost budget notices

Answer plain questions, and the agreement assembles itself with your province’s rules applied — age of majority, limitation period, the 35% interest ceiling. Both of you e-sign from your phones, and the sealed PDF carries a tamper-evident certificate. Drafting is free; the single $29 certification fee defaults to the borrower. For advances large enough to secure against the property, add a real estate lawyer to the team — that layer is worth paying for.