Ontario Closing Costs: The Line Items That Surprise First-Time Buyers
Saving for a down payment is only one part of preparing to buy a home.
Before the property becomes yours, there are also legal fees, taxes, adjustments, insurance costs and other expenses that may need to be paid before or on closing.
For first-time buyers, the important question is not simply:
“How much is my down payment?”
It is:
“How much money will I actually need available to complete the purchase?”
CMHC and the Financial Consumer Agency of Canada suggest budgeting approximately 1.5% to 4% of the purchase price for closing and other upfront costs, although the actual amount can vary significantly depending on the property, location and financing.
Here are the main costs Ontario buyers should understand.
What Are Closing Costs?
Closing costs are expenses that arise in addition to the purchase price and down payment when you buy a home.
Some are paid through your lawyer on closing.
Others, such as a home inspection or appraisal, may be paid earlier in the transaction but still need to be included in your overall home-buying budget.
Depending on your purchase, they can include:
Ontario Land Transfer Tax;
Toronto Municipal Land Transfer Tax, if applicable;
legal fees and disbursements;
title insurance;
registration costs;
adjustments for property taxes or condominium fees;
mortgage-related costs;
property insurance;
appraisal or inspection costs; and
additional charges that may apply to a new construction purchase.
Not every buyer will have every expense.
That is why an estimate based on your actual transaction is more useful than relying only on a percentage.
How Much Is Ontario Land Transfer Tax?
Ontario Land Transfer Tax is generally payable when ownership of land is transferred.
The tax is calculated on a graduated scale based on the value of the consideration, which in an ordinary arm's-length home purchase is generally based on the purchase price.
For current Ontario residential purchases, the provincial rates are:
0.5% on the first $55,000;
1% on the portion above $55,000 up to $250,000;
1.5% on the portion above $250,000 up to $400,000;
2% on the portion above $400,000; and
for property containing one or two single-family residences, 2.5% on the portion above $2 million.
Because the tax is graduated, you do not apply the highest rate to the entire purchase price.
Your lawyer will calculate the amount payable as part of the closing.
Is There a Land Transfer Tax Refund for First-Time Buyers?
Yes, if you qualify.
Ontario currently provides eligible first-time homebuyers with a refund of up to $4,000 of provincial Land Transfer Tax. A qualifying buyer purchasing an eligible home for $368,000 or less may therefore pay no provincial Land Transfer Tax after the refund.
Eligibility includes requirements such as:
being at least 18 years old;
occupying the property as your principal residence within nine months;
never having owned a home or an interest in a home anywhere in the world; and
meeting the rules relating to any spouse who previously owned a home.
There are also citizenship or permanent-residency requirements and specific rules where only some purchasers qualify.
“First-time buyer” can mean something different for Ontario Land Transfer Tax than it does for other federal home-buying programs.
Do not assume that qualifying for one first-time-buyer program automatically means you qualify for all of them.
Do Toronto Buyers Pay a Second Land Transfer Tax?
Yes.
If the property is located in the City of Toronto, the buyer may also pay Toronto's Municipal Land Transfer Tax in addition to Ontario's provincial Land Transfer Tax.
For many residential purchases, the lower Toronto brackets are structured similarly to the provincial tax.
However, Toronto now has higher graduated rates for high-value residential properties. Effective April 1, 2026, rates above $3 million range from 4.40% to 8.60% on the applicable portions of the purchase price.
So it is no longer accurate to say that Toronto's tax always simply duplicates or “doubles” the provincial tax.
Is There a Toronto First-Time Buyer Rebate?
Yes.
Eligible first-time homebuyers can currently receive a Toronto Municipal Land Transfer Tax rebate of up to $4,475.
For an eligible first-time buyer purchasing in Toronto, there may therefore be both:
up to $4,000 in Ontario Land Transfer Tax relief; and
up to $4,475 in Toronto Municipal Land Transfer Tax relief.
Eligibility requirements should be confirmed before relying on those amounts in your closing budget.
What Are Adjustments on a Real Estate Closing?
Adjustments are not necessarily an additional fee.
They are a way of allocating certain property expenses between the buyer and seller based on the closing date.
For example, suppose the seller has already paid the municipal property taxes for a period that extends beyond closing.
