How much should I save for closing costs when buying an Ontario home?

Short answer

Budget for closing costs separately from your down payment. FCAC suggests preparing for roughly 1.5% to 4% of the purchase price, but your actual amount depends on the property, municipality, taxes, legal quote and adjustments. On a $750,000 purchase, that planning range is

Short answer

1,250 to $30,000. Use an itemized budget and your lawyer’s statement rather than assuming one percentage will cover every transaction.

Source: FCAC home-buying costs.

The client concern behind this question

The down payment is ready, but legal fees, land transfer tax, adjustments, insurance, appraisal, moving and immediate repairs can still leave the buyer short.

First-time buyers often focus on the purchase price because it is visible. The risks usually sit underneath it: the source and timing of cash, lender qualification, property acceptance, legal conditions and how much money remains after the keys arrive.

Start with the decision, not the maximum approval

Decide what monthly housing cost leaves room for food, transportation, childcare, savings, maintenance and an unexpected expense. Then calculate a price range. A lender’s maximum answers an underwriting question; it does not decide what is comfortable for the household.

Separate borrower approval from property approval

The borrower review considers income, credit, debts, down payment and documents. The property review can include the appraisal, condition, location, legal use, unit count, condominium information and insurer or lender restrictions. A strong borrower can still face a property decline or lower valuation.

Build the cash-to-close map

List the deposit already paid, remaining down payment, land transfer tax, legal costs, title insurance, inspection, appraisal, adjustments, moving costs and a post-closing reserve. FCAC’s general home-buying guidance estimates upfront costs at roughly 1.5% to 4% of purchase price, but the buyer’s lawyer and actual transaction should determine the working amount.

Every large deposit, transfer or gift in the required review period should have a clear paper trail. Do not move money repeatedly between accounts without keeping statements. Registered-plan withdrawals also need enough time for the institution, lender and lawyer to receive acceptable evidence.

A worked $750,000 Ontario closing budget

Illustration only: Assume a $750,000 resale home in Brampton, a 20% down payment and a buyer eligible for the full Ontario first-time-homebuyer refund. This example excludes Toronto’s additional municipal tax and any non-resident taxes. The service amounts below are assumed budgeting figures, not quotes.

• Ontario land transfer tax before the refund: $11,475.
• Assumed full first-time-buyer refund: minus $4,000, leaving $7,475. Have the lawyer verify eligibility.
• Legal work and disbursements: $2,000, assumed to include applicable taxes and exclude the separately listed title insurance.
• Title insurance: $500.
• Home inspection: $500.
• Appraisal, if charged to the buyer: $400.
• Property-tax or other closing adjustments: $1,000.
• Moving allowance: $1,000.

Illustrative transaction and moving budget: $12,875, in addition to the down payment. Without the assumed $4,000 refund, the same budget becomes $16,875. Keep a separate emergency reserve; adding an assumed $5,000 reserve makes the first scenario’s extra cash target $17,875.

The provincial tax calculation is $275 on the first $55,000, $1,950 on the next $195,000, $2,250 on the next $150,000 and $7,000 on the remaining $350,000. Ontario’s tax calculation and first-time-homebuyer refund conditions explain the rules.

How much remains after paying the offer deposit?

The 20% down payment in this example is $150,000. If a $37,500 offer deposit has already been paid and is credited toward the purchase price, the remaining down payment is $112,500. Add the $12,875 working cost budget and $5,000 reserve: $130,375 still needs to be earmarked before deducting any costs already paid separately. The deposit is part of the purchase funds; do not count it as an extra fee.

Your lawyer will specify the actual amount to transfer and its deadline. The reserve stays with you; inspection, appraisal and moving charges may be paid separately. Reconcile each paid item so it is not counted twice.

When this example needs a different budget

• Toronto purchase: additional municipal land transfer tax and a separate eligibility test for any municipal rebate may apply.
• Less than 20% down: mortgage default insurance and applicable tax on the premium can change the financing and cash required.
• New construction: taxes, rebate assignments, development charges, adjustments and interim occupancy may require a separate budget.
• Alternative or private financing: include any applicable lender, broker and additional legal fees before comparing the total cost.
• Property-specific issues: well or septic checks, surveys, insurance, repairs, utility setup and unusual adjustments can add costs.

What can change the answer?

The answer can change with city, purchase price, first-time-buyer eligibility, property type, tax adjustments, lawyer’s statement and lender requirements. A small change after approval, including a new vehicle payment, job change, missed payment or unexplained transfer, can alter qualification or documentation before closing.

Questions Rajiv would ask before the offer

1. What payment feels comfortable after every household expense?
2. Where did the deposit, down payment and closing money come from?
3. What does the pre-approval cover, and what remains unreviewed?
4. What property risks could affect the lender, insurer or appraisal?
5. What happens if the value comes in below the price?
6. Which professional must confirm the legal or tax point?
7. If non-A lending is proposed, what is the total cost and exit?

What not to assume

• Do not assume pre-approved means funded.
• Do not spend every available dollar on the down payment.
• Do not remove a financing condition without understanding the risk.
• Do not assume every first-time-buyer definition is identical.
• Do not change jobs, borrow money or move large funds without discussing the file.

Facts, assumptions and professional roles

The federal and Ontario sources explain consumer programs, tax rules and refunds. They do not set an individual lender’s underwriting policy. Rajiv’s broker interpretation connects the verified file to available lender programs. The lawyer confirms title, contract and land-transfer-tax matters; the accountant or tax professional confirms personal tax treatment.

Related AskRajiv answers

Continue with Mortgage Knowledge Centre, Mortgage Declined: Start Here, down-payment and closing-fund problems, low-appraisal closing shortfalls, mortgage term versus amortization, options after an A-lender decline.

Mortgage second opinion or strategy session

Before making the offer firm, request a Mortgage Second Opinion or Mortgage Strategy Session through SimplifyMortgage.ca. Bring the pre-approval, income documents, credit obligations, bank statements, registered-plan information, purchase agreement, listing and estimated closing costs. Rajiv can identify the real risk and compare practical lender routes before the deposit or closing is exposed.