Family help for down payment barely increases

Over the last few years critics have complained that fewer and fewer Canadians rely on personal savings for their down payment, preferring to get help from friends and other sources. But a new survey shows that this just isn’t the case.

Released in mid-November by the Canadian Association of Accredited Mortgage Professionals, the annual survey shows that the average down payment made by first-time homebuyers hasn’t changed much in the last three decades—bouncing between 20% and 22% since 1980. However, the source of that down payment has shifted over the years.

Before 1980, first-time homebuyers relied primarily on:

personal savings for the bulk of their down payment (54%)
gifts from family members (5%)
family loans (9%)
loans from financial institutions (26%)
loans from employers (1%)
other sources (4%)
withdrawals from an RRSP (2%)

Between 2010 and 2014, the source of down payment shifted:

personal savings for the bulk of their down payment (40%)
gifts from family members (11%)
family loans (6%)
loans from financial institutions (27%)
loans from employers (1%)
other sources (2%)
withdrawals from an RRSP (12%)

However, if you were to include withdrawals from RRSPs as part of savings, then there’s only been a 2% drop in the amount of personal savings used by first-time homebuyers to make a down payment—from 54% in pre-1980, to 52% in the 2010 to 2014 period.

The survey also shows that the reliance on family loans or gifts has gone up from 14% in the pre-1980 era to 17% starting in 2010. But this increase is relatively small when you take into consideration that family money makes up a much smaller portion of a first-time homebuyers down payment. For example, if a first-time buyer bought a $450,000 home, with a 21% down payment of $94,500, then the family portion of the down payment is just over $2,800 in the 2010 to 2014 period, when compared to pre-1980.

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