Buying a home in Canada includes two upfront financing payments before getting a mortgage: a down payment and closing costs.

Most people are aware they will need to save for a down payment, but unaware that there are other closing costs associated with purchasing a home.   

First, a deposit must be paid. The deposit is considered part of your overall down payment and is given to the seller’s representative once the offer to purchase their home has been accepted.

After your deposit, you are required to provide a down payment which can come from various sources. 

In addition to these payments, closing cost- which range between 1.5% – 4% of  your purchase price- must also be factored into your budget.

But, what do closing costs cover? The list below gives you a glimpse into the costs that are usually associated with purchasing as home.

Home Inspection

Often, home inspections are a condition in your offer to purchase a property and paid for by you, the buyer.


Though this closing cost is technically optional, it is very advisable to conduct a home inspection even if you are acquiring a new build home.


Once the offer has been accepted, you will schedule an inspection with a third-party company.


After the inspection, a report outlining any concerns you may want to address with the seller prior to possession will be issued to you.

Legal Fees

Lawyers go through the paperwork required when purchasing a home and are considered a mandatory closing cost. It is important to know your legal fees are negotiable.

It’s also good practice to ask your close friends and family to refer a good lawyer to you so that you aren’t paying more than you should be. Alternatively, you can shop around to find a lawyer who charges reasonable prices.  

Property Insurance

Most lenders will ask that you get property insurance to ensure your residence is covered in case of any unforeseen emergencies.


This closing cost is also considered mandatory and should be accounted for in your budget.

Property Taxes

One of the costs of owning a home are property taxes. In many cases, the previous owner has already paid the property taxes for the year.


The amount that has been paid from the time of your possession to the end of the year will have to be reimbursed to the seller—and as such, they are included in your closing costs.

Adjustment Costs

When you take possession of a home, chances are it won’t be at the end of a billing cycle.

The previous owner will have already paid for the utilities like gas, water and electricity. A reimbursement from your possession date to the day you have the utilities set up under your name will need to be issued to the seller. 



Depending on your situation, your lender may also ask that you pay for a property appraisal and/or title insurance.


And don’t forget your moving costs! The lender will not be looking for confirmation that you have these funds, but you should make sure they are included in you budget!

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