Key takeaways
- Do not treat a single percentage as a reliable closing-cost budget. Build an itemized estimate on top of your down payment; Toronto, non-resident, new-build and high-adjustment transactions can be materially more expensive.
- Land Transfer Tax is usually the single biggest closing cost.
- Other common costs: legal fees and disbursements, title insurance, adjustments, and sometimes an appraisal. A home inspection is a separate pre-closing due-diligence expense.
- Your lawyer typically collects the funds needed to complete registration a day or two before closing, so have the money ready.
What are closing costs?
Closing costs are the one-time expenses you pay to complete the purchase of your home. They are separate from your down payment, which is the portion of the purchase price you pay directly rather than borrowing.
Think of your down payment as buying a share of the house, and closing costs as the fees, taxes, and services needed to actually transfer that house into your name. You generally cannot skip them, and most of them are due right at the finish line of the deal. That’s why they deserve their own line in your budget from the very start of your home search.
The important thing to understand is that closing costs generally come on top of your down payment. If you save only enough for the down payment, you can find yourself short of cash in the final days before closing, which is often exactly when the money is needed.
How much should I budget?
There is no reliable government percentage that fits every Ontario purchase. Start with an itemized estimate of Land Transfer Tax, legal fees and disbursements, title insurance, adjustments, lender-related charges and transaction-specific taxes.
Your actual total can land outside that range, and it can be materially higher in some situations. A higher-priced or luxury purchase in a city with an additional municipal land transfer tax (such as Toronto), a purchase by a non-resident that may attract additional taxes, a new build where HST applies, or a transaction with large adjustments can all push your costs well above the typical range. A simpler, lower-priced purchase may land nearer the bottom.
Ask your lawyer and lender for estimates early, then add a contingency for adjustments or charges that are not yet known. Refresh the calculation when the property, municipality, financing and closing date are confirmed.
What are the typical closing costs?
Here are the main costs most buyers in Ontario should expect. Not every cost applies to every purchase, and the size of each varies with the home, the lender, the insurer, and the service providers you choose.
| Closing cost | What it is |
|---|---|
| Land Transfer Tax | A tax on transferring ownership of the property to you. This is usually the biggest closing cost. Some municipalities, such as Toronto, charge an additional municipal land transfer tax on top of the provincial one. |
| Legal fees and disbursements | What you pay your lawyer to handle the closing. “Disbursements” are the out-of-pocket amounts your lawyer pays on your behalf, such as registration and search charges. |
| Title insurance | A policy that protects you against certain title problems, such as fraud or unknown claims against the property. Your lawyer usually arranges this. |
| Property tax and utility adjustments | Repaying the seller for amounts they prepaid that cover time after your closing date — for example, property taxes or utilities they already paid ahead. |
| Appraisal | An estimate of the home’s value, sometimes required by your lender. Depending on the lender, it may be arranged earlier in the process, and in some cases it is paid or covered by the lender rather than collected on closing. |
| PST on mortgage default insurance | If your mortgage is insured (common with a smaller down payment), the insurer charges a premium, and Ontario applies 8% PST on that premium. The premium itself is commonly added to your mortgage, while the PST is generally paid in cash around closing. |
A quick note on that last item: mortgage default insurance protects the lender, not you, and is generally required when your down payment is less than 20% of the price. The insurance premium is commonly added to your mortgage, but the 8% Ontario PST on that premium is generally paid in cash as a closing cost.
A separate expense to plan for is a home inspection. This is a professional check of the home’s condition, and it is a pre-closing due-diligence step, typically arranged and paid before you finalize the purchase so you know what you’re buying. It is not an amount your lawyer collects to complete registration on closing.
A note on Land Transfer Tax: Ontario’s tax is calculated on a sliding scale, so a single flat percentage is not accurate. As a shortcut for a one-or two-family residence, for values above $400,000 and up to $2 million the tax works out to (value × 2%) − $3,525; above $2 million it works out to (value × 2.5%) − $13,525. If you buy in a municipality that charges its own land transfer tax, such as Toronto, that amount is added on top. Confirm the current rates and your specific figures with your lawyer.
A note on new builds and HST: HST may apply to a newly built or substantially renovated home, and the agreement may quote a price that assumes one or more rebates are assigned to the builder. The federal first-time home buyers’ GST/HST rebate received Royal Assent in March 2026. Ontario also has enhanced 2026 new-housing relief with separate eligibility, price and agreement or construction-date rules. Confirm the current program, whether HST is included in the price, who claims or receives each rebate, and the cash required on closing with your lawyer and accountant.
When and how do I pay them?
Your lawyer typically collects the funds needed to complete the purchase from you a day or two before the closing date. That includes amounts like Land Transfer Tax, legal fees, and adjustments, which your lawyer pays out on closing day on your behalf.
So even though these are called “closing costs,” you generally hand over the money slightly before closing, not on the day itself. This matters because the funds usually need to be in a form the lawyer can rely on immediately, such as a bank draft or wire transfer, which can take a little time to arrange with your bank.
Some costs are handled earlier and separately. A home inspection, for example, is a pre-closing expense usually paid to the inspector at the time of the inspection. An appraisal may also be arranged earlier and, depending on the lender, paid or covered by the lender rather than collected by your lawyer on closing. When you build your budget, keep in mind that these expenses can land at different moments in the process, not all in one lump on closing day.
How can I avoid surprises?
The best defence is to plan for closing costs from the very beginning, not once you’ve found a home. Because these costs are generally separate from your down payment, treat them as a distinct savings goal.
A few simple habits help:
- Use an itemized estimate and leave an additional contingency if you are buying in Toronto, buying a new build or buying as a non-resident.
- Ask your lawyer early for an estimate of legal fees, disbursements, and the adjustments specific to your purchase.
- Check your municipality to see whether a municipal land transfer tax applies in addition to the provincial one.
- Keep your closing funds accessible so you can provide a bank draft or wire when your lawyer asks, a day or two before closing.
Closing is legal work, so you will generally use your own licensed real estate lawyer to complete the purchase. Your lawyer is also your best source for a precise breakdown of what you’ll owe, tailored to your specific home and mortgage.