Closing Costs for Buyers in Ontario: How Much Money Do You Actually Need?

Your Down Payment Isn't the Only Money You'll Need to Buy a Home

One of the most common surprises for buyers—especially first-time buyers—is discovering that having enough money for the down payment doesn't necessarily mean you have enough money to close.

There are additional expenses involved in purchasing a home in Ontario.

Some may be relatively small.

Others can amount to thousands—or potentially tens of thousands—of dollars depending on the purchase price, location and property.

That's why one of the conversations I like to have with buyers before we start seriously shopping is:

How much cash will you actually need to complete your purchase?

Let's break down some of the costs you should be prepared for.

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1. Your Deposit

First, let's clear up one of the biggest sources of confusion.

Your deposit is not an additional cost on top of your purchase price.

When you submit an offer, the Agreement of Purchase and Sale will specify the amount and timing of the deposit.

If the transaction proceeds to closing, that deposit is ultimately credited toward the purchase price.

For example, if your total required down payment is $100,000 and you've already provided a $50,000 deposit, you don't suddenly need another $100,000 as your down payment.

Your lawyer and lender will account for the funds already deposited when determining the balance required for closing.

However, the important planning issue is timing.

You need to have the deposit funds accessible when they're required under the agreement.

That's why we discuss the deposit before submitting an offer—not after it's accepted.

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2. Your Down Payment

Your down payment is the portion of the purchase price you're funding yourself rather than through the mortgage.

The amount required depends on your purchase price, financing structure and eligibility.

Some buyers purchase with less than 20% down, while others choose or are required to contribute 20% or more.

Your mortgage professional should establish your required down payment before you begin seriously shopping.

But remember:

Don't use every dollar you have for your down payment without considering what else you'll need to close and comfortably move into the property.

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3. Ontario Land Transfer Tax

Ontario buyers generally need to account for provincial land transfer tax when purchasing real estate.

The amount is based on the property's purchase price and applicable provincial rules.

For many buyers, this is one of the largest closing expenses outside of the down payment.

Eligible first-time home buyers may qualify for a refund of some or all of the Ontario land transfer tax, up to the applicable program limit.

Eligibility requirements matter, so don't assume you're entitled to the refund simply because this is the first property you're personally purchasing.

Your lawyer should confirm how the rules apply to your particular transaction.

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4. Buying in Toronto? There May Be an Additional Land Transfer Tax

This is an important distinction.

If you're purchasing a property within the City of Toronto, there is a municipal land transfer tax in addition to Ontario's provincial land transfer tax.

That means someone purchasing a property in Toronto may face substantially different closing costs than someone purchasing a similarly priced property in Burlington, Oakville, Milton, Georgetown, Hamilton or Niagara.

Eligible first-time buyers may have access to applicable rebates, but again, eligibility should be confirmed before relying on them in your budget.

Location matters when calculating closing costs.

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5. Real Estate Lawyer Fees and Disbursements

You'll need a real estate lawyer to complete your purchase.

Your lawyer's account may include professional fees as well as various transaction-related disbursements.

Depending on the transaction, your lawyer may deal with matters such as:

• Title searches
• Registration
• Mortgage instructions
• Transfer documents
• Adjustments
• Title insurance
• Closing funds
• Other transaction-specific legal requirements

Rather than guessing what legal fees will be, I recommend obtaining an estimate directly from your lawyer.

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6. Title Insurance

Title insurance is commonly obtained as part of an Ontario real estate closing.

It can provide protection against certain title-related risks, subject to the specific policy terms and exclusions.

Your real estate lawyer can explain:

• Whether title insurance is being obtained
• What the policy covers
• The cost
• Any transaction-specific title concerns

This is a legal matter, so questions regarding the extent of coverage should be directed to your lawyer.

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7. Property Tax Adjustments

This one surprises buyers because it isn't necessarily a “fee.”

It's an adjustment.

Suppose the seller has already paid property taxes covering a period extending beyond the closing date.

The buyer may need to reimburse the seller for the portion applicable after the buyer takes ownership.

Your lawyer calculates these adjustments as part of the closing statement.

The same concept can apply to certain other prepaid expenses depending on the property and agreement.

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8. Condo Fee Adjustments

If you're purchasing a condominium, there may also be adjustments relating to condominium fees.

For example, if the seller has already paid the condominium fees for a period extending beyond closing, the appropriate amount may be adjusted between buyer and seller.

Your lawyer will calculate the applicable adjustment.

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9. Status Certificate Review

If you're purchasing a condominium, reviewing the condominium corporation's status certificate and related documentation can be an important part of your due diligence.

Depending on the transaction, there may be costs associated with obtaining and/or reviewing these documents.

A lawyer experienced in condominium transactions should review the documentation and advise you on legal issues such as:

• Financial matters
• Common expenses
• Insurance
• Litigation
• Rules
• Unit-specific issues
• Other condominium corporation matters

The exact scope of the review should be discussed with your lawyer.

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10. Home Inspection

A home inspection is another expense buyers may need to budget for.

Inspection costs vary depending on the property and scope of inspection.

Additional specialized inspections may also be recommended depending on the property.

These could potentially involve:

• Septic systems
• Wells
• Pools
• Electrical systems
• Structural concerns
• Environmental concerns
• Other specialized assessments

This is money spent before closing, so it needs to be part of your overall purchase budget.

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11. Home Insurance

Your lender will generally require appropriate property insurance to be in place before mortgage funds are advanced.

