Closing costs to budget for
The down payment is not the whole story. Closing costs catch many first-time buyers off guard.
Beyond the down payment, expect to pay one-time costs at closing. Budgeting for them early prevents a stressful surprise on possession day.
Typical closing costs
| Cost | What it is |
|---|---|
| Land transfer / recording tax | Tax on transferring the property; varies widely, rebates may apply |
| Legal / notary / title fees | Closing the transaction and registering title |
| Appraisal | Lender's valuation of the home |
| Home inspection | Optional but strongly recommended |
| Title insurance | One-time protection against title defects |
| Mortgage default insurance | If down payment is under 20% (Canada) / PMI (US) |
| Prepaid taxes & interest | Adjustments for amounts the seller prepaid |
Frequently asked questions
How much are closing costs?
Plan for roughly 1.5 to 4 percent of the purchase price in Canada and 2 to 5 percent in the US, on top of your down payment. The exact figure depends on location and loan.
What is land transfer tax?
A tax charged in many Canadian provinces and some US areas when property changes hands. It can be one of the largest closing costs; some places offer first-time buyer rebates.
Do I need a lawyer or title company?
In Canada a real estate lawyer or notary closes the transaction; in the US a title company or attorney typically does. Both involve fees you should budget for.
What is title insurance?
A one-time policy protecting against title defects, fraud and survey issues. It is common in the US and increasingly used in Canada.
Can closing costs be rolled into the mortgage?
Sometimes a portion can, but it increases your loan and interest. Most buyers pay closing costs in cash at closing, so budget for them separately.