Mortgage Closing Costs in Canada: Complete Guide

You’ve saved the down payment.

You’ve been pre-approved.

You’ve found the house, negotiated the offer and started thinking about possession day.

Then your lawyer tells you how much money you’ll need to bring to closing.

That’s when some buyers discover an uncomfortable truth:

The down payment isn’t the last expense of buying a home.

There are legal costs, taxes in some provinces and municipalities, property adjustments, insurance and potentially several other expenses between an accepted offer and getting the keys.

None of this needs to be a surprise.

If you’re budgeting for mortgage closing costs in Canada, a reasonable starting point is to keep roughly 1.5% to 4% of the purchase price available for closing-related expenses, although the actual amount can vary considerably by province, property and transaction.

And that’s the important part.

There’s no universal “$8,000 closing-cost package” that applies to every Canadian homebuyer.

Let’s look at what you’ll actually be paying for.

How Much Are Mortgage Closing Costs in Canada?

This is usually the first question.

It’s also the one where we’d be careful about giving you one percentage and sending you on your way.

A buyer in Alberta purchasing a $500,000 home can have very different costs from someone buying a $500,000 property in Ontario because provincial taxes and registration costs differ.

The property itself matters too.

Are you buying a condo?

A newly constructed home?

Is an appraisal required?

Has the seller already paid the property taxes for the year?

Those details can change the amount required on closing day.

That’s why the 1.5% to 4% range is better treated as a planning cushion than a quote.

If you’re already looking at properties, we can get much closer than that by working with the actual purchase price and location.

Let’s Put Some Numbers Around It

Suppose you’re buying a $600,000 home.

If you set aside 2% of the purchase price for closing costs, that gives you a working budget of:

$600,000 × 2% = $12,000

Does that mean your closing costs will be exactly $12,000?

No.

You may need considerably less—or more.

The point is to avoid putting every available dollar into the down payment and then realizing you still need cash for the transaction itself.

This comes up more often than you’d think.

Someone has $65,000 available and mentally assigns all $65,000 to the down payment. Then we start discussing legal fees, adjustments, insurance and everything else.

Suddenly, the original down-payment plan has to change.

We’d much rather separate those buckets before you start writing offers.

Your Lawyer Does More Than Hand You the Keys

Legal fees are one of the closing costs you can expect on almost every purchase.

Your real estate lawyer handles important pieces of the transaction, including reviewing documents, completing title-related work, registering the property transfer and mortgage, and making sure funds go where they’re supposed to go.

You’ll generally see the lawyer’s professional fee along with disbursements and applicable taxes.

The exact amount varies by law firm and transaction.

A straightforward purchase may cost less than a file requiring additional work.

Rather than relying on an online estimate, ask your lawyer for a quote early in the process. It’s a much better number to put into your closing budget.

Land Transfer Tax Can Change the Numbers Quickly

This is where location becomes especially important.

Several Canadian provinces charge a land transfer tax or similar property transfer tax when real estate changes hands. The calculation and available rebates vary by province.

Some municipalities can add another layer. Toronto, for example, has its own municipal land transfer tax in addition to Ontario’s provincial tax.

Other provinces use different systems and fees.

If you’re a first-time homebuyer, you may also qualify for rebates or exemptions depending on where you’re purchasing and whether you meet the applicable requirements.

The practical advice here is simple:

Don’t copy somebody else’s closing-cost estimate unless they’re buying in the same jurisdiction under similar circumstances.

The tax difference alone can make their number irrelevant to you.

Property Tax Adjustments Aren’t Really a Fee

This one sounds complicated until you see what it’s doing.

Imagine the seller has already paid the property’s municipal taxes for a period that extends beyond your possession date.

Once you own the home, part of that prepaid tax belongs to your period of ownership.

So, the closing statement may require you to reimburse the seller for your share.

The reverse can happen depending on what’s been paid and when you’re taking possession.

These are called adjustments.

Similar adjustments can sometimes apply to other prepaid property expenses.

You’re not necessarily being charged an additional tax. The lawyer is making sure the buyer and seller each pay the appropriate share based on the closing date.

Still, it affects how much cash you need at closing—which is why it belongs in the budget.

Title Insurance: A Small Line Item With an Important Job

Your lawyer may arrange title insurance as part of the purchase.

Title insurance can provide protection against certain title-related risks, subject to the policy’s terms. That can include issues that aren’t always obvious during the purchase process.

The cost depends on the property and policy.

For most buyers, the practical thing to know is that it may appear among the legal and closing expenses rather than as a separate bill you were expecting months in advance.

Your lawyer can explain exactly what coverage is being arranged and what it costs.

Will You Need an Appraisal?

Maybe.

A lender may require an appraisal to confirm that the property provides adequate security for the mortgage.

This becomes particularly important if the agreed purchase price and the property’s supported market value don’t line up.

Here’s why.

Suppose you agree to pay $700,000, but an appraisal supports a value of only $675,000.

The lender may base its financing on the lower supported value.

That can create a cash shortfall the buyer needs to cover.

That’s a much bigger issue than the appraisal fee itself.

Not every mortgage requires a borrower-paid appraisal, and the cost varies. But if one is needed, it’s another expense to have on your radar.

Don’t Forget About Home Insurance

Before a lender advances mortgage funds, you’ll generally need appropriate property insurance in place.

This isn’t mortgage default insurance.

It’s insurance on the home itself.

You’ll usually arrange coverage to take effect on your possession or closing date and provide confirmation if required.

The premium depends on the property, coverage and insurer, so this isn’t something we’d try to estimate from the purchase price alone.

It’s worth getting quotes before closing rather than treating insurance as a problem for possession day.

