Buying a Home in Ontario?

Date Posted: June 17, 2026

 

 

 

 

Buying a Home in Ontario? Don’t Forget Closing Costs

When people start planning to buy a home, the down payment usually gets most of the attention. That makes sense. It is one of the biggest upfront costs, and it plays a major role in what you can afford.

But your down payment is not the only money you need to have ready.

In Ontario, buyers also need to plan for closing costs. These are the additional costs that come with finalizing a home purchase, and they are usually due around the time your purchase closes. If you are not prepared for them, they can create a stressful surprise right before you get the keys.

The good news is that with proper planning, closing costs do not have to catch you off guard.

 

 

What Are Closing Costs?

Closing costs are the extra expenses you pay on top of your down payment when you buy a home. They can include things like land transfer tax, legal fees, title insurance, home inspection costs, appraisal fees if required, adjustments, moving expenses, and utility setup costs.

In many cases, these costs are paid before or on closing day. That means you need to have funds available in addition to your down payment.

A common rule of thumb is to budget around 1.5% to 4% of the purchase price for closing costs, although the actual amount can vary depending on the property, purchase price, location, mortgage details, and your personal situation. CMHC and the Financial Consumer Agency of Canada both reference this 1.5% to 4% range as a helpful planning guideline for homebuyers.

 

 

Why Closing Costs Matter So Much

Closing costs matter because they can affect your real home-buying budget.

For example, a buyer may have enough saved for the minimum down payment, but not enough set aside for land transfer tax, legal fees, moving expenses, and other costs. This can create pressure late in the process, especially if the buyer has already made an offer and is working toward closing.

Your mortgage approval may also depend on showing that you have enough money available for both the down payment and closing costs. Lenders want to see that the purchase is financially realistic, not just that you can cover the minimum down payment.

This is why it is so important to talk through your full budget before making an offer.

 

 

Land Transfer Tax in Ontario

One of the biggest closing costs for many Ontario buyers is land transfer tax.

Ontario land transfer tax is calculated using a sliding scale based on the purchase price of the home. The tax rates increase at different price brackets, and for homes with one or two single-family residences, amounts above $2 million are taxed at a higher rate.

For many buyers, this can add up to several thousand dollars. It is one of the most important costs to estimate early because it is directly connected to the price of the property you are buying.

First-time buyers in Ontario may qualify for a land transfer tax refund of up to $4,000, which can reduce or even eliminate the provincial land transfer tax on some purchases.

This refund can be a big help, but it is not something to assume without checking eligibility. Your mortgage broker and real estate lawyer can help you understand whether you may qualify.

 

 

What About Toronto?

If you are buying in the City of Toronto, there is an additional municipal land transfer tax on top of the Ontario land transfer tax. This means buyers in Toronto generally need to budget more for closing costs than buyers in other Ontario municipalities.

For Ottawa buyers, the municipal Toronto land transfer tax usually will not apply. But it is still a good reminder that closing costs can change depending on location.

 

 

Legal Fees and Disbursements

You will also need a real estate lawyer to complete the purchase. Your lawyer helps with important parts of the transaction, including reviewing documents, registering the mortgage, transferring title, coordinating funds, and making sure the legal side of the purchase is completed properly.

Legal fees can vary depending on the lawyer, the complexity of the transaction, and the property. There may also be disbursements, which are additional expenses paid by the lawyer on your behalf, such as registration costs, searches, couriers, and other administrative items.

Your lawyer can provide a clearer estimate once they know the details of your purchase.

 

 

Title Insurance

Title insurance is another common closing cost. It is designed to protect against certain title-related issues, such as defects in ownership, registration errors, or problems that may not be discovered before closing.

In many transactions, title insurance is recommended or required by the lender. Your lawyer will usually explain this to you as part of the closing process.

While it is often not the largest closing cost, it is still something to include in your budget.

 

 

Home Inspection and Appraisal Costs

A home inspection is not always required, but many buyers choose to get one because it can help identify potential issues with the property before the purchase becomes firm.

Depending on your offer and the property, an inspection may help you better understand the home’s condition, upcoming maintenance needs, and possible repair costs.

An appraisal may also be required by the lender. This is when the lender wants to confirm the value of the property before finalizing the mortgage. In some cases, the lender may cover the appraisal. In other cases, the buyer may be responsible for the cost.

Not every purchase will require every cost, but it is better to plan for the possibility.

 

 

Adjustments on Closing

Adjustments are another cost that can surprise buyers.

When you buy a home, the seller may have already paid for certain expenses in advance, such as property taxes, condo fees, or utilities. If those payments cover a period after you take ownership, you may need to reimburse the seller for your share.

These adjustments are calculated by the lawyer and included in the final amount needed to close.

They are not always huge, but they can add to the total amount you need available.

 

 

Moving Costs, Utilities, and Setup Expenses

Once the legal and mortgage pieces are handled, there are still practical costs to consider.

Moving costs can include movers, truck rentals, boxes, packing supplies, storage, cleaning, and time off work. You may also have utility setup costs, internet installation, new furniture, window coverings, appliances, or small repairs after moving in.

These expenses are not always considered “formal” closing costs, but they are still part of the real cost of buying a home.

A smart home-buying budget should leave room for these items too.

 

 

How Much Should You Budget?

A helpful guideline is to budget 1.5% to 4% of the purchase price for closing costs. On a $600,000 home, that would mean planning for roughly $9,000 to $24,000 in additional costs.

That range may sound wide, but closing costs can vary quite a bit depending on the situation.

Your actual amount may depend on whether you are a first-time buyer, whether you qualify for the land transfer tax refund, whether the property is a condo, whether an appraisal is needed, whether you are buying in Toronto, how much property tax has already been prepaid, and what moving or setup costs you will have.

This is why it is important to get personalized advice instead of relying only on a rough estimate.

 

 

First-Time Buyers Should Plan Carefully

If you are a first-time buyer, closing costs are especially important to understand.

Many first-time buyers spend a lot of time saving for the down payment, only to realize later that they also need additional funds available for closing. Even with the Ontario land transfer tax refund, there may still be legal fees, title insurance, adjustments, moving costs, and other expenses to cover.

Planning ahead can help you avoid last-minute stress and make the home-buying process smoother.

It can also help you shop more confidently because you will know your true budget, not just your maximum purchase price.

 

 

Your Full Budget Matters More Than Just the Purchase Price

When buying a home, the purchase price is only one part of the equation.

You also need to consider your down payment, mortgage payment, property taxes, insurance, condo fees if applicable, utilities, maintenance, closing costs, and moving expenses.

A home may technically fit your mortgage approval, but that does not always mean it fits comfortably into your life.

A mortgage broker can help you look at the full picture and understand what you may qualify for, what your monthly payment could look like, and how much you should have ready before closing.

 

 

Talk to Mortgage Brokers Ottawa Before You Make an Offer

Closing costs are not something you want to figure out at the last minute.

Before you make an offer, talk to Mortgage Brokers Ottawa. We can help you understand your full home-buying budget, estimate the funds you may need, and review your mortgage options so you can move forward with more confidence.

Buying a home should be exciting, not stressful.

With the right plan in place, you can avoid surprises and be ready for the full cost of homeownership.