Because the buyer will own the property for part of that prepaid period, the buyer may reimburse the seller for the buyer's share.
For a condominium, a similar adjustment may be required if common expenses have already been paid beyond the closing date.
Adjustments can also operate in the buyer's favour where the seller owes an amount covering the buyer's period of ownership.
The statement of adjustments helps determine the final amount that has to move between buyer and seller on closing.
That is one reason the exact funds required cannot always be known on the day the offer is accepted.
What Is the Difference Between Legal Fees and Disbursements?
They are not the same thing.
Legal Fees
Legal fees are the amount the law firm charges for the professional work involved in completing the transaction.
Depending on the purchase, that work can include:
reviewing the agreement of purchase and sale;
reviewing title;
communicating with the lender;
preparing closing documents;
reviewing title insurance;
arranging funds;
registering the transfer and mortgage; and
completing the transaction.
Disbursements
Disbursements are third-party expenses or transaction costs paid in connection with the file.
Depending on the transaction and firm's billing structure, these may include:
land-registration charges;
title searches;
title insurance;
document or registration charges; and
other third-party costs required to complete the purchase.
A condominium transaction may also involve status-certificate-related costs depending on who orders the certificate and what the agreement provides.
When comparing lawyers' quotes, ask whether the quote includes legal fees, disbursements and applicable tax, rather than comparing only the headline legal fee.
What Is Title Insurance?
Title insurance is commonly obtained as part of an Ontario residential purchase.
For a one-time premium, a residential owner's policy can provide protection against specified title-related risks, such as certain unknown title defects, existing liens, public-record errors and title fraud.
The cost varies depending on factors such as the property value and insurer.
Unlike home insurance, there is generally no annual premium. Residential title-insurance coverage ordinarily continues for as long as the insured owns the property.
Title insurance is separate from the lawyer's title review and does not replace a home inspection.
What Mortgage Costs Should First-Time Buyers Budget For?
Your mortgage can create costs beyond the principal and interest payments that begin after closing.
Mortgage Appraisal
A lender may require an appraisal to confirm the property's value before advancing the mortgage.
Whether the buyer pays the appraisal fee depends on the lender and mortgage product.
Mortgage Loan Insurance
Many buyers with a down payment of less than 20% require mortgage loan insurance.
For CMHC-insured mortgages, the premium is calculated based on the loan-to-value ratio and can generally be added to the mortgage principal.
But there is an Ontario cost that buyers sometimes overlook:
Ontario applies provincial sales tax to mortgage loan insurance premiums, and that tax cannot be added to the mortgage.
Ontario's Retail Sales Tax rate on taxable insurance premiums is currently 8%.
So even where the insurance premium itself is financed through the mortgage, the tax on the premium requires separate cash.
Do You Need Property Insurance Before Closing?
If you are obtaining a mortgage, your lender will generally require suitable property insurance to be in place before it advances the mortgage funds.
That means insurance should be arranged before closing rather than after you receive the keys.
The premium itself may be paid directly to the insurer rather than through your lawyer, but it still belongs in the overall purchase budget.
For condominium purchases, the condominium corporation carries insurance for certain common property, but buyers may still need their own unit-owner insurance depending on the property and lender requirements.
Is a Home Inspection a Closing Cost?
Technically, a home inspection is usually paid before closing rather than appearing on the lawyer's final closing account.
But it should still be part of the money you budget for the purchase.
The same applies to certain appraisal costs.
CMHC's home-purchase budgeting guidance includes expenses such as appraisal fees, home inspections, legal fees, land-registration costs, property-tax adjustments, title insurance and property insurance when estimating the total cost of buying a home.
For budgeting purposes, the distinction between “closing cost” and “pre-closing cost” matters less than whether you have enough cash available when each bill is due.
Are Closing Costs Different for a New Construction Home?
They can be.
A newly constructed home or pre-construction condominium can involve costs that do not normally arise on an ordinary resale purchase.
HST is one important example.
Newly constructed and substantially renovated homes are generally subject to HST, although the agreement may structure the price and applicable rebates in different ways.
Ontario also introduced expanded HST relief in 2026 for eligible new-home purchases, with eligibility depending on matters such as the agreement date, value of the home, construction timing and intended use.
