The purchase price is not the full amount of cash you may need to buy a home. In addition to the down payment, buyers may face land transfer taxes, legal costs, closing adjustments, insurance, inspections, moving expenses and property-specific charges.
A useful starting benchmark from the Financial Consumer Agency of Canada is to plan for approximately 1.5% to 4% of the purchase price in upfront or closing costs. That range is not a quote: a Toronto purchase, a new build, an insured mortgage or an unusual property can change the total materially.
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Closing costs versus the down payment
Your down payment reduces the amount you need to borrow. Closing costs are the additional amounts required to complete and set up the purchase.
The deposit paid with or shortly after an accepted offer is usually credited toward the purchase price and forms part of the down payment. Do not add it twice when estimating the cash you need. What matters is the total amount required, how much has already been paid and when the remaining funds must reach your lawyer.
The costs Ontario homebuyers should plan for
1. Ontario land transfer tax
Ontario land transfer tax is generally payable when ownership is transferred and registered. The amount depends primarily on the value of the consideration and the applicable rate bands. It can be one of the largest closing costs, so use an up-to-date estimate from your lawyer rather than treating it as a small miscellaneous fee.
2. Toronto municipal land transfer tax
If the property is in the City of Toronto, municipal land transfer tax applies in addition to the Ontario tax. This is one reason a generic percentage can understate the cash required for a Toronto closing.
3. Legal fees, disbursements and title protection
Your real estate lawyer coordinates the transfer of ownership, mortgage registration and movement of closing funds. Ask for an estimate that distinguishes the professional fee from disbursements, registration charges and title insurance, if used. A quote may change if the transaction becomes more complex.
4. Home inspection and specialty reviews
A general home inspection is a pre-closing decision cost rather than a legal closing fee, but it still belongs in the purchase budget. Depending on the property, buyers may also consider septic, well, water, structural, electrical or other specialized reviews.
5. Appraisal and lender-related costs
A lender may require an appraisal or another property review. Sometimes the cost is covered or arranged through the mortgage channel; sometimes the borrower pays it. Confirm the amount and timing instead of assuming it is included.
6. Property tax, utility and condo adjustments
The seller may have prepaid property taxes, utilities, condo fees, rent or other expenses beyond the closing date. The statement of adjustments accounts for applicable credits and charges. These amounts are transaction-specific and may not appear in an early mortgage estimate.
7. Home insurance
Lenders commonly require satisfactory property insurance before advancing mortgage funds. Arrange coverage early enough to resolve questions about the property, replacement cost or insurer requirements before closing day.
8. Sales tax on mortgage default insurance
If mortgage default insurance is required, the insurance premium may generally be added to the mortgage. Ontario sales tax on that premium cannot be added to the mortgage and must be paid when you get the mortgage. This is easy to miss because the premium and the tax are treated differently.
9. New-build adjustments, HST and levies
Newly constructed and substantially renovated homes can involve HST treatment, rebate conditions, builder adjustments, development charges, occupancy fees or contract-specific levies. Rules and effective dates can change. Have your lawyer review the agreement and explain which amounts are included in the price and which remain payable.
10. Moving, utility setup and immediate repairs
Movers, storage, utility connections, new locks, basic supplies and early repairs may not appear on a legal statement, but they still compete for the same cash. Keep a separate move-in reserve so the closing funds are not accidentally spent.
First-time buyer land transfer tax relief
Eligible first-time buyers may receive an Ontario land transfer tax refund of up to $4,000. For an eligible home in Toronto, the municipal first-time buyer rebate may provide up to an additional $4,475.
Eligibility is not automatic simply because this is your first purchase in Canada. The Ontario and Toronto rules consider factors such as age, prior ownership anywhere in the world, a spouse’s ownership history, citizenship or permanent-resident status and whether the home becomes the buyer’s principal residence within the required period. These definitions may differ from other federal first-time buyer programs.
A practical way to estimate the cash you need
- Start with the purchase price and total down payment.
- Subtract any deposit already paid from the remaining down payment.
- Request current Ontario and, where applicable, Toronto land transfer tax estimates.
- Add the lawyer’s estimate, inspection, appraisal, insurance and expected adjustments.
- Add property-specific or new-build charges.
- Keep a separate moving and immediate-repair reserve.
- Confirm that the funds are in the right account and supported by the documentation your lender requires.
The objective is not to predict every dollar months in advance. It is to identify the large categories early, replace estimates with confirmed figures as closing approaches and avoid using money that has already been committed.
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General educational information only. It is not legal, tax or mortgage advice, a mortgage approval or a commitment to lend. Fees, taxes, rebates and requirements vary and can change. Confirm transaction-specific amounts with your lawyer, tax professional, insurer and mortgage professional. Do not send sensitive financial documents by regular email; ask for the secure submission method.
Sources: Financial Consumer Agency of Canada: Buying a home; How much you need for a down payment; Ontario land transfer tax refunds for first-time homebuyers; Toronto MLTT rebate opportunities; CRA GST/HST new housing rebate. Verified August 2026.