The offer has been accepted, your mortgage is moving ahead, and then the final numbers arrive. For many buyers, closing costs first home Canada purchases can bring are the biggest surprise after the deposit. These are the expenses due around possession day that sit outside your down payment and mortgage amount. Planning for them early means fewer stressful last-minute decisions.

For a first home in Ontario, a sensible starting point is to keep 1.5% to 4% of the purchase price available for closing costs, separate from your down payment. The right figure depends on the property, the municipality, the mortgage, and whether you qualify for first-time buyer rebates. In the GTA, land transfer tax can make a meaningful difference.

What counts as a closing cost?

Closing costs are the fees, taxes and services needed to legally complete your home purchase and take ownership. Some are paid before closing, some are handled by your lawyer, and some arrive just after you get the keys.

They are not all optional. A home inspection may be your choice, for example, but legal work, land transfer tax and title insurance are usually part of the process. The key is knowing which costs apply to your purchase before you commit every available dollar to the down payment.

The main closing costs for first home buyers in Canada

Land transfer tax

In Ontario, buyers generally pay provincial land transfer tax when a property changes hands. If you buy in the City of Toronto, there is also a separate municipal land transfer tax. That second tax is one reason a Toronto purchase can require a larger closing-cost budget than a similar-priced home in Burlington, Milton or Halton Hills.

Eligible first-time buyers may receive a rebate on Ontario land transfer tax. Eligible Toronto buyers may also receive a municipal rebate. The rebate can reduce the bill significantly, but it may not eliminate it entirely on a higher-priced home. Your lawyer can confirm eligibility and calculate the exact amount before closing.

Legal fees, disbursements and title insurance

A real estate lawyer reviews the agreement, conducts title searches, registers the property and mortgage, receives the lender funds, and makes sure ownership transfers properly. Legal fees vary, but first-time buyers should budget for the lawyer’s fee plus disbursements such as registrations and searches.

Title insurance is usually arranged through the lawyer. It protects against certain title-related issues, including registration errors, fraud and some problems that may not appear in a standard search. It is normally a one-time cost, not an annual insurance policy.

Ask for an all-in legal quote rather than looking only at the advertised legal fee. A clear quote should separate the lawyer’s fee, tax, title insurance and expected disbursements.

Home inspection and appraisal

A professional home inspection can uncover issues that are easy to miss during a viewing: an ageing roof, moisture in the basement, electrical concerns or costly repairs ahead. In a competitive market, some buyers choose to submit an offer without an inspection condition. That can improve the appeal of an offer, but it also increases risk. If you waive the condition, consider arranging an inspection before making the offer where possible.

Your lender may also require an appraisal to confirm the property supports the mortgage amount. Sometimes the lender covers it; sometimes the buyer pays. It is worth asking early, particularly if you are buying a unique property, a rural home, or a property where the agreed price appears above nearby sales.

Mortgage default insurance and related fees

If your down payment is under 20% of the purchase price, mortgage default insurance is normally required. The premium is often added to the mortgage rather than paid in cash on closing, so it does not always feel like a closing cost. Still, it affects your monthly payment and the total amount borrowed.

In Ontario, provincial sales tax on the insurance premium cannot usually be rolled into the mortgage. It is generally due in cash at closing. This is an easy cost to overlook when you are focused on the down payment percentage.

Property tax and utility adjustments

The seller may have prepaid property taxes, water charges or other items that cover a period after you take possession. Your lawyer adjusts the statement so each party pays its fair share. If the seller has paid ahead, you reimburse the relevant portion on closing.

These adjustments are not extra fees in the usual sense, but they can still change the cash you need. The amount depends on the closing date and the property’s billing cycle. Condominium buyers may also see adjustments for common expenses or a reserve fund contribution, depending on the building and agreement.

Costs that happen before and after closing

Not every purchase expense appears on your lawyer’s final statement. Before closing, you may pay for a home inspection, appraisal, deposit, insurance and moving arrangements. After closing, there may be immediate needs such as changing locks, buying a lawnmower, repairing a leaking tap, or purchasing window coverings.

Then there is moving day itself. Removal costs, boxes, utility set-up fees and a few meals when the kitchen is in chaos can add up quickly. A house with no appliances included may require a much larger first-month budget than expected.

Keep a separate moving and home set-up fund if you can. Your closing-cost fund should get you through the legal transaction; your home set-up fund gives you room to settle in without putting every unexpected purchase on a credit card.

How much should you set aside?

The 1.5% to 4% guideline is useful, but it is not a promise. A buyer purchasing outside Toronto who receives a full first-time buyer land transfer tax rebate may land near the lower end. A buyer in Toronto, or someone with a smaller down payment and insurance tax to pay, may need closer to the upper end.

For example, a $700,000 Ontario property outside Toronto may involve legal fees and title insurance, an inspection, tax adjustments and land transfer tax after any available rebate. Add the sales tax on mortgage default insurance if the down payment is below 20%, and the required cash can be several thousand dollars more than a buyer first expected.

The most useful number is not a generic estimate. It is a written, property-specific estimate prepared before you remove conditions or finalise your mortgage. That lets you see the whole picture: down payment, deposit, lender requirements, closing costs and the money left for life after possession.

Ways to avoid a last-minute cash shortfall

Start by treating your down payment as separate money. If you have saved exactly 5% or 10% of the purchase price, you may not yet be ready to close. Build the closing-cost reserve alongside the down payment, even if that means adjusting your target purchase price.

Next, ask direct questions. Will the lender require an appraisal? Is default insurance applicable? Does the property have a rental water heater, condominium fees or prepaid taxes that could affect adjustments? If you are buying in Toronto, has the municipal land transfer tax been included in your estimate?

A mortgage broker can help you understand the lender side of the numbers, while your lawyer provides the final legal closing statement. Both should be part of your planning well before possession day. At EasyApproval.ca, Peter can help first-time buyers look beyond the rate and choose a mortgage structure that leaves room for the real cost of getting settled.

A final word before you make an offer

A first home should feel exciting, not like a financial ambush. Keep some breathing room in your budget, get the numbers in writing, and do not be afraid to ask for an explanation when a fee is unclear. The right mortgage is one that helps you buy your home and still sleep comfortably once the keys are in your hand.