What Costs Come After the Down Payment When Buying a Home in Canada

You’ve finally saved your down payment. It’s sitting in your FHSA or TFSA, you’ve got pre-approval in hand, and you’re ready to make an offer. Then someone mentions closing costs — and suddenly you’re doing mental math on a number you hadn’t fully accounted for. This catches a lot of first-time buyers off guard, not because they weren’t warned, but because the full list of what’s due on closing day (and the months just before it) is rarely spelled out in one place. These aren’t optional costs. Most of them have to be paid in cash on or before your closing date — your mortgage doesn’t cover them. If you’re planning to buy in the next year or two, you need to know what’s coming.

Quick answer: Beyond your down payment, most Canadian homebuyers need to budget an additional 1.5% to 4% of the purchase price in closing costs. On a $600,000 home, that’s roughly $9,000 to $24,000. The biggest line items are land transfer tax, legal fees, and home inspection — plus ongoing costs like home insurance and property taxes that start almost immediately.

What Is Land Transfer Tax and How Much Will You Pay?

Land transfer tax is charged by your provincial (and sometimes municipal) government every time a property changes hands. In most provinces, you pay it once on closing day — it’s calculated as a percentage of the purchase price, and the rate usually increases in tiers as the price goes up.

In Ontario, for example, on a $600,000 purchase you’d owe around $8,475 in provincial land transfer tax. If you’re buying in the City of Toronto, a second municipal land transfer tax is stacked on top of that, bringing the combined total to over $16,000. British Columbia has its own Property Transfer Tax. Quebec has a Welcome Tax (taxe de bienvenue). Alberta is the exception — there’s no land transfer tax there, just a smaller land title transfer fee.

First-time buyers in Ontario and BC can claim a rebate that reduces or eliminates the tax up to a purchase price threshold. In Ontario, the provincial first-time buyer rebate maxes out at $4,000 — meaning it covers the full provincial tax on homes under about $368,000, and partially offsets it on pricier properties.

Quick tip: Check your province’s land transfer tax calculator before you make an offer — this is usually the single largest closing cost and it’s easy to underestimate.

What Legal Fees and Title Insurance Will Cost You

A real estate lawyer isn’t optional in Canada. Every property purchase requires a lawyer (or notary in Quebec and BC) to complete the title search, register the transfer, and handle the flow of funds on closing day. Legal fees typically run between $1,500 and $2,500 depending on the complexity of your purchase, the province, and the firm you choose. That amount covers disbursements — the smaller administrative costs your lawyer passes through, like title search fees, registration fees, and couriering documents.

Title insurance is a separate one-time premium paid through your lawyer. It protects you and your lender against title defects — issues that might surface after closing, like unknown liens, survey errors, or fraud. It typically costs between $150 and $350 for a residential property. Most lenders require it, and even if yours doesn’t, it’s worth having. Your lawyer will usually arrange it as part of the closing process.

Home Inspection, Appraisal, and Other Pre-Closing Costs

These costs happen before closing day, but they’re still part of the total you need in cash.

A home inspection costs roughly $400 to $600 for a standard single-family home, and more for larger or older properties. In competitive markets, buyers sometimes waive inspections to make their offers more attractive — but that’s a financial risk. A $500 inspection that surfaces a $20,000 foundation issue is almost always worth it.

If your mortgage is with a major lender, they may require an appraisal to confirm the property is worth what you agreed to pay. The cost is usually $300 to $600 and is sometimes covered by the lender, but not always. Ask upfront.

Depending on the property’s age or location, your lender or lawyer might also require a survey certificate to confirm the lot boundaries. If an existing survey exists and is acceptable, you avoid this cost. If not, a new survey can run $1,500 to $3,000.

Ongoing Costs That Start on Day One

Closing day isn’t the end of the spending. Several recurring costs kick in the moment you take possession.

Home insurance is mandatory before any mortgage closes — no insurer sign-off means no keys. Annual premiums for a detached home typically fall between $1,500 and $3,000 depending on the home, your location, and your coverage level. Your lender will ask for proof of insurance before funds are released.

Property taxes in Canada are paid to your municipality, usually in installments throughout the year. If you’re buying mid-year, you’ll likely have to reimburse the seller for property taxes they’ve already paid for the months you’ll own the home — this adjustment is handled by your lawyer on closing day. After that, property taxes become your recurring responsibility.

Utility setup and moving costs are easy to forget. Hooking up electricity, gas, and internet in a new home sometimes involves deposits or connection fees. And moving — whether you’re renting a truck or hiring movers — costs more than most people anticipate, especially if you’re crossing a city.

Frequently Asked Questions

How much should I budget for closing costs in Canada?

A practical rule of thumb is 1.5% to 4% of the purchase price, on top of your down payment. The wide range reflects variation in province (land transfer tax differs significantly), property type, and whether you qualify for first-time buyer rebates. If you’re buying in Toronto or Vancouver, budget toward the higher end. Always get a rough estimate from your real estate lawyer before you finalize your offer.

Is land transfer tax included in the mortgage?

No. Land transfer tax must be paid in cash on closing day — it cannot be rolled into your mortgage. This is one of the most common surprises for first-time buyers who have focused entirely on saving their down payment.

Who pays for the home inspection — buyer or seller?

The buyer pays for their own home inspection in Canada. It’s ordered by you, performed before you firm up your offer (ideally as a condition of your offer), and paid directly to the inspector. Sellers may sometimes provide their own inspection report, but you’re under no obligation to rely on it.

Do you need a lawyer to buy a home in Canada?

Yes. A real estate lawyer or notary is required to complete the legal transfer of property in every Canadian province. They conduct the title search, prepare the closing documents, register the deed, and coordinate the movement of funds between all parties. Trying to skip this step isn’t legally possible.

What is a closing adjustment and why do I owe it?

Closing adjustments account for expenses the seller has prepaid or underpaid on your behalf. If the seller paid annual property taxes upfront for a full year but you’re taking possession partway through, you’ll reimburse them for the months you’ll own the home. Conversely, if they owe utility arrears, those get deducted from what they receive. Your lawyer calculates and applies all adjustments, and the net result shows up as a credit or debit on your closing statement.

Already saving for a down payment and want to understand all the pieces together? Check out how much you actually need for a down payment in Canada, what CMHC insurance costs and when it applies, and how to use your FHSA and RRSP Home Buyers’ Plan together.

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