First-Time Home Buyer Closing Costs in Ontario: What to Budget

Buying your first home is exciting — and then comes the closing cost conversation. Most buyers focus on saving the down payment, only to discover there's a separate pile of costs due on the day they get the keys. Those costs can add up to several thousand dollars beyond the purchase price, and they need to be in your bank account on closing day.

Understanding exactly what you're paying for — and why — removes the surprise. This article walks through every major closing cost a first-time home buyer in Ontario should expect, including the one rebate that can put a meaningful amount back in your pocket.

What Are Closing Costs?

Closing costs are the fees and charges payable on the day legal title to your new home transfers from the seller to you. Unlike your down payment, which goes toward the property itself, closing costs cover the legal, government, and administrative work that makes the transfer official and protects your ownership.

Lenders, real estate agents, and mortgage brokers routinely tell buyers to budget 1.5% to 4% of the purchase price for closing costs. The exact amount depends on the property's value, whether you're buying in the City of Toronto, the type of property, and the specific services your transaction requires. Always confirm exact figures with your real estate lawyer once you have a firm deal.

The Major Closing Costs, One by One

1. Legal Fees

Ontario law requires a licensed lawyer to complete a residential real estate purchase. Your lawyer reviews and certifies title, prepares and registers the transfer documents, coordinates with your lender, and handles the money on closing day. Legal fees for a standard purchase vary by firm and complexity; flat-fee pricing (like Treadstone Law offers) lets you know the number upfront rather than receiving a surprise bill weeks later.

2. Ontario Land Transfer Tax (LTT)

Every buyer of Ontario real estate pays provincial Land Transfer Tax under the Land Transfer Tax Act. The tax is calculated on a sliding scale based on the purchase price:

• A lower rate applies to the first portion of the price.
• The rate increases as the price climbs through several thresholds.
• Homes priced above a certain level (roughly $400,000 and above, as of writing — verify the current brackets) attract an additional marginal rate.

For a home in the $700,000–$900,000 range, the provincial LTT alone typically runs several thousand dollars. Your lawyer will calculate the exact amount once the purchase price is confirmed.

First-Time Buyer Rebate: Ontario offers a Land Transfer Tax rebate for first-time home buyers. As of writing, the maximum rebate is up to $4,000 on the provincial LTT, which can offset the tax entirely on lower-priced purchases. Eligibility conditions apply — for example, you must never have owned a home anywhere in the world before, and the property must become your principal residence. Verify the current maximum and conditions with your lawyer or at ontario.ca, as the rebate amount can change.

3. Toronto Municipal Land Transfer Tax

If your property is within the City of Toronto, you pay a second land transfer tax on top of the provincial one — Toronto's own Municipal Land Transfer Tax (MLTT). The MLTT uses a similar sliding-scale structure. First-time buyers purchasing in Toronto may be eligible for a separate municipal rebate as well. See our article on the Toronto Municipal Land Transfer Tax for the full breakdown.

4. Title Insurance

Title insurance is a one-time premium — no annual renewals — that protects your ownership against risks that may not show up even in a thorough title search: unknown liens, survey errors, title fraud, certain zoning violations, and more. In Ontario, nearly every purchase is completed with title insurance in place of a traditional survey (though surveys are still obtained in some circumstances).

Premiums vary by property value but are typically a few hundred dollars for a residential property. Given what title insurance covers, it is widely considered one of the best-value items on the closing cost list.

5. Disbursements

Disbursements are the out-of-pocket expenses your lawyer incurs on your behalf and passes on at cost. Common disbursements include:

• Land registry search and registration fees (paid to the province through the Teraview system).
• Off-title searches: property tax arrears search, execution search (to confirm no judgments against the seller), and utility/work order searches.
• Bank wire or cheque handling fees.
• Courier and document costs.

Disbursements are typically itemized on your lawyer's reporting letter so you can see exactly what was spent.

6. Closing Adjustments

On closing day, the purchase price is adjusted for items the seller has prepaid or underpaid. Common adjustments include:

• Property taxes: If the seller has prepaid taxes for the full year, you reimburse them for your share of the remaining months.
• Condominium maintenance fees: If the seller prepaid the month's maintenance fee, you credit them back for your portion.
• Utilities: Less common for freehold but may arise in certain transactions.

Adjustments can go in either direction — sometimes they reduce what you owe, sometimes they add to it. Your lawyer prepares a statement of adjustments before closing so you know the final number.

7. Home Inspection and Appraisal

While not strictly legal closing costs, buyers often pay for a home inspection (a few hundred dollars, paid to the inspector before conditions are waived) and a mortgage appraisal (usually arranged by your lender, sometimes passed to you). Budget for these separately.

8. Moving and Immediate Costs

Also plan for moving expenses, utility hookups, and any immediate repairs or appliance needs. These are not closing costs in the legal sense, but they arrive in the same financial window.

A Realistic Closing Cost Summary

For a first-time buyer in Ontario purchasing a freehold home outside Toronto at around $750,000 (as of writing — use current figures when you're ready to buy):

For a Toronto purchase, add the Municipal Land Transfer Tax, which can add several thousand dollars more.

Frequently asked questions