If you’ve decided now is the time to purchase your first home, it is important to consider the additional costs associated with closing the purchase, beyond your regular mortgage payments. Understanding these expenses in advance can help you budget more confidently and avoid unexpected surprises during the buying process. Here are a few of the additional costs you can expect.

Appraisal Fees

Mortgage lenders typically require an independent appraisal before approving a loan. The buyer is responsible for the appraisal fee, which can range from $250 to $800 depending on the property type and location.

Deposit

When submitting an Offer to Purchase, the seller will usually require a deposit as a sign of good faith and commitment to the transaction. This amount is often applied toward your down payment and is typically a minimum of 5% of the purchase price.

Down Payment

To qualify for a mortgage, buyers are required to provide a down payment based on the purchase price of the home. A down payment of 20% or more is generally needed for a conventional mortgage. Buyers with less than 20% down may still qualify for financing but will typically be required to obtain mortgage loan insurance.

Mortgage Loan Insurance Premium

If your down payment is less than 20%, your lender will require mortgage loan insurance. The premium is calculated as a percentage of the mortgage amount and is usually added to your mortgage payments.

Home Inspection Fee

Your real estate professional may recommend making your offer conditional on a home inspection. This allows you to identify any major issues with the property before finalizing the purchase. Buyers are typically responsible for the inspection fee, which generally ranges from $300 to $500.

Property Insurance

Property insurance protects your home and belongings against certain unexpected events, such as fire or flooding. Most lenders require proof of insurance before releasing mortgage funds.

Survey or Certificate of Location Cost

Some lenders may request an updated survey or certificate of location as part of the mortgage approval process. Depending on the property and region, these costs can range from $1,000 to $2,000.

Legal Fees

In some provinces, buyers are required to use a lawyer or notary to complete the purchase transaction. Even where it is not mandatory, legal representation is strongly recommended. Legal fees typically range from $1,000 to $3,000, depending on the services required.

Title Insurance

Your lawyer may recommend title insurance to help protect against issues such as title fraud, zoning violations, or ownership disputes. In many cases, this cost is included as part of your legal fees.

Sales Tax for New Properties

Newly constructed or substantially renovated homes may be subject to GST or HST. In some provinces, buyers pay the 5% GST, while other provinces may charge combined tax rates ranging from 12% to 15%.

Land Transfer Tax

Most provinces charge a land transfer tax based on the purchase price of the home. Some municipalities may also apply their own additional land transfer taxes. Eligible first time home buyers may qualify for rebates that help reduce these costs.

Purchasing your first home is an exciting milestone, and understanding the full financial picture can help you move forward with confidence. To learn more about the home buying process and what to expect at every stage of your journey, download our complimentary Buyer’s Guide today.