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Summary: Closing costs in Ontario are the one-time taxes, legal fees, and adjustments due at closing, on top of the down payment. First-time buyers in Toronto typically pay 1.5%–4% of the purchase price, with Ontario's Land Transfer Tax Act being the largest single line.
What counts as a closing cost?
A closing cost is any one-time payment a buyer makes around closing day, on top of the down payment and mortgage proceeds. They cover the legal and administrative work to transfer the property into your name, plus the taxes and adjustments that fall due the day the title changes hands.
These costs are separate from the recurring expenses of ownership: property tax, mortgage payments, utilities, condo fees. They're a one-time stack of payments that need to be in your lawyer's trust account a day or two before closing, and underestimating them is one of the most common reasons a deal gets stressful in the final week.
It helps to think of closing costs in three buckets: government taxes, professional fees, and adjustments owed to the seller for things they've already prepaid.
What are the line items you'll actually pay?
The specific line items vary by property type, location, and mortgage structure, but most Ontario buyers will face the same core categories: government taxes, the lawyer's bill, title insurance, and adjustments owed to the seller for prepaid expenses.
Cost | Who collects it | Typical range |
|---|---|---|
Ontario Land Transfer Tax | Province of Ontario | 0.5%–2.5% of purchase price |
Municipal Land Transfer Tax (Toronto only) | City of Toronto | 0.5%–7.5% of purchase price |
Legal fees and disbursements | Real estate lawyer | $1,500–$2,500 |
Title insurance | Title insurer | $250–$1,000 (one-time premium) |
Property tax adjustment | Reimbursed to seller | Varies by closing date |
Status certificate review (condos) | Real estate lawyer | $100–$300 |
HST on new construction | Canada Revenue Agency / builder | 13% of purchase price (rebated if eligible) |
Mortgage default insurance | Canada Mortgage and Housing Corporation, Sagen, or Canada Guaranty | Added to mortgage if down payment <20% |
A few notes on the items most first-time buyers underestimate:
Land Transfer Tax. Ontario charges a marginal-rate tax on every residential purchase under the Land Transfer Tax Act, R.S.O. 1990, c. L.6. Toronto adds a second, equivalent municipal tax on top — the only municipality in Ontario that does this.
Property tax adjustment. If the seller has already paid property tax for the year, you reimburse their share from closing day forward. Your lawyer reconciles this in the statement of adjustments.
Title insurance. A one-time premium that protects you against title defects, fraud, and survey issues for as long as you own the home. Ontario buyers almost always purchase it, and lenders generally require it.
HST on new builds. Resale homes are exempt from the Harmonized Sales Tax (HST). New construction is not, though first-time buyer rebates have expanded significantly, and most builders credit the rebate at closing rather than making you front the full 13%.
How much should you budget overall?
For most Ontario buyers, total closing costs land between 1.5% and 4% of the purchase price, with Land Transfer Tax (LTT) doing the heaviest lifting. The percentage varies by city, financing structure, and whether you qualify for first-time buyer rebates, but the range is a reliable starting point for budgeting.
On a $700,000 Toronto purchase, a first-time buyer's stack typically looks like this:
Ontario LTT, before rebate. Approximately $10,475, calculated using the province's marginal brackets confirmed on the Ontario Land Transfer Tax page.
Toronto MLTT, before rebate. Approximately $10,475 on top of the provincial tax — Toronto's municipal rates mirror the province's at most price points.
Legal fees and disbursements. $1,800–$2,300 all-in, including the title transfer, mortgage registration, courier charges, and Teraview registration fees.
Title insurance. $400–$700 for a typical Toronto condo or starter home.
Property tax and utility adjustments. $500–$2,000 depending on what the seller has prepaid.
Before applying first-time buyer rebates, that's roughly $23,000–$26,000, or 3.3% to 3.7% of purchase price. Rebates can take a meaningful chunk back, but the upfront cash requirement is the number that matters when you're looking at your bank balance.
What rebates and savings can a first-time buyer claim?
Ontario gives qualifying first-time buyers two distinct Land Transfer Tax rebates, and they can be claimed at the closing table by your lawyer. You don't need to wait and file separately after closing.
