The Hidden Costs of Buying a Home (That Many Buyers Forget to Budget For)

Saving for your down payment is a huge accomplishment.

For many buyers, it's the biggest hurdle to homeownership.

But one of the biggest surprises we see is that people often forget about the costs that come after the down payment.

None of these should scare you. They're simply part of buying a home, and knowing about them ahead of time makes the whole process a lot less stressful.

One thing we always tell buyers is this: it's much less stressful to budget for a cost you don't end up having than to be surprised by one you weren't expecting. A little planning upfront can make your closing day a whole lot more enjoyable.

First Things First... Your Deposit Isn't Your Down Payment

This is something that catches many first-time buyers off guard.

When your offer is accepted, you'll typically provide a deposit within a short period of time. That deposit forms part of your overall down payment, but it isn't an extra cost on top of it.

For example, if you're purchasing a home with a 10% down payment and you've already provided a $20,000 deposit, that $20,000 is credited toward the total amount you'll need to bring on closing day.

Closing Costs

As a general rule, we recommend buyers budget between 1.5% and 2.5% of the purchase price for closing costs, depending on the property and their situation.

If you're purchasing a new build or expect additional moving, setup, or immediate home improvement expenses, you may want to budget a little more.

What does that actually include?

Legal Fees

Your lawyer handles much more than just paperwork. They review the Agreement of Purchase and Sale, complete title searches, arrange the transfer of funds, register the property in your name, and make sure everything is ready for closing day.

Most buyers can expect legal fees and disbursements to range from approximately $1,500 to $2,500, although that can vary depending on the transaction.

Title Insurance

Most buyers in Ontario purchase title insurance.

It's a one-time cost that helps protect against things like title fraud, certain survey issues, unknown encroachments, and errors in public records.

Depending on the property, title insurance typically costs between $300 and $600 and is arranged through your lawyer.

Land Transfer Tax

This is often the biggest closing cost buyers forget about.

In Ontario, Land Transfer Tax is based on the purchase price of the home.  

The good news is that many first-time home buyers qualify for a rebate that can significantly reduce or even eliminate the provincial portion of this cost, depending on the purchase price.  

There are online calculators that can provide an estimate, but we'll make sure you understand what to expect long before closing day.

Home Inspection

While not every purchase includes a home inspection, we almost always recommend one when circumstances allow.

A typical inspection costs between $500 and $800, depending on the size and type of property.

It's a relatively small investment that can provide valuable information before making one of the biggest purchases of your life.

Adjustments

On closing day, you may reimburse the seller for expenses they've already paid, such as property taxes, condo fees, heating fuel, or utilities.

Sometimes these adjustments are only a few hundred dollars. Other times they can be more, depending on the timing of your closing.

Mortgage-Related Costs

Some lenders may require an appraisal, which generally costs between $300 and $600, although many lenders cover this expense.

If your down payment is less than 20%, you'll also pay mortgage default insurance. Most buyers don't pay this upfront because it's usually added directly to the mortgage.

Your mortgage professional will explain exactly how these costs apply to your situation.

Home Insurance

If you're getting a mortgage, your lender will require proof of home insurance before closing.

The cost depends on the property, its location, and the coverage you choose, but it's another expense that's important to include in your budget.

Buying a New Build?

If you're purchasing a newly built home, there may be additional costs to consider, including HST, Tarion enrolment fees, utility hook-up charges, or other builder-related costs, depending on the purchase agreement.

Every new build is different, so it's important to understand exactly what's included in the purchase price before signing.

Don't Forget Moving Day

Moving isn't just about hiring a truck.

Professional movers can cost anywhere from $1,000 to $3,000 or more, depending on how far you're moving and how much you have to move.

If you're doing it yourself, you'll still need to budget for a rental truck, fuel, packing supplies, and probably a few pizzas for the friends who volunteered to help.

You may also have setup or connection fees for services like hydro, natural gas, internet, or cable, depending on where you're moving and the service providers involved.

The First Few Weeks in Your New Home

This is the one that catches almost everyone by surprise.

You move in, unlock the front door... and suddenly realize there are dozens of little things you need that never crossed your mind:

• A lawn mower

  
  

• A snow shovel

  
  

• Garden hoses

  
  

• Curtain rods

  
  

• Paint

  
  

• Light bulbs

  
  

• Smoke detector batteries

  
  

• Cleaning supplies

  
  

• A few basic tools

  
  

• Maybe a new mailbox, house numbers, or a few shelves for the garage

  
  

None of these purchases are huge on their own, but together it's easy to spend several hundred - or even a couple thousand - dollars during your first few weeks of homeownership.

Leave Yourself a Cushion

One of the best pieces of advice we can give is this:

Don't spend every dollar you have on your down payment.

Owning a home is exciting, but things happen.

Maybe the dishwasher stops working.

Maybe the hot water tank needs a repair.

Maybe you decide you'd really like to paint the bedrooms before you unpack everything.

Having a little money set aside for those unexpected expenses can make your first few months of homeownership much more enjoyable.

Sample Budget: Buying a $600,000 Home in Ontario

Every purchase is different, but here's an example of what a buyer purchasing a $600,000 home might budget for in addition to their down payment:

Expense	Estimated Cost
Legal Fees & Disbursements	$1,500 - $2,500
Title Insurance	$300 - $600
Land Transfer Tax*	Approximately $8,475
Home Inspection	$500 - $800
Mortgage Appraisal (if required)	$300 - $600
Home Insurance (first year)	Varies
Moving Costs	$1,000 - $3,000+
Utility Connection/Setup Fees	Varies
Initial Home Supplies & Tools	$500 - $2,000+

Estimated Total (before any first-time home buyer rebates): Approximately $12,500 to $18,000+, depending on the property and your individual circumstances.

*If you're a first-time home buyer, you may qualify for a Land Transfer Tax rebate, which can significantly reduce this cost. The amount of the rebate depends on the purchase price and your eligibility.  

The good news is that you don't have to figure all of this out on your own. Before you buy, we'll walk you through the costs that apply to your specific purchase so there are no surprises on closing day.

The Bottom Line

Buying a home comes with more than just a down payment, but none of these costs should come as a surprise.

Our job is to make sure you understand what to expect before you get the keys so you can focus on the exciting part... making your new house feel like home.