The Real Cost of Buying a Home in Ontario: What You Need to Know
Buying a home in Ontario is a major financial investment, and the purchase price is just one part of the total cost. Many buyers, especially first-time homebuyers, overlook the additional expenses that come with homeownership. Understanding these costs upfront can help you budget effectively and avoid financial surprises.
In this guide, we’ll break down the real cost of buying a home in Southern Ontario, including land transfer taxes, legal fees, home inspections, and other closing costs.
1. Land Transfer Tax (LTT)
The land transfer tax is one of the biggest closing costs when buying a home in Ontario. The amount depends on the property’s purchase price:
Ontario Land Transfer Tax Rates
0.5% on the first $55,000
1.0% on the portion between $55,000 - $250,000
1.5% on the portion between $250,000 - $400,000
2.0% on the portion between $400,000 - $2 million
2.5% on the portion above $2 million (for single-family homes)
Toronto Municipal Land Transfer Tax
If you’re buying in Toronto, you’ll pay an additional municipal land transfer tax, which mirrors the provincial rates, effectively doubling your tax.
First-Time Home Buyer Rebate
First-time homebuyers in Ontario can receive a rebate of up to $4,000 on the provincial land transfer tax, and up to $4,475 in Toronto.
2. Legal Fees & Closing Costs
Hiring a real estate lawyer is essential to ensure a smooth home-buying process. Legal fees typically range from $1,500 - $2,500, covering:
Title searches
Reviewing agreements
Registering the mortgage and deed
Disbursements (admin costs, title insurance, etc.)
Title Insurance
Title insurance protects you against fraud, undisclosed liens, and errors in public records. This one-time cost ranges from $250 - $400.
3. Home Inspection Fees
A home inspection is crucial, especially for older homes. Expect to pay between $400 - $700, depending on the size and location of the home.
4. Mortgage-Related Costs
CMHC Mortgage Insurance
If your down payment is less than 20%, you’ll need mortgage loan insurance through CMHC, Sagen, or Canada Guaranty. The premium is added to your mortgage and calculated as:
4.0% for a 5% down payment
3.1% for a 10% down payment
2.8% for a 15% down payment
Appraisal Fees
Lenders may require an appraisal to confirm the home’s value, costing $300 - $500.
5. Additional Costs to Consider
Property Taxes
Property taxes vary by municipality but generally range from 0.6% - 1.2% of the home's assessed value annually.
Home Insurance
Lenders require homeowners’ insurance, typically costing $800 - $2,500 per year, depending on the home’s value and coverage.
Moving Costs & Utilities
Factor in moving expenses ($500 - $2,000), utility setup fees, and potential renovations or furniture purchases.
Final Thoughts: Be Prepared for the True Cost of Homeownership
Understanding the real cost of buying a home in Southern Ontario ensures you’re financially prepared beyond the purchase price. From land transfer taxes and legal fees to mortgage insurance and moving costs, budgeting properly can prevent unexpected financial strain.
If you’re looking to buy a home in Southern Ontario, working with an experienced real estate agent can help you navigate these costs. Feel free to reach out—I’d love to help you find the perfect home while keeping your budget in check!