Ontario LTT rebate. Up to $4,000 for buyers who have never owned a home anywhere in the world. According to the Ministry of Finance, this fully eliminates LTT on purchases up to $368,000 and reduces LTT on every purchase above that.
Toronto Municipal Land Transfer Tax (MLTT) rebate. Up to $4,475 on top of the provincial rebate for buyers closing on a Toronto property. Eligibility mirrors the provincial rules.
To claim either rebate, all buyers on title must qualify as first-time buyers. If your co-buyer has previously owned a home anywhere in the world, your eligibility is reduced proportionally to your share of ownership. Your lawyer files the rebate paperwork as part of the closing.
For a full walk-through of who qualifies and how each rebate is calculated, the first-time home buyer Land Transfer Tax rebate guide is a useful reference.
When do closing costs need to be paid?
Your lawyer needs all closing funds in their trust account at least one business day before the closing date, sometimes two depending on your lender. The money you've been saving for months has to move from your account into the lawyer's trust on a specific deadline, usually by certified cheque or wire transfer.
The closing-day sequence works like this: your lawyer holds the funds in trust, registers the title transfer and mortgage on teraview (the Ontario land registration system), and releases payment to the seller's lawyer once registration is confirmed. By the end of the day, you have keys and the seller has been paid.
A few practical points worth flagging:
Review the statement of adjustments early. Your lawyer prepares it roughly a week before closing. Read it, ask about anything you don't recognise, and confirm the total funds owed.
Move your down payment ahead of schedule. Banks can take 24–48 hours to clear large transfers between institutions. Don't leave it to closing morning.
Coordinate first-time buyer programs in advance. If you're using a Home Buyers' Plan or First Home Savings Account (FHSA) withdrawal, those funds have processing windows too. Talk to your bank well before the closing date.
At Ownright, our team of licensed Ontario real estate lawyers handles residential purchases, refinances, and sales through a digital platform. Statement of adjustments, rebate filings, and trust account funding all run online, with unlimited support by chat, email, or video call. You can start your closing online or get in touch with questions.
Frequently asked questions
Do closing costs include the down payment?
No. The down payment is a separate amount paid toward the home's purchase price; closing costs are the additional one-time payments (taxes, legal fees, title insurance, adjustments) that fall due around closing day. Budget for both as distinct line items when planning your savings.
Can closing costs be added to the mortgage?
Generally no. Most lenders require closing costs to come from your own cash. Some lenders offer a cash-back mortgage that returns 1%–5% of the principal at closing, but in exchange you accept a higher interest rate. Mortgage default insurance is the main cost that can be financed.
How much are closing costs on a $500,000 home in Ontario?
For a first-time buyer in a non-Toronto Ontario municipality buying a $500,000 resale home, closing costs typically run $5,500–$10,000 after the LTT rebate. The biggest line is the Ontario Land Transfer Tax (~$6,475 before rebate). Add Toronto MLTT and the stack roughly doubles.
Do I pay HST on closing costs?
Yes, on some. HST applies to legal fees, title insurance, and home inspection fees. It does not apply to Land Transfer Tax (which is already a tax), property tax adjustments, or the home's purchase price if you're buying resale. Your lawyer's invoice will break the HST out separately.
What happens if I can't cover my closing costs?
Speak to your lawyer and your lender as soon as you know. Closing dates can sometimes be extended if both parties agree, and lenders may consider increasing your mortgage to cover a shortfall. The main thing to avoid is missing the date — the seller may sue for damages or keep your deposit.
About the author
Joel Fox is a co-founder and COO at Ownright. He helps run the firm's day-to-day work on Ontario residential closings, refinances, and sales, and writes regularly to demystify the parts of a transaction that most homeowners only encounter once or twice in their lives.
Legal references: Land Transfer Tax Act, R.S.O. 1990, c. L.6 (Ontario LTT and MLTT framework); City of Toronto Act, 2006, S.O. 2006, c. 11 (municipal LTT authority); Excise Tax Act, R.S.C. 1985, c. E-15 (HST on new residential construction).
Important note: This article is not legal advice. No one should act, or refrain from acting, based solely on the information in this post or any linked materials without first seeking appropriate legal or professional advice.