A builder's agreement may also contain adjustments or charges that are specific to the development.
That makes legal review of the agreement particularly important for a new construction purchase.
Do not assume the closing-cost estimate for a resale property will be accurate for a pre-construction or newly built home.
What About Non-Resident Buyers?
Additional taxes can apply in some situations.
Ontario currently imposes a 25% Non-Resident Speculation Tax on certain purchases or acquisitions of residential property by foreign nationals, foreign corporations and taxable trustees.
Toronto also has its own Municipal Non-Resident Speculation Tax for certain foreign residential purchasers.
These amounts can be substantial and fall well outside an ordinary 1.5% to 4% closing-cost estimate.
If citizenship or residency status may affect the transaction, it should be discussed with the lawyer well before closing.
Is 1.5% to 4% Still a Good Closing-Cost Estimate?
It is a useful starting point, not a guarantee.
CMHC and the Financial Consumer Agency of Canada continue to recommend budgeting approximately 1.5% to 4% of the purchase price for closing and upfront costs.
But the actual percentage can move considerably depending on:
the purchase price;
whether the property is in Toronto;
whether you qualify for first-time-buyer refunds;
whether mortgage loan insurance is required;
whether the purchase is resale or new construction;
adjustments;
the lender's requirements; and
any additional taxes that apply to the buyer.
This is why a percentage should be used for early planning—not as the final amount you expect to bring to closing.
When Will You Know the Exact Amount Needed for Closing?
The final amount becomes clearer as closing approaches and your lawyer receives the information required to complete the transaction.
That can include:
the mortgage advance;
the statement of adjustments;
final tax information;
land transfer tax calculations;
title-insurance costs; and
other closing disbursements.
Your lawyer can usually give you an estimate before the final figures are available.
For first-time buyers, asking for that estimate early can be useful because it allows you to keep the required cash separate from money you have set aside for moving, furniture or repairs.
Your down payment should not be the last dollar available in your account on closing day.
Frequently Asked Questions
How much should I budget for closing costs in Ontario?
A commonly used guideline is approximately 1.5% to 4% of the purchase price, but the actual amount depends on the property, location, financing and available tax refunds.
How much is the Ontario first-time homebuyer Land Transfer Tax refund?
Eligible first-time homebuyers can currently receive up to $4,000 of provincial Land Transfer Tax relief.
Do first-time buyers pay Land Transfer Tax in Toronto?
Potentially. Toronto charges its own Municipal Land Transfer Tax in addition to Ontario's provincial tax. Eligible first-time buyers can currently receive a Toronto rebate of up to $4,475.
Are legal fees included in the down payment?
No. The down payment is part of the purchase price. Legal fees and applicable disbursements are separate transaction costs.
Is title insurance a yearly cost?
Generally, no. Residential title insurance is usually purchased with a one-time premium, and owner's coverage generally continues while you own the property.
Is mortgage default insurance paid in cash on closing?
The insurance premium can often be added to the mortgage. However, Ontario sales tax on the premium cannot be added to the mortgage and must be paid separately.
Are property-tax adjustments an extra tax?
No. An adjustment usually allocates an expense already paid or owing between buyer and seller based on their respective periods of ownership.
Are closing costs higher on a new construction home?
They can be. New homes can involve HST, rebate rules and builder-specific adjustments that do not arise in the same way on an ordinary resale transaction.
Understand Your Closing Costs Before Closing Day
The amount you need to complete a purchase is more than the down payment.
Land transfer tax, legal costs, adjustments, insurance and lender-related expenses can all affect the amount of cash you need before receiving the keys.
Willing Law Professional Corporation assists buyers in Windsor, Windsor-Essex and across Ontario with residential purchases and closing matters.
If you are planning your first purchase, reviewing the expected closing costs early can help you understand how much you actually need to set aside before making the transaction firm.
Contact Willing Law today for assistance with your next real estate transaction.
📞 Phone: 519-980-3476
✉️ Email: info@willinglaw.com
This article is general information about Ontario law and is not legal advice. Reading it does not create a solicitor-client relationship. For advice on your situation, book a free 15-minute strategy call at willinglaw.com.
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