Canada Mortgage and Housing Corporation and the other mortgage insurers use that letter to confirm the funds are not a disguised loan, since an undisclosed second debt changes what the buyer can actually afford to carry, including against a minimum down payment that runs 5 percent to $500,000 then 10 percent above that.
The letter is usually signed by the donor and dated close to the deposit or closing, and a lender may also ask for a bank statement showing the funds actually moved from the donor's account, so the paper trail matters as much as the wording.
Joel Dyck can point a buyer to a mortgage broker who has the exact gift letter template their lender wants before the funds are transferred. Get your hand-reviewed valuation from Joel Dyck.