Condo Buyers Have a Few Extra Things to Think About

Buying a condominium changes the closing conversation slightly.

In addition to the usual legal and mortgage-related expenses, there can be costs associated with reviewing condominium documents or status information, depending on the province and transaction.

You’ll also want to understand the condo fees and whether any adjustments are being made at closing.

More importantly, we’d want you to know what you’re buying into.

A condo with a healthy reserve and well-managed finances is a different proposition from a building facing major repairs or special assessments.

That’s not strictly a “closing cost,” but it’s exactly the kind of financial detail worth investigating before the purchase becomes unconditional.

What About Newly Built Homes?

New construction deserves its own conversation.

Depending on the property and purchase agreement, buyers may encounter GST/HST considerations, adjustments, upgrade costs, warranty-related charges, utility setup costs or other builder-specific expenses.

Some costs may be included in the purchase agreement.

Others may not be.

This is one situation where we’d strongly recommend having your lawyer review the agreement and explain the potential closing costs rather than relying on a generic online calculator.

A resale-home estimate may not tell you much about what you’ll actually owe on a new build.

The Expense People Forget: Moving Into the House

Technically, a moving truck isn’t a mortgage closing cost.

Your bank doesn’t care whether you own a sofa.

Your budget does.

Once you get the keys, there’s still moving, utility setup, locks, furniture and all the little purchases that somehow multiply during the first month.

Then there’s the possibility of repairs.

Maybe the inspection already warned you about the furnace. Maybe you discover the dishwasher has a very loose interpretation of the word “working.”

We generally don’t love seeing buyers arrive at possession day with their savings account sitting at $37.

Leaving yourself some breathing room after closing matters.

A Simple Closing-Cost Checklist

Before making an offer, we’d want room in the budget for the expenses that could realistically apply to your purchase:

Legal fees, disbursements and applicable taxes
Land or property transfer taxes where applicable
Title insurance
Property tax and other adjustments
Appraisal costs if required
Home insurance
Condo-related documentation or adjustments where applicable
New-construction taxes or charges where applicable
Moving and immediate property expenses

Not every buyer will pay every item on that list.

That’s exactly why your estimate should be based on your purchase rather than a generic national number.

Where Does Mortgage Default Insurance Fit?

This causes some confusion.

If you’re purchasing an eligible home with less than 20% down, you may require mortgage default insurance.

You can generally add the insurance premium to your mortgage instead of paying the full amount in cash at closing.

However, if your province charges sales tax on the premium, you generally can’t add that tax to your mortgage and may need to pay it at closing.

So, while the mortgage insurance premium itself may not come out of your closing-day cash, there can still be an upfront tax implication depending on your province.

This is another reason insured buyers should plan beyond the minimum down payment when preparing financially for closing.

How Much Cash Should You Have Left After Closing?

There’s no magic number.

But we’d ask a different question:

What happens if something breaks during your first month in the house?

If the answer is “credit card,” your purchase budget may deserve another look.

Homeownership comes with expenses that renters don’t always have to think about. Keeping an emergency fund gives you somewhere to turn when the hot-water tank, furnace or roof decides it would like some attention.

Getting approved for the largest possible mortgage and draining your savings to close isn’t necessarily winning.

Sometimes buying slightly below your maximum leaves you in a much stronger position.

Frequently Asked Questions

Are closing costs included in my mortgage?

Usually, you should expect to pay many closing costs separately from the mortgage and down payment.

You can generally add certain costs, such as an eligible mortgage default insurance premium, to your mortgage. However, you should confirm whether you can finance any other closing expenses rather than assuming your mortgage will cover them.

When do I pay closing costs?

Your lawyer typically settles many of the transaction’s final costs around closing.

You may pay other expenses—such as an appraisal, inspection, or insurance—earlier or arrange them separately.

Do first-time homebuyers pay closing costs?

Yes.

Being a first-time buyer doesn’t eliminate closing costs, although you may qualify for certain rebates, credits or exemptions depending on the jurisdiction and your circumstances.

Build closing expenses into the budget even if you expect to receive a first-time-buyer benefit.

Are closing costs the same everywhere in Canada?

No.

This is one of the biggest reasons national estimates can be misleading.

Taxes, registration systems and available rebates vary by province and sometimes municipality. Your property type and mortgage can change the numbers further.

Is the down payment considered a closing cost?

We’d budget it separately.

Your down payment is the portion of the purchase price you’re contributing yourself. Closing costs are the additional expenses required to complete the transaction.

If you have $100,000 available to buy, don’t automatically assume you have a $100,000 down payment.

The Bottom Line

The worst time to discover mortgage closing costs in Canada is a few days before you get the keys.

By then, the house has been purchased, and the money needs to be there.

We’d rather work backwards.

Start with the cash you have available.

Set aside a realistic amount for closing costs and an emergency cushion.

Then determine what can comfortably go toward the down payment.

That may give you a slightly different purchase budget than an online mortgage calculator—but it’ll be a much more useful one.

If you’re preparing to buy, Red Key Mortgage can help you look at the financing before you start making offers. We’ll work through your down payment, mortgage amount and the closing expenses you should be planning for based on the property and location.

Because getting approved for the mortgage is only part of buying the home.

You also need to be ready for everything that happens between “offer accepted” and “here are your keys.”

If you’re unsure which option is best for you, give us a call. We’ll take the time to understand your goals and help you choose the mortgage solution that best fits your needs.

Helpful Resources

Mortgages can feel overwhelming at first but once you understand how everything fits together, it gets a lot simpler.

That’s what we do every day. And honestly? It doesn’t have to be complicated.

Mortgages are simple for us—let us make them simple for you.

Mortgage Closing Costs in Canada: What Homebuyers Should Budget For