What Closing Costs Should Ontario Buyers Budget For?

Quick Overview

Closing costs are the one-time expenses you pay on top of the purchase price. They are separate from your down payment
The largest closing cost is usually Ontario land transfer tax. Ottawa has no municipal land transfer tax, so only the provincial tax applies
Eligible first-time buyers can claim a land transfer tax refund of up to $4,000
Other costs include legal fees and disbursements, title insurance, adjustments, and (for condos) a status certificate
CMHC guidance puts total closing costs at roughly 1.5% to 4% of the purchase price
The money for closing must reach your lawyer before closing day, and delays can put the purchase at risk

Closing Costs vs. the Down Payment

The down payment is your equity in the home, the part of the price you are not borrowing. Closing costs are the additional expenses needed to complete the purchase, such as taxes, legal fees and disbursements (CMHC). They are one-time costs, due by the time the sale is completed (Financial Consumer Agency of Canada).

In practice, part of your down payment goes in as a deposit when your offer is accepted. The rest of the down payment and all of the closing costs go to your lawyer shortly before closing, by certified cheque or bank draft (Law Society of Ontario). Some costs, like the home inspection and appraisal, are paid to the provider before then.

Having these funds ready matters. A buyer who cannot deliver the money on time risks being in breach of the purchase agreement.

Land Transfer Tax

Ontario charges land transfer tax on every purchase of land under the Land Transfer Tax Act. The tax is marginal, so each rate applies only to the slice of the price inside that bracket. For a single-family home, the Ontario government’s published rates are:

Up to $55,000: 0.5%
$55,000.01 to $250,000: 1.0%
$250,000.01 to $400,000: 1.5%
$400,000.01 to $2,000,000: 2.0%
Over $2,000,000: 2.5%

A worked example for Ottawa. The Ottawa Real Estate Board reported an average Ottawa home sale price of $685,640 for September 2026 (Ottawa Real Estate Board). On that price, the tax works out as:

First $55,000 at 0.5%: $275.00
Next $195,000 at 1.0%: $1,950.00
Next $150,000 at 1.5%: $2,250.00
Remaining $285,640 at 2.0%: $5,712.80
Total: $10,187.80

No municipal tax in Ottawa. The Ontario government states that only purchases within the City of Toronto may be subject to a municipal land transfer tax (Government of Ontario). Ottawa buyers pay the provincial tax only.

The First-Time Homebuyer Refund

Eligible first-time buyers can get a refund of all or part of the land transfer tax, up to a maximum of $4,000 (Government of Ontario). Applied to the example above, it would reduce $10,187.80 to $6,187.80.

To qualify, you must:

Be at least 18 years old
Be a Canadian citizen or permanent resident
Occupy the home as your principal residence within nine months of the transfer
Never have owned an eligible home, or an interest in one, anywhere in the world
If you have a spouse, make sure your spouse has not owned an eligible home while you were spouses (a partial refund may still be available in some cases)

If you buy with someone who is not an eligible first-time buyer, the refund is prorated to your share of ownership.

Your lawyer normally applies the refund at registration, so you only need to bring the net amount to closing (Government of Ontario guide). If you did not claim it at closing, for example because your permanent resident status came through afterward, you can apply to the Ministry of Finance within 18 months after the transfer (Government of Ontario). Other land transfer tax overpayments can be claimed within four years of payment.

The $4,000 maximum has not changed in recent years (Government of Ontario news release).

Legal Fees and Disbursements

In Ontario, a lawyer handles the registration of title documents. Your lawyer’s account will show a professional fee and, separately, disbursements, which are third-party costs paid on your behalf. These typically include:

Registration fees. Registering a document electronically costs $85.00 including HST until November 1, 2026, and $86.42 including HST from November 2, 2026. A typical purchase with a mortgage involves two documents, the transfer and the charge, for a total of $172.84 from that date (Government of Ontario)
Title and execution searches
Tax certificates, courier fees, bank transfer fees and document preparation costs

Fees vary with the type of property and how complicated the file is, so you should ask your lawyer for a written estimate. The Law Society of Ontario sets rules that protect you. Fees must be fair and reasonable (LSO Financial Management Guideline). Lawyers may charge only the actual cost of a disbursement, and accounts must show fees and disbursements separately (LSO fees and disbursements). If a lawyer advertises a price for a residential real estate transaction, the price must include all fees, disbursements and third-party charges except HST and a short list of permitted disbursements, and the advertisement must say those are not included (Rule 4.2-2.1, LSO Rules of Professional Conduct, Chapter 4).

A Residential Real Estate Lawyer Ottawa can give you the full picture of fees and disbursements before you commit to a closing date.

Title Insurance

Title insurance is a single premium paid at closing. Premiums vary with the purchase price and property type and are subject to 8% provincial sales tax. Your lawyer can confirm the exact premium for your purchase. Lawyers must tell you that they receive no commission from the insurer (LSO Rules of Professional Conduct, Chapter 3).

Adjustments on Closing Day

The price in your agreement is rarely the exact amount you pay on closing day. Your lawyer prepares a statement of adjustments that splits recurring costs, such as property tax, condo fees, utilities and heating oil, between you and the seller as of the closing date. If the seller has prepaid something that covers a period after closing, you reimburse the seller, and that increases the amount you need to bring. If something is owed and unpaid, you may receive a credit instead (CMHC).

Costs Buyers Often Forget

CMHC’s budgeting guidance lists several other costs (CMHC):

Home inspection. Around $500, paid before closing
Appraisal. Often $250 to $350 when your lender requires one
Home insurance. Proof of coverage is required on closing day
Moving and utility connection costs

Two more deserve attention:

Condo status certificate. If you are buying a condo, the corporation can charge a maximum of $100 for the status certificate, including taxes (Ontario Regulation 48/01).

