What are closing costs when you buy a home in Canada?

Closing costs are one-time expenses paid when your purchase completes, on top of your down payment. CMHC suggests planning for roughly 1.5% to 4% of the price, depending on where and what you buy.

The short version: the biggest item is usually land transfer tax, followed by legal fees, title insurance and, if you put down less than 20%, sales tax on the mortgage insurance premium. All of these are paid in cash.

What closing costs include

• Land transfer tax, which varies by province and city. See our guide for the rules in each province.
• Legal fees and disbursements for the lawyer or notary, who handles the title search, registration and funds.
• Title insurance, a one-time policy that protects against title problems and fraud. It is often cheaper than a title search alone.
• Home inspection, and an appraisal if your lender requires one.
• Sales tax on the mortgage insurance premium if your down payment is under 20%, in provinces such as Ontario and Québec. It is due in cash at closing and cannot be added to the mortgage.
• Adjustments: you reimburse the seller for prepaid property tax or utilities.
• GST or HST on a new build, unless a rebate applies.
• Moving costs, utilities connection and early repairs.

Keep your closing money separate from your down payment so you do not count the same dollars twice.

Example: $600,000 home in Ontario (outside Toronto), 10% down

• Land transfer tax: about $8,475.
• Legal fees and title insurance: about $2,000.
• Home inspection: about $500.
• Sales tax on the mortgage insurance premium ($16,740 x 8%): about $1,340.
• Total: about $12,300, or roughly 2% of the price, before adjustments and moving.

The same price in other provinces

Land transfer tax changes the total a lot. On a $600,000 home:

• Toronto: the municipal tax roughly doubles the land transfer tax, adding about $8,475 on top of the provincial amount, before rebates.
• British Columbia: property transfer tax of about $10,000, before any first-time exemption.
• Alberta: no land transfer tax, only land title fees of roughly $1,240 for the transfer and a $540,000 mortgage.

How to lower the bill

• Claim first-time buyer rebates, which your lawyer can usually apply at closing. Ontario refunds up to $4,000, Toronto up to $4,475 more, and British Columbia exempts qualifying purchases up to a price limit.
• Compare legal fees, and ask what disbursements are included.
• Ask about the inspection scope and whether a second inspection is needed.
• Choose a larger down payment to avoid the insurance premium and its tax.

How to budget

Add the estimate to your down payment to find the cash you need. On a $600,000 home, 1.5% to 4% is roughly $9,000 to $24,000. The figures here are estimates, so confirm exact amounts with your lawyer and your lender. Our Mortgage Simulator estimates closing costs for your province and price.

Sources: CMHC: general requirements, Ontario: calculating land transfer tax, Alberta: land titles fees.