How much should I budget for closing costs?

A common rule of thumb is 1.5% to 4% of the purchase price, though the exact amount depends heavily on your province and city, largely because land transfer tax differs across Canada.

Are closing costs part of my mortgage?

Generally no. Closing costs are usually paid in cash at closing and are separate from the mortgage and down payment, so you need to save for them on top of your down payment.

What is the biggest closing cost?

In many markets, land transfer tax is the largest single closing cost, particularly in cities that charge a municipal tax on top of the provincial one.

Mortgage Glossary

What is Closing Costs?

Closing costs are the one-time fees and expenses you pay to finalize a home purchase, on top of the down payment. In Canada they typically include land transfer tax, legal fees, title insurance, and an appraisal. Most buyers should budget roughly 1.5% to 4% of the purchase price to cover them.

Find my best mortgage Back to glossary

Quick answer

Also known as: closing fees, settlement costs

Key points

Closing costs are paid in cash at completion, separate from the down payment
Budget roughly 1.5% to 4% of the purchase price as a general guide
Common items include land transfer tax, legal fees, and title insurance
Land transfer tax varies significantly by province and city
First-time buyers may qualify for land transfer tax rebates in some areas
Property tax and utility adjustments are settled at closing

Closing Costs explained

Closing costs are the various charges due at the moment a real estate transaction completes and ownership transfers to the buyer. They are separate from the down payment and the mortgage itself, and they must usually be paid in cash at closing.

Common Canadian closing costs include land transfer tax, lawyer or notary fees, title insurance, the home inspection, an appraisal, and adjustments for prepaid property tax. The total varies widely by province and municipality, especially because land transfer tax differs across the country.

What a Closing Costs is for

Closing costs cover the legal, administrative, and tax requirements of transferring a property. They pay the professionals and government bodies that register your ownership, verify clear title, and ensure the transaction is legally sound and properly recorded.

How it can help you

Knowing your closing costs early prevents a nasty surprise on possession day and helps you save the right total before you buy. Lenderoo lets you compare mortgage offers from 40+ lenders for free, so once you know your closing budget you can line up financing that leaves enough cash to cover it.

When it comes up

A buyer planning a purchase sets aside both the down payment and an extra few percent of the price for closing costs, ensuring they have funds for the lawyer, land transfer tax, and title insurance on closing day.

Example: Budgeting for closing on a $500,000 home

Sam buys a home for $500,000. Beyond the down payment, he budgets about 3% for closing costs, which is roughly $15,000.

That figure covers land transfer tax, legal fees, title insurance, an appraisal, and property tax adjustments. Because he planned ahead, Sam has the cash ready and avoids scrambling in the final days before possession.