Sales tax on mortgage default insurance. If your down payment is under 20%, your lender will require mortgage default insurance from CMHC, Sagen or Canada Guaranty. The premium is usually added to your mortgage. Ontario charges an 8% retail sales tax on the premium, which cannot be added to the mortgage and must be paid in cash at closing (Ontario Ministry of Finance). On a $15,000 premium, that is $1,200.

New Homes and HST

Resale homes are generally not subject to HST. New or substantially renovated homes are. The combined rate is 13%, made up of 5% federal GST and 8% provincial tax. Several rebates may reduce it, including the standard Ontario new housing rebate (up to $24,000 of the provincial portion), the federal first-time home buyers’ GST/HST rebate for eligible new homes up to $1 million, and a temporary Ontario enhancement for eligible new homes up to $1 million under agreements signed between April 1, 2026 and March 31, 2027. Eligibility, timing and how each rebate is credited at closing depend on your agreement and on rules still being implemented, so confirm with your lawyer and your builder before relying on any figure (Canada Revenue Agency).

Builders commonly quote prices net of the rebate on the assumption that you will live in the home and assign the rebate to them. If you are buying a new home as an investment and do not qualify for that rebate at closing, you may need to pay the amount at closing and claim it back separately, so check your agreement carefully.

Non-Resident Speculation Tax

Foreign entities, foreign nationals and certain trustees buying residential property in Ontario are subject to a 25% Non-Resident Speculation Tax in addition to land transfer tax. The federal Prohibition on the Purchase of Residential Property by Non-Canadians Act operates separately from the NRST and may also apply, so confirm its current status before making an offer. Limited exemptions and rebates exist for the NRST, with strict deadlines (Government of Ontario). If this may apply to you, speak to a lawyer before you make an offer.

Federal Programs That Help With Cash

The federal First Home Savings Account lets first-time buyers save tax-free for a home, with an annual contribution limit of $8,000 and a lifetime limit of $40,000. Contributions are tax-deductible and qualifying withdrawals are not taxed (Canada Revenue Agency). The Home Buyers’ Plan allows withdrawals from an RRSP toward a first home, with repayment required over time (FCAC). These do not reduce closing costs directly, but they can supply the cash to pay them.

How Much Should You Set Aside?

CMHC advises that closing costs usually fall between 1.5% and 4% of the purchase price (CMHC). On the average Ottawa price above, that is roughly $10,300 to $27,400. Land transfer tax alone is about 1.5% of that price, so most buyers should expect their total to land above the low end of the range once legal fees, title insurance and adjustments are added. An eligible first-time buyer can reduce it with the refund.

Here is what the published figures cover for the $685,640 example:

Ontario land transfer tax: $10,187.80 (less up to $4,000 first-time buyer refund)
Registration of transfer and charge: $172.84 (from November 2, 2026)
Title insurance: varies, ask your lawyer
Home inspection: about $500
Appraisal (if required): $250 to $350
Condo status certificate (condos only): up to $100
Legal fees, other disbursements, adjustments, mortgage insurance sales tax: varies, ask your lawyer

Deadlines to Keep in Mind

Closing funds: your lawyer must have your remaining down payment and closing costs in trust before closing, and the funds must clear in time for registration
First-time buyer refund (if not claimed at closing): 18 months from the date of transfer
Other land transfer tax overpayments: four years from the date of payment
Non-Resident Speculation Tax rebates: time limits are strict and vary by category

Planning Your Closing Budget With LMS Lawyers

Closing costs are easier to manage when you know the figures before you commit. LMS Lawyers can walk Ottawa-area buyers through land transfer tax, the first-time buyer refund, the statement of adjustments and the other items on their closing statement. A Residential Real Estate Lawyer Ottawa at LMS can also confirm which refunds and rebates apply to your situation.

FAQs

Does Ottawa charge a municipal land transfer tax?
No. Only purchases in the City of Toronto may be subject to a municipal land transfer tax. Ottawa buyers pay only the provincial tax.

How much is the first-time homebuyer land transfer tax refund?
Up to $4,000, for eligible buyers. Your lawyer can usually apply it at closing.

Are closing costs the same as the down payment?
No. The down payment is your equity in the home. Closing costs are additional expenses such as taxes, legal fees and disbursements.

What if my down payment is under 20%?
You will need mortgage default insurance. The premium is usually added to the mortgage, but Ontario’s 8% sales tax on the premium must be paid in cash at closing.

Do I pay HST on a resale home?
Generally no. HST applies to newly built or substantially renovated homes, and rebates may reduce it.

How much should I budget for closing costs?
CMHC suggests 1.5% to 4% of the purchase price, though your own figure depends on the price, the property and your circumstances.

Summary

Closing costs are separate from your down payment and are due by closing day. In Ontario, the biggest item is usually provincial land transfer tax, which works out to $10,187.80 on an average Ottawa price of $685,640, with no municipal tax added in Ottawa. First-time buyers can claim a refund of up to $4,000. Other costs include registration fees, legal fees, title insurance, adjustments, a possible condo status certificate, and the 8% sales tax on any mortgage default insurance premium. New homes bring HST, with several rebates that may reduce it. CMHC guidance suggests budgeting 1.5% to 4% of the price. LMS Lawyers can review your closing figures with you before closing day.

Sources

This article is intended for general information purposes only and describes federal and Ontario law as of October 2026. It does not constitute legal advice and does not create a lawyer-client relationship between LMS Lawyers and the reader. For advice specific to your situation, please consult a licensed lawyer.