Single Mom Gifted 5% Down Payment from her Parents

Single Mom Story

In late 2013, I met a lovely single mother named Kim*. She was 27 years old, with no pets, and had been working as a nanny for the last four years. At the time, she was renting a small basement suite.

Kim was in desperate need of a new home for her and her three-year-old son. Her landlord was increasing the rent and it just didn’t make sense for her to stay renting anymore.

She had never purchased a home before, and as a first-time homebuyer, she only had to have a 5% down payment. This was great news for her as she figured she would be stuck renting forever without a massive sum of money to put down.

She needed a home in Edmonton’s west end to be close to her son’s daycare and her parents. She also didn’t want to be on the west side of the Anthony Henday as she didn’t drive and this would cause a few issues for her daily commute on public transit.

We got started finding her ideal home right away! I connected her with a trusted mortgage broker and got the pre-approval process started immediately. This is a very important first step to ensure that there are no surprises down the road. The pre-approval established that Kim had great credit, but almost no cash for the down payment. She immediately lost hope.

I let her know that there are other options and to stay positive. I took her for coffee and we talked it out. I knew she was very close with her mom and dad through the conversations we previously had while building a rapport together. I explained that her parents could gift her the 5% down payment, and that if they agreed, we would be okay.

Family can gift buyers their down payment as long as they also send a letter to the lender (or mortgage broker) saying that they understand this is a gift and that they do not expect the money to be repaid by the buyer, in this case, Kim. Lenders want to make sure the money is a gift and not a loan. Kim and her family had a personal arrangement for a repayment plan.

With that roadblock out of the way, we began to view homes to suit her needs, which included: a minimum of 2 bedrooms, 1 full bath, some sort of garage or underground parking, priced between $250,000 and $285,000. There was no shortage of wonderful apartment-style condos in Edmonton for her to look at. We viewed 7 homes and 2 brand new builds.

After two weeks of searching, Kim and her son fell in love with a great condo in the Ormsby Place area. We immediately decided to write an offer. She had one week to close the deal – she needed to read all of the condo documents fully to ensure the management company was in good standing, and to get her financing all put together.

With my connections to a trustworthy mortgage broker and a speedy condo document review company, (you can read them personally if you wish to save money) she was able to remove conditions and buy her first home!

On possession day we celebrated with a big group hug…just another reason I love my job!

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