Home Financing Costs in Canada: What to Budget For
The down payment is usually the number people focus on when budgeting for a home purchase — but it's far from the only cost, and underestimating the rest can leave you short at closing.
Land Transfer Tax
Land Transfer Tax is charged by most provinces (and, in Toronto, an additional municipal tax on top of Ontario's provincial one) on a tiered scale based on the purchase price — the more expensive the property, the higher the marginal rate on the portion above each threshold. Rates and rebates for first-time buyers vary significantly by province and city, so confirm the exact figure for your location with a real estate lawyer before budgeting. Use the Home Financing Calculator on this site to estimate your total upfront cost, including this tax.
Mortgage Default Insurance
If your down payment is less than 20% of the purchase price, federally regulated lenders require mortgage default insurance (through CMHC or a private insurer) — a premium usually added to your mortgage balance rather than paid upfront in cash. A down payment of 20% or more avoids this requirement entirely, which is one reason many buyers target that threshold specifically.
Legal Fees and Other Closing Costs
Beyond Land Transfer Tax and possible mortgage insurance, budget for legal fees, a home inspection, and title insurance — all real costs that add up on top of the down payment. Get a detailed quote from a real estate lawyer before finalizing your purchase, since these costs vary by province and by property.
Frequently Asked Questions
- What is Land Transfer Tax?
- A provincial (and sometimes municipal) tax paid when property changes ownership, calculated on a tiered scale based on the purchase price. Rates and first-time buyer rebates vary significantly by province and city.
- Do I need mortgage default insurance in Canada?
- If your down payment is less than 20%, federally regulated lenders require it (through CMHC or a private insurer). A 20%+ down payment avoids this requirement.
- What other costs come with buying a home besides the down payment?
- Land Transfer Tax, legal fees, a home inspection, title insurance, and possibly mortgage default insurance premiums if your down payment is under 20%.
- Does Land Transfer Tax rate depend on which province I'm buying in?
- Yes, significantly — rates, tiers, and first-time buyer rebates vary by province and, in some cities like Toronto, an additional municipal tax applies on top.
Informational content, not financial, tax, or legal advice. Verify amounts, limits, and current conditions directly with official sources (CRA, CDIC, OSFI) before making a decision.
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