Key takeaways
- Closing costs are paid on top of your down payment. Many buyers underestimate them.
- Ontario land transfer tax on a $700,000 home is $10,475 before any first-time buyer refund.
- Toronto buyers also pay a separate municipal land transfer tax.
- Ask your lawyer to claim your first-time refund as part of closing.
Your down payment isn't the only cash you need. Closing costs often run into the thousands, and they're due on or before closing day.
1. Ontario land transfer tax
This is usually the largest closing cost. For a home with one or two single-family residences, Ontario's rates are:
| 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% |
| Above $2,000,000 | 2.5% |
Examples (Ontario tax only)
| Purchase price | Land transfer tax | After the $4,000 first-time refund |
|---|---|---|
| $500,000 | $6,475 | $2,475 |
| $700,000 | $10,475 | $6,475 |
| $900,000 | $14,475 | $10,475 |
| $1,000,000 | $16,475 | $12,475 |
Eligible first-time buyers can receive a refund of up to $4,000, and homes up to $368,000 owe no tax. You must apply within 18 months, and your lawyer can usually handle this at closing. Homes in Toronto are also subject to a separate municipal land transfer tax, with its own first-time buyer refund. Ask your lawyer to calculate both.
2. Legal fees and disbursements
You'll need a lawyer (or in some cases a notary) to complete the transaction. Fees vary, and are commonly in the low thousands of dollars including disbursements.
3. Title insurance
Often a few hundred dollars. It protects against certain title and ownership problems.
4. Home inspection and appraisal
An inspection is optional but strongly recommended and usually costs a few hundred dollars. A lender may require an appraisal. Ask who pays.
5. Mortgage default insurance
If your down payment is under 20%, the premium is normally added to your mortgage, but any provincial sales tax on the premium must be paid at closing. See how much down payment you need.
6. Adjustments and moving costs
Prepaid property taxes and utilities may be adjusted on closing. Budget for movers, utility hookups and immediate repairs.
A rule of thumb
Many buyers set aside an extra amount on top of their down payment for these costs. Your mortgage professional and lawyer can give you a closer estimate for your purchase.
Sources and further reading
- Ontario: Calculating land transfer tax
- Ontario: Land transfer tax refunds for first-time homebuyers
- CMHC: Mortgage loan insurance premiums
This article is general information, not personalized mortgage, legal, tax or financial advice. Rules, rates and eligibility change and depend on your circumstances and lender criteria. Confirm details before you make decisions.
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