The short version
- Budget roughly 1.5% to 4% of the purchase price for closing costs.
- Land transfer tax is the largest. Toronto buyers pay it twice.
- First-time buyers can get part of the land transfer tax back.
Your down payment is not the only cash you need on closing day. Closing costs in Ontario commonly run between about 1.5% and 4% of the purchase price, and they cannot be added to your mortgage. Here is where the money goes.
Land transfer tax
This is the big one. Ontario charges it on every purchase, on a sliding scale:
| Portion of the price | Rate |
|---|---|
| Up to $55,000 | 0.5% |
| $55,000 to $250,000 | 1.0% |
| $250,000 to $400,000 | 1.5% |
| $400,000 to $2,000,000 | 2.0% |
| Over $2,000,000 | 2.5% |
On a $900,000 home that comes to $14,475.
Buying in the City of Toronto? You pay a second, municipal land transfer tax on top, which roughly doubles the bill. This applies to Toronto itself, not to Mississauga, Brampton, Vaughan or the rest of the GTA.
First-time buyer? You may get up to $4,000 of the Ontario tax back, and up to $4,475 of the Toronto tax.
Work out your own number with our land transfer tax calculator.
Legal fees and title insurance
A real estate lawyer handles the title search, the mortgage paperwork and the transfer of funds. Typical figures:
- Legal fees: about $1,000 to $2,500
- Title insurance: about $200 to $500
Before you close
- Home inspection: about $300 to $600. Optional, and worth it.
- Appraisal: about $300 to $1,000, if your lender requires one. Some lenders cover it.
- Home insurance: your lender needs proof of coverage before closing.
If your down payment is under 20%
You need mortgage default insurance. The premium is added to your mortgage, but the Ontario sales tax on that premium is not. It is due in cash on closing.
Adjustments
If the seller has prepaid property tax or utilities past the closing date, you pay them back for the days you will own the home. Your lawyer lists these on the statement of adjustments.
New builds
Newly built homes can carry HST and builder closing charges such as development levies and utility hook-ups. Ask what is included in the price, and ask for a cap on adjustments in the agreement.
After closing
Leave room for moving costs, utility set-up fees, and the first things every new home needs: locks changed, window coverings, and whatever the inspection told you to fix first.
A quick way to budget
Take your purchase price, set aside 1.5% to 4%, and get a firm quote from your lawyer once you have an accepted offer. See how the full picture fits your income with the affordability calculator, or tell us what you are looking for and we will walk you through the numbers.
Sources
General information for Ontario, not legal, tax or financial advice. Rules and rates change, so confirm details with your lawyer, lender or accountant.