A Down Payment Sent From India: The Paperwork on Both Ends

The lender’s real question is where the money came from

Canadian financial institutions operate under anti-money-laundering rules that require them to establish the source of funds used in a purchase. This is not suspicion and it is not personal — it applies to everyone, and large transactions are routinely reported as a matter of process. What it means for you is that a large deposit appearing in your account shortly before closing, with no explanation attached, will stop your file.

In practice lenders commonly ask to see the account history covering the down payment for a period of months, so that the money can be seen accumulating or arriving with a traceable origin. Money that has been sitting in your own account for a long time needs little explanation. Money that arrived last week needs a complete one.

The operating principle is simple: every dollar of your down payment should be traceable to a documented origin. Plan for that from the beginning and it is paperwork. Discover it two weeks before closing and it is a crisis.

Gift or loan — decide, and say so honestly

If family is providing the money, the lender needs to know which it is. A gift is documented with a gift letter — a short signed statement from the giver confirming the amount, the relationship, and that the money is not repayable. Lenders have their own template and will usually want the giver’s identification and evidence the funds came from their account.

A loan is a debt. It has to be disclosed, and the repayment obligation is factored into the ratios the lender uses to decide how much you can borrow. That may reduce your approval, which is precisely why people are tempted to describe a loan as a gift.

Do not. Signing a gift letter for money that is in fact repayable is a false statement on a credit application. Separately, if your parents believe they have lent you money and expect either repayment or a share of the property, and nothing was written down, that is the beginning of a family dispute that surfaces at a sale, a separation or a death. Write it down at the start — see the guide on buying as a joint family for how ownership and contribution are actually structured.

Getting the money out of India: LRS, Form A2 and 15CA/15CB

India regulates outward remittance by resident individuals through the Liberalised Remittance Scheme, administered under the Reserve Bank of India’s framework. Under it, a resident individual may remit up to a specified limit per financial year for permitted purposes, and a purchase of property abroad or a gift to a relative abroad are among the categories that have been permitted — subject to the rules as they stand at the time.

The mechanics at the Indian bank generally involve Form A2, which declares the purpose of the remittance, and depending on the nature and amount of the transfer, Forms 15CA and 15CB, the latter being a certificate from a chartered accountant. Banks apply these requirements with some variation and will tell you exactly what they need for your specific case.

Two practical points. First, the annual limit is per resident individual — which is why a larger down payment is often assembled from more than one family member, each remitting within their own limit and each documented separately. Second, the rules, the limit and any tax collected at source on outward remittance have all been amended in recent years. Have the sending family member confirm the current position with their bank or their chartered accountant before planning around a number they remember.

The Canadian side of the paper trail

Send the money into your own Canadian bank account, not directly to your lawyer at the last minute. Your lender wants to see it land, sit, and be identifiable in your account history.

Keep everything: the Indian bank’s remittance advice, the SWIFT confirmation, the Form A2 copy, and the 15CA/15CB where they were required. Keep the sending family member’s bank statement showing the money leaving their account. Your lender may ask for any of these, and reconstructing them from an overseas bank months later is genuinely difficult.

Then keep the account clean. Do not move the funds between three accounts before closing, and do not mix them with other transfers. Every additional hop is another line an underwriter has to trace and another opportunity for the file to be paused for an explanation.

Timing and exchange rates

Start the transfer early. International transfers can take days, banks ask compliance questions, and a purchase agreement’s closing date does not move because a remittance is being reviewed. Aim to have the money in your Canadian account well before your financing condition deadline, not before your closing date.

The exchange rate is a real variable on a sum this size, and there is no clever answer to it. What is avoidable is being forced to convert on a specific day because you left it late — that removes what little flexibility you had.

What never works

Cash. Undocumented transfers from a third party who is not a close relative. Money that appears days before closing with no explanation. Funds routed through several accounts to obscure the origin. Each of these will either stop the mortgage or delay it past the closing date, and a missed closing on a firm agreement is a far more expensive problem than the paperwork ever was.

Robin walks through this at the very first meeting with families whose down payment is coming from India, in Gujarati or Hindi, and usually with the parents on a call — because the paperwork lives on their side, and it is far easier to organize before the money moves than after.