What Closing Costs Should You Budget For Beyond the Down Payment?

Your down payment is just one part of the cash you need on closing day. A lot of first-time buyers budget for the down payment and forget the rest, then get a surprise when their lawyer sends the final bill.

Here is what else to plan for. Land transfer tax, which first-time buyers can partially offset with the $4,000 rebate we mentioned above. Legal fees, typically $1,500 to $2,000 for a standard resale purchase. Title insurance, usually a few hundred dollars, protects against title defects and fraud. A home inspection, generally $400 to $600, money well spent even in a competitive market. If your down payment is under 20%, a CMHC insurance premium gets added to your mortgage, and PST on that premium is sometimes due at closing depending on the deal. And a property tax adjustment, reimbursing the seller for any prepaid taxes covering the period after you take ownership.

As a rough rule of thumb, budget an extra 1.5 to 4% of the purchase price on top of your down payment for closing costs. On a $700,000 home, that is somewhere between $10,500 and $28,000, a wide range, which is exactly why getting a specific number from your lawyer early matters more than a generic percentage.