Plan for the Costs Beyond Your Down Payment

The down payment gets most of the attention, but it is not the only cash you need to buy a home. A realistic closing-cost budget helps first-time buyers avoid last-minute surprises and negotiate with confidence. Here are the major categories Ontario buyers should plan for.

Deposit and down payment are not the same thing
The deposit is submitted with or shortly after an accepted offer and shows the seller that you intend to complete the purchase. It normally becomes part of your total down payment on closing. Your lawyer and lender will confirm the remaining funds you must provide.

Ask how quickly the deposit is due and make sure the money is accessible. A transfer delay is a terrible reason to miss a contractual deadline.

Ontario land transfer tax
Ontario charges land transfer tax when a property changes ownership. Eligible first-time buyers may receive a refund of up to $4,000. The rules are specific: for example, ownership history, spouse status, residency and how the property will be occupied can affect eligibility.

A purchase in the City of Toronto may also involve municipal land transfer tax. Your lawyer can calculate both taxes and any available rebates for your exact transaction.

Legal work, title insurance and registrations
Your real-estate lawyer reviews title, prepares mortgage and transfer documents, manages funds and registers ownership. Ask for an estimate that separates legal fees, tax and disbursements. Title insurance is also commonly arranged through the lawyer and helps address certain title and fraud risks.

Inspection, appraisal and specialty reviews
A general home inspection can reveal visible defects and maintenance priorities. Depending on the property, you may also need a septic inspection, well-water test, sewer scope, electrical review or specialist opinion. Rural and older homes can require different due diligence than a newer GTA condo.

Your lender may require an appraisal, and the appraisal fee is sometimes paid by the buyer. Confirm this early.

Mortgage insurance and provincial tax
If your down payment is below 20%, mortgage default insurance will typically apply. The insurance protects the lender, not the buyer. The premium may often be added to the mortgage, but Ontario sales tax on the premium generally must be paid at closing and cannot be rolled into the loan.

Adjustments, insurance and utility setup
The seller may have prepaid property taxes, condo fees, fuel or other costs beyond the closing date. Your lawyer's statement of adjustments balances these items. You will also need home insurance in place before funds are advanced and may face utility deposits or connection fees.

Moving and first-month ownership costs
Budget for movers, locks, window coverings, immediate repairs, furniture and tools. Keep a reserve after closing instead of spending every available dollar on the purchase. The Financial Consumer Agency of Canada suggests planning for closing costs in the range of 1.5% to 4% of the purchase price, while recognizing that the actual amount depends on the home and transaction.

A simple closing-cost checklist

• Request written estimates from your lawyer, lender and inspector.
• Confirm the deposit deadline and transfer method.
• Ask your lawyer to estimate land transfer tax and rebates.
• Keep emergency savings separate from closing funds.
• Verify the final amount and payment instructions directly with your lawyer to reduce wire-fraud risk.

Buy with the full picture

OSM Realtors can help you compare the complete cost of homes across the GTA and Durham Region—not just the list price—so your offer fits both your goals and your budget.

Buy Smart. Sell Confident.

This article is general information, not financial, legal or tax advice. Confirm costs and eligibility with your lender, lawyer and other qualified professionals.

Helpful official resources: Buying a home, Down payments and mortgage insurance, and Ontario first-time buyer refund.