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Purchasing a home is a thrilling milestone, but it comes with substantial expenses beyond the property’s price tag. Closing costs, encompassing various fees and taxes necessary to complete a real estate transaction, can significantly impact your home-buying budget. 

Closing costs are in addition to your down payment and are required to finalize your property purchase. They generally can’t be rolled into your mortgage payment and cost an additional 1.5% to 4% of your home’s purchase price. For example, a $500,000 home would have an additional $7,500 to $20,000 in closing costs (on top of your down payment). 

Gaining a clear understanding of these costs is essential for assessing the true affordability of homeownership. This comprehensive guide provides you with all the essential information about closing costs in Canada.

Key Points: What You Need To Know

  • Closing costs range from 1.5% to 4% of a home’s purchase price. On a $500,000 home, expect $7,500 to $20,000 in fees.
  • Major closing costs include land transfer taxes, legal fees, and title insurance.
  • Costs vary by province and property type. For example, Ontario’s land transfer taxes are higher than Alberta’s, and houses generally cost more than condos.
  • Most closing costs must be paid upfront in cash on or before closing day. 
  • You can reduce costs by comparing quotes, negotiating with sellers, or increasing your down payment.

Closing Costs In Canada At a Glance

Closing CostEstimated Cost
Land Transfer TaxUsually 0.4% to 4% of property value
Title Insurance$250 – $400
Legal Fees$500 – $1,000
PST Tax on Mortgage Default Insurance (Down Payment <20%)8% tax on your total mortgage default insurance premium
Adjustment Costs (Property Tax)$0 – $3,000, varies by province and home value 
Home Inspection$250 – $700
Mortgage Default Insurance (Down Payment <20%)2.8% to 4% of mortgage amount
Property Appraisal$300 – $600
Property Insurance (Varies with Province)$780 to $1,250 annually
Utility Setup and Installation Fees$100 – $300
New Home WarrantyVaries by province, home type, and individual negotiation 
Moving Costs$300 – $5,000

Keep in mind that the figures provided are estimations, and the actual amount may vary depending on factors like your location, property type, and whether it’s a new construction, all of which can affect the ultimate cost of your closing expenses. 

How To Calculate Your Closing Costs?

To calculate your closing costs, a rule of thumb is to allocate between 1.5% to 4% of the home’s purchase price. For instance, on a $200,000 home, this typically amounts to around $3,000 to $8,000 in addition to your down payment. Online calculators can be useful tools to help you in this process. 

As a seller, you can expect to pay between 2% to 5% of the home’s total price. A home seller generally covers real estate agent commissions, individual legal fees, and potential mortgage penalties. 

Do Closing Costs Vary By Province In Canada?

Yes, closing costs differ for various reasons, primarily due to location and the type of property you’re buying. One significant factor influencing these variations is the land transfer taxes imposed by each province. These taxes can range from a few hundred dollars in some provinces to several thousand dollars in others. 

If you’re purchasing a home in Toronto, you’ll need to account for both provincial and municipal land transfer taxes. Additionally, the specific property you’re acquiring plays a vital role in determining closing costs. A larger property may require a more costly appraisal, and if it has a higher sale price, you can expect more substantial land transfer taxes, ultimately impacting the overall closing costs.

Types Of Closing Costs

Depending on whether you’re the buyer or seller, you’ll have certain costs to deal with. Here we’ll discuss the costs associated with buying a home.

Mandatory Closing Costs – For The Buyer

Here are some of the mandatory closing costs you can expect when buying a home:

Land Transfer Tax

Land transfer tax (LTT) varies significantly across Canada depending on the province or territory. All provinces, except for Alberta and Saskatchewan, have a Land Transfer Tax (LTT) payable upon closing. Some provinces have a Land Transfer Tax Rebate for first-time homebuyers, ranging between $2,000 to $8,000.   

LTT is calculated based on the purchase price and tax rates range from 0% in some provinces to over 4% for high-value properties in others. Toronto also charges an additional municipal land transfer tax.

Title Insurance

In some cases, lenders require title insurance to safeguard against potential losses in property ownership disputes. This insurance is typically purchased through your lawyer or notary and can cost between $250 and $400.

Legal Fees and Disbursements

Homebuyers can anticipate a minimum cost of $500 (plus GST/HST) for legal fees charged by a residential real estate lawyer. These fees cover the preparation and recording of official documents.

PST on Mortgage Default Insurance

If opting for mortgage default insurance, there’s an extra Provincial Sales Tax (PST). This is due at closing and is a tax on top of your mortgage default insurance fees. The tax ranges by province, but has the following costs: Saskatchewan at 6%, Manitoba at 7%, Ontario at 8%, and Quebec at 9%.

Other Closing Costs – For The Buyer

Here are some of the other closing costs you can expect when buying a home:

Property Tax Adjustments

When purchasing a resale home, you may need to reimburse the previous owner for a portion of the annual property tax, depending on the remaining time in the year. If the previous owner has pre-paid their property taxes, you will compensate them for their prorated amount. Your lawyer can provide specific guidance, and they will typically inform you of the amount when you meet during the closing process. 

Home Inspection Fees

Including a condition for a professional home inspection in your purchase offer is essential. Typically costing around $500, this inspection uncovers potential hidden issues, potentially saving you from costly post-purchase surprises. You can also negotiate with the seller for repair cost credits or a full contract cancellation in the event of significant problems found by the inspector.

