When you’re buying your first home, it’s easy to focus on saving for the down payment. But there’s another set of expenses that can catch buyers off guard: closing costs.

These are the fees and charges you need to pay when the home purchase is finalized. And while they’re not as big as your down payment, they are important to plan for. If you’re not ready, they can cause some last-minute stress.

Let’s break down what closing costs include and how much you should expect to set aside.

How Much Should You Budget?

In Ontario, closing costs typically range from 2 to 4 percent of the purchase price. So if you're buying a $600,000 home, you might need between $12,000 and $24,000 on top of your down payment. It’s not a small amount, which is why it’s so important to budget for it early.

What’s Included in Closing Costs?

Here are the most common items that make up your closing costs

Land Transfer Tax

This is one of the biggest closing costs in Ontario. It’s based on the price of the home and calculated using a tiered formula. If you're buying in Toronto, there’s also a separate municipal land transfer tax

The good news is that first-time homebuyers in Ontario can qualify for a rebate of up to $4,000. In Toronto, the rebate can be up to $4,475 more. That can make a big difference

Legal Fees and Disbursements

You’ll need a real estate lawyer to handle the paperwork, do a title search, register the home in your name, and transfer the funds. Legal fees usually range from $1,000 to $2,000, depending on the lawyer and the complexity of the deal

Title Insurance

Title insurance protects you against potential issues with the property title, like fraud or errors in ownership history. It’s a one-time fee and usually costs a few hundred dollars

Home Inspection

If you had a professional home inspection done, you’ll need to pay for it before closing. This typically costs between $400 and $600, but it’s worth every penny to know what you’re buying

Appraisal Fee

Sometimes your lender will require an appraisal to confirm the value of the home. If this isn’t covered by the lender, it may cost you about $300 to $500

Adjustments

You may need to reimburse the seller for prepaid property taxes, utilities, or condo fees. These are called adjustments and will be calculated just before closing

Moving Costs and Set-Up

While not technically part of the legal closing costs, moving expenses, service hook-ups, and small repairs or purchases add up quickly. It's smart to include a buffer for these

Final Tip

Make sure you have your closing cost funds available and accessible. They can’t be tied up in RRSPs or long-term investments at the time of closing. Your lawyer will need this money in trust a few days before the deal is finalized.

Buying your first home is a major milestone and knowing what to expect helps keep the process smooth and stress-free. Planning ahead for closing costs gives you one less thing to worry about when it’s time to get the keys