closing costs for first time home buyer

It’s every buyer’s dream. You’ve fallen in love with a home, made an offer on it, and learned that your bid has been accepted. While it may be a relief to know you’ve secured your new property, your work isn’t done yet!

There are still several steps to complete before you can take possession—and a few closing costs to cover. While paying these additional expenses is one of the not-so-great things about buying real estate, being informed can help you budget effectively.

If you’re about to purchase a home, here are the major closing cost you can expect…


Your deposit is the money you put down immediately after your offer is accepted—usually within 24 hours. It’s subtracted from your purchase price, the remainder of which you’ll pay off through your mortgage.

Depending on the cost of your home, your minimum down payment will be between 5 and 20 per cent of your purchase price (with less expensive homes at the low end of the scale).

CMHC insurance

Making a down payment of less than 20 per cent? You’ll be required to purchase mortgage default insurance (provided by CMHC), which protects your lender. This cost will be added to your mortgage—but you will have to pay the provincial sales tax (PST) on it come closing day.

Your insurance will be calculated as a percentage of your mortgage (and the amount will shrink if you make a larger down payment). It can cost several thousand dollars, and your PST will be 8 per cent of that number.

Home appraisal

Once your offer has been accepted, your lender will send a qualified appraiser to confirm that the amount you’ve offered isn’t too high. The process includes an in-person visit and a comparison to recent sale prices in the area.

While large banks tend to pay for appraisals, some lenders pass the cost on to you. When that’s the case, you can usually expect to pay somewhere around $500 for the service.

Inspection fee

Most buyers opt to have a home inspected before their transaction is finalized. During this process, a qualified professional will look at the property’s various systems and components, and produce a report for you to review.

To reduce the risk associated with buying a home, you can make your purchase contingent on a satisfactory inspection. In Toronto, inspectors typically charge anywhere from $350-$750.

Legal fees

From performing a title search to ensure your future home is free and clear to reviewing all documents relevant to your purchase, a real estate lawyer will play an important role in your transaction. Having one who’s fully qualified will provide peace of mind at every step.

Legal fees can range from between $500 and $1000 for a straightforward transaction to significantly more for a complicated one. The purchase price of the home in question is usually also a factor.

Title insurance

You’ll almost certainly want to purchase title insurance through your lawyer. This type of coverage protects you if there are any preexisting claims on, liens against, or easements impacting the property you’re buying.

Simply put, “title” refers to the ownership of a piece of land and the rights that go along with it. At a cost of around $200 to $300, you’ll be covered if (for example) creditors come looking for unpaid bills from the previous homeowner, or someone else claims an interest in your property.

Land transfer tax

Land transfer taxes, which are charged by both the provincial and municipal governments, are due on closing day. In both cases, they’ll be between 0.5 and 2.5 per cent of your purchase (depending on the price of your home).

Ontario and Toronto land transfer taxes exist on a sliding scale. Given that a rate of 1.5 per cent is charged for homes that cost between $250,000 and $400,000, very few buyers will pay less than that for either tax. You can calculate how much to budget for here.


Homeowners sometimes pay utilities and property taxes in advance. When they make a payment that overlaps with the period after the new owners take possession, they must be reimbursed. If this is the case for your purchase, your lawyer and the seller’s will work together to determine how much you’re responsible for

We all know buying a home can be costly, and the amount you’ll pay goes beyond your accepted bid. Luckily, by knowing the costs involved and working with a knowledgeable local agent, you can ensure that your purchase goes smoothly—right up until closing day, and beyond!

Preparing to buy a home? We know the process inside and out, and we’d love to walk you through it! Get in touch to get started!


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