Budget Breakdown: Thinking of Buying a Home? Here’s What To Budget For!
Buying a home is an exciting milestone—but the upfront costs can often catch people off guard. To help you prepare (and avoid surprises), I’ve put together a clear and simple guide outlining the most common acquisition and closing costs.
Feel free to forward this to friends or family members who might also be planning to buy—it’s a helpful budgeting resource for anyone on the path to homeownership!
Deposit
Cost: Typically 5% of the purchase price
Once your offer is accepted, you’ll need to provide a deposit within 24 hours—usually about 5% of the agreed purchase price. This amount forms part of your overall down payment, so having those funds easily accessible is key.
Downpayment
Cost: Varies based on the purchase price
Here’s how minimum down payments work in Canada:
Tip: Homes priced at $1.5M or more are not eligible for mortgage insurance, so a 20% down payment is required.
Land Transfer Tax (LTT)
Cost: Depends on purchase price & location
In Ontario, land transfer tax is due at closing—and if you’re buying in Toronto, there’s an additional municipal land transfer tax on top of the provincial one. The total amount depends on the price of the home, and it can add up quickly.
Good news for first-time buyers: You may be eligible for a rebate (more on that below!)
Property Insurance
Cost: $700 – $2,200/year
Most lenders require proof of property insurance before they’ll release mortgage funds. Costs vary based on the home’s value, age, condition, location, and what’s inside (contents and valuables).
Legal Fees and Disbursements
Cost: Around $2,000
A real estate lawyer handles important legal tasks like title searches, land registration, and more. These fees usually include title insurance and other necessary disbursements.
Home Inspection
Cost: Around $600
A home inspection is a great way to identify potential issues before finalizing your purchase. Even in a hot market, skipping the inspection can be risky—it might reveal issues that could cost you thousands down the road.
Moving Costs
Cost: $500–$1,500
Moving day expenses depend on how much you’re moving and how accessible your new home is. If you’re hiring professional movers, budget for at least a full day of service.
Mortgage Insurance (CMHC Insurance)
If your down payment is less than 20%, mortgage insurance is mandatory. The premium depends on the purchase price and how much you’re putting down, and it’s typically rolled into your mortgage—not paid upfront.