Mortgage Default Insurance

If your down payment is less than 20%, CMHC, Sagan, or Canada Guaranty insurance is mandatory (your lender will choose the provider). This is to protect your mortgage lenders in the event of default. While these fees vary with your down payment, they range between 2.8% to 4% of the mortgage amount. However, CMHC fees can be rolled into your mortgage payments, so they don’t need to be paid at closing. 

Appraisal Fees

Mortgage lenders commonly require a property appraisal to protect their loans. This usually costs between $300 and $600. Negotiating this fee with your lender is possible, especially if you’re a new customer. 

Property Insurance

Property insurance across Canada ranges from $780 to $1,250 annually on average. This covers your home from unforeseen damages and is required upon move-in. Note that fees will vary depending on your home’s value, province, and coverage. In general, more expensive homes will have higher insurance fees. 

Utility and Service Hook-Up Fees

This category includes the cost of setting up hydro, electricity, gas, and internet. As an example, Hydro One charges a one-time $38 account setup fee to set up water and electricity. Some utilities may also request a security deposit, but this requirement may be waived if you have maintained a positive payment history with them for a year or longer. Telecom providers can charge $50 to $100 (or more), but generally waive fees for new customers. Overall, you can expect to budget $100 to $300 for this category. 

Moving Costs

Local moves under 100 kilometres typically range from $650 to $1,500. Conversely, long-distance moves exceeding 100 kilometres are notably pricier, averaging $2,000 to $5,000 per move. Alternatively, you can reduce costs if you drive the moving truck. 

Are Real Estate Commissions Part Of The Closing Costs?

Usually, the seller pays for the commission of both real estate agents. During the closing process, this fee is deducted from the proceeds of the sale. For instance, let’s assume a seller is closing a $200,000 home sale. If the overall commission is 5%, there would be a total fee of $10,000. While these rates vary by province, they’re generally between 3.5% to 5%. This overall fee is then divided by the real estate agents and their brokerages. 

In addition, the seller must pay HST on the commission. This contributes another 13% to 15% in fees. Overall, the seller would receive $188,700 to $188,500 after real estate commissions are deducted. 

Do Closing Costs Need To Be Paid Upfront?

The majority of closing costs are typically managed by the buyer’s lawyer or notary public on or just before closing day. They ensure all payments are made to the right parties throughout the process. However, some costs, like mortgage default insurance, can be rolled over into the mortgage, allowing for a more flexible approach to managing immediate expenses. 

A useful tip for existing homeowners is to employ a cash-out refinance to roll closing costs into mortgage payments. This provides a lump-sum payment which you can use to cover closing costs. 

Can You Reduce Your Closing Costs?

  1. Taking advantage of First-Time Home Buyer programs will help you revoke or reduce land transfer taxes, providing further savings. 
  2. Opting for a down payment of 20% or more allows you to avoid mortgage default insurance premiums and PST entirely. 
  3. Negotiating with the seller is another avenue to explore; motivated sellers may be open to help cover some of your closing costs. 
  4. Take your time when selecting legal services by comparing the fee structures of various real estate lawyers, considering hourly rates and charges for specific tasks. 
  5. Additionally, keep an eye out for lender rebates, as some banks offer substantial cash rebates or special offers when you successfully fund your mortgage. TD, for example, provides rebates of up to $4,000 that can significantly reduce your overall closing costs.


Closing costs in Canada can significantly impact your home-buying budget. They typically range from 1.5% to 4% of the purchase price. These costs cover various fees and taxes essential for completing a real estate transaction, such as land transfer taxes, legal fees, title insurance, and moving expenses. While they differ by province and property type, most closing costs must be paid upfront in cash. 

To manage these expenses effectively, consider strategies like making a higher down payment, negotiating with the seller, comparing legal services, and exploring potential lender rebates. As you prepare to open the door to your new home, remember that understanding and preparing for closing costs is your ticket to a smoother, more affordable journey into homeownership.

Closing Cost FAQs

How much are closing costs in Canada? 

Closing costs in Canada typically range from about 1.5% to 4% of the property’s purchase price, in addition to the down payment. These costs can be influenced by various factors, including the property’s price, location (province), and specific expenses related to the property transaction, such as land transfer taxes and legal fees.

Why do closing costs vary?

Closing costs differ due to factors like location, property type, and various fees associated with the transaction, such as legal fees, land transfer taxes, and property appraisals.

Who pays for closing costs, the buyer, or the seller?

In Canada, it’s common for the buyer to cover most of the closing costs. However, certain costs, such as the realtor’s commission and mortgage penalties, are often the responsibility of the seller. The exact division of costs can be negotiated and may vary based on the real estate market conditions.

How much are lawyer fees when buying a house in Canada? 

When purchasing a house in Canada, lawyer fees often range between $500 and $1,000, depending on the complexity of the transaction and the legal services required.

How much is title insurance in Ontario? 

In Ontario, title insurance costs usually fall between $250 and $400 for real estate transactions.
Trevor O'Hagan avatar on Loans Canada
Trevor O'Hagan

Trevor is a personal finance, SEO, and technical sales expert. He received an Honours BAA (Economics) degree from Wilfrid Laurier University. Trevor previously worked at Salesforce and used his personal finance knowledge to become a homeowner in Ontario by age 25. Aside from Loans Canada, Trevor contributes to Forbes Advisor and Hardbacon. He also serves as the chairman of the Schwartz-Reisman Alumni Association and is a content specialist at Croton Content.

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