Buying your first home is a major milestone, but many buyers underestimate how much money they actually need. Most people plan for the down payment and monthly mortgage, then feel blindsided when thousands of dollars in extra charges appear before closing.

The truth is that first time home buyer costs go far beyond the sale price. If you want to avoid financial stress, you need to understand the hidden costs of buying a house, the real closing fees, and the ongoing expenses that start the moment you get the keys.

This guide breaks down the real cost of buying a home in Canada, with a strong focus on Ontario, so you can budget properly and buy with confidence.

What are the hidden costs when buying a home in Ontario and Canada?
The real cost of buying a home goes beyond your down payment and mortgage. Expect closing costs of about 1.5% to 4% of the home price, covering land transfer tax, legal fees, title insurance, home inspection and appraisal fees, mortgage default insurance (if your down payment is under 20%), moving and utility setup costs, and property tax adjustments. First-time buyers in Ontario can get rebates on land transfer tax, but you still need to budget for home insurance, maintenance, and unexpected repairs

Understanding Home Buying Fees

When planning your purchase, it’s essential to list all potential fees. Many of these don’t show up until closing day or after you own the home.

1. Land Transfer Tax (LTT)

This is usually the largest hidden cost. You pay this provincial tax when you purchase property, calculated as a percentage of the purchase price. In Ontario, it can add several thousand dollars unless you qualify for a first time home buyer rebate (up to $4,000) and, if in Toronto, a municipal rebate.

2. Legal Fees and Disbursements

You need a lawyer or notary for title searches, document review, registration, and closing paperwork. These fees often range from $1,200 to $3,000 or more in urban markets. Disbursements are small out-of-pocket amounts your lawyer pays on your behalf, including courier and registration fees.

3. Home Inspection and Appraisal

An inspection helps you spot issues before purchase, typically costing $400 to $800. An appraisal may be required by your lender to confirm the property’s market value, usually $300 to $500. These are important costs many first time buyers overlook.

4. Title Insurance

This protects against title defects, liens, and fraud. Lenders often require it, and it usually costs a few hundred dollars.

5. Mortgage Default Insurance

If your down payment is under 20%, Canadian law requires mortgage default insurance from CMHC or another insurer. The premium is based on your down payment and can be added to your mortgage balance.

6. Adjustments and Prepayments

On closing day, you may reimburse the seller for prepaid property taxes, utilities, or condo fees. You might also pay interest adjustment if your mortgage starts mid-month.

7. Moving and Setup Costs

Don’t forget moving companies, truck rentals, or utility setup fees (electricity, water, internet), which can easily reach several thousand dollars.

8. Property Insurance and Maintenance

Home insurance is required before closing and is an ongoing cost, usually $900 to $2,000+ annually. You should also budget around 1% of the home’s value each year for maintenance and repairs.

Hidden Costs of Buying a House in Ontario vs Canada

Ontario

• Land Transfer Tax is significant and doubled in Toronto due to municipal tax.
• Legal fees and inspection costs tend to be higher in urban areas.
• Rebates are available for first time buyers, but you still need cash at closing.

Rest of Canada

• Quebec, BC, and other provinces vary in tax and rebate rules.
• Some provinces do not charge land transfer tax.
• New builds may have GST/HST and warranty costs.

What First Time Home Buyers Need to Know

Closing Costs for First Time Buyers

A good rule of thumb is to set aside at least 1.5% to 4% of your home’s purchase price for closing costs beyond your down payment. For a $700,000 home, that might mean $10,000 to $28,000 in additional costs.

Budget Tips for First Time Home Buyers

• Use online land transfer tax calculators to estimate costs before making offers.
• Get quotes early for inspection, appraisal, insurance, and legal services.
• Take advantage of government programs like the Home Buyer’s Plan and rebates where eligible.

Frequently Asked Questions

Hidden costs of buying a house Reddit users mention?
Many buyers on Reddit highlight closing adjustments, legal and title fees, land transfer tax, and unexpected adjustments due at closing, sometimes totaling 3% to 5% of the purchase price.

Fees when buying a house Ontario?
Expect land transfer tax, legal fees, title insurance, inspection, appraisal, and adjustments. Your lawyer can give a detailed invoice before closing.

Lawyer fees when buying a house Ontario?
Typically between $1,200 and $3,000 depending on location and complexity.

Cost of buying a house in Ontario calculator?
Online land transfer tax and closing cost calculators are available from provincial government sites and many Realtor or mortgage brokerage pages to help you estimate specific numbers before you buy.

Closing costs when buying a house Ontario calculator?
Use these tools and include taxes, legal fees, title insurance, inspection, appraisal, and adjustments to get an accurate picture.

What are the biggest closing costs buyers usually pay?
The largest expenses typically are land transfer tax, legal fees, mortgage default insurance, and inspection/appraisal fees.

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