Insurance costs can vary substantially based on factors such as:

• Property type
• Location
• Age
• Replacement cost
• Claims history
• Electrical systems
• Plumbing
• Heating systems
• Coverage selected

Don't leave insurance until the night before closing.

Certain property characteristics can affect insurability, and that's something you want to discover before you're scrambling to close.

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12. Appraisal Costs

Depending on your financing, your lender may require an appraisal.

Sometimes the lender absorbs the cost.

Sometimes the borrower pays it.

Your mortgage professional can tell you whether an appraisal is expected and whether there is a cost to you.

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13. Mortgage-Related Costs

Depending on your mortgage structure, there may be other financing-related costs.

These should be reviewed directly with your mortgage professional.

The key question to ask is:

“Aside from my down payment, what other mortgage-related funds or fees should I expect before closing?”

Get the answer before committing to the purchase.

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14. Moving Costs

Closing costs don't end at the lawyer's office.

You still have to move.

Budget for things such as:

• Movers
• Moving truck
• Boxes and supplies
• Storage
• Elevator bookings
• Deposits
• Cleaning
• Temporary accommodation if required

For condominium buyers, check the building's moving procedures well in advance.

Some buildings require elevator reservations and refundable deposits.

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15. Immediate Homeownership Expenses

Then there are the expenses nobody calls “closing costs,” but they still hit your bank account immediately after closing.

You may suddenly need:

• Window coverings
• Furniture
• Appliances
• Lawn equipment
• Snow removal equipment
• Tools
• Locks
• Security systems
• Paint
• Minor repairs
• Utility setup
• Internet
• Household supplies

This is why I don't want buyers arriving at closing with $12 left in their bank account.

Getting the keys should be exciting—not financially terrifying.

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So, How Much Should You Budget for Closing Costs in Ontario?

You'll often hear general rules of thumb expressed as a percentage of the purchase price.

Those estimates can be useful for very preliminary planning, but I don't like relying on them once a buyer is actually preparing to purchase.

Why?

Because consider two buyers purchasing homes at the same price.

One is an eligible first-time buyer purchasing in Georgetown.

The other is purchasing in Toronto and doesn't qualify for first-time buyer rebates.

Their closing costs could be materially different.

Property type, financing, location and eligibility all matter.

So instead of relying exclusively on a percentage, I prefer to build a property-specific closing-cost estimate before the offer whenever possible.

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A Better Way to Think About Your Buying Budget

Instead of asking:

“What's the maximum mortgage I qualify for?”

Ask:

“How much can I comfortably spend while still having enough cash to close and enough money left afterward?”

Those are very different questions.

Imagine you have:

Savings → Deposit → Remaining Down Payment → Closing Costs → Moving Costs → Emergency Reserve

All of those pieces need to work together.

A buyer who technically qualifies for an $800,000 purchase may decide that purchasing at $725,000 gives them a much more comfortable financial position.

The goal isn't simply to buy the most expensive property the bank will finance.

The goal is to buy a home that makes sense within your overall financial plan.

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Don't Discover Your Closing Costs After Your Offer Is Accepted

This is one of the most important things I want first-time buyers to understand.

By the time your offer is accepted, you have already made a significant financial commitment.

That's not the ideal time to begin asking:

What's land transfer tax?

How much is my lawyer?

Do I need another $10,000?

When is my deposit due?

We want those conversations happening before you offer.

Transparency around costs should be part of the buying process from the beginning.

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Buying Your First Home in Ontario?

Before we start booking showings, let's build the financial picture.

The Ana Bastas Real Estate Team helps buyers throughout Georgetown, Halton Hills, Milton, Oakville, Burlington, Hamilton, Niagara, the GTA and Ottawa understand not only what they can purchase—but what it may actually cost to complete that purchase.

We'll coordinate with your mortgage professional, lawyer and other qualified professionals so you can make informed decisions throughout the transaction.

Know the Numbers Before You Make the Offer.

→ BOOK A BUYER STRATEGY CALL

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FAQ SECTION

What closing costs does a buyer pay in Ontario?

Depending on the transaction, costs can include provincial land transfer tax, legal fees and disbursements, title insurance, property-tax adjustments, inspection expenses, insurance and financing-related costs. Toronto purchases can also be subject to municipal land transfer tax.

Is my deposit part of my down payment?

The deposit is credited toward the purchase price if the transaction closes and therefore forms part of the funds you're contributing toward the purchase. It isn't an additional amount added to the purchase price.

Do first-time home buyers pay land transfer tax in Ontario?

Eligible first-time buyers may qualify for a land transfer tax refund. Eligibility and current limits should be verified for the individual buyer before purchasing.

Do buyers pay Realtor commission in Ontario?

Real estate remuneration depends on the representation agreement and the particular transaction. Buyers should review their representation agreement with their brokerage and understand how the brokerage will be compensated before making an offer.

Do I need home insurance before closing?

Where a purchase is mortgage-financed, the lender will generally require appropriate property insurance before advancing mortgage funds. Buyers should confirm the lender's specific requirements.

What are adjustments on closing?

Adjustments allocate certain prepaid or outstanding property expenses between buyer and seller as of the closing date. Property taxes and certain condominium expenses are common examples.

Do I need more money than my down payment to buy a house?

Yes. Buyers should budget for applicable closing expenses and should ideally maintain additional funds for moving, immediate homeownership expenses and an emergency reserve.

KNOW YOUR NUMBERS BEFORE YOU MAKE AN OFFER

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BOOK A BUYER STRATEGY CALL

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