Hidden Costs of Buying a House in Toronto


Many first-time homebuyers are taken by surprise when they realize that there are added expenses to purchasing a home in addition to the down payment. The following are potential costs you should take into consideration when closing on your home.

Please keep in mind that the information provided below is meant to be a general guide and not to be considered legal advice. Circumstances differ from one individual to another and it is highly recommended that you speak with a qualified real estate broker or lawyer for specific advice that meets your needs.

List of fees


Legal Fees

$900 to $2000

Lawyers will take care of all the paperwork when purchasing a home. They will review and process all relevant documents – registering your home, title search, claims against the property, mortgage, land transfer taxes, exchanging documents with the seller, and more.

Legal fees can vary greatly depending on your location. Shop around!


Home Inspection Fees

$300 to $1000

A home inspection is highly recommended. However, in a hot seller’s market with bidding wars, many people often forgo a home inspection to increase their chances. 

A qualified home inspector can help uncover any issues with the property – they will inspect things like plumbing, electrical, HVAC, windows, walls, floors, ceilings, roof, and foundation. If the inspector uncovers any problems, you can use this to negotiate the price down with the seller.


Real Estate Appraisal Fee

$250 to $600

An appraisal is reviewing and evaluating the property to determine its market value. A trained and licensed appraiser will consider the recent sales of similar size properties in the area, inspect for the quality of the house, and other factors to determine the appraisal value.

By no means is it an exact science and the appraisal value can differ from one appraiser to another.

The appraisal of the home is required by most mortgage lenders, as it is what they use to determine how much to loan you for the property. The actual cost of the appraisal varies depending on location and type of dwelling.


Sales Tax

13% in Taxes

In Ontario, 13% in HST (Harmonized Sales Tax) will be applied to newly constructed homes. HST does not apply to previously owned homes.

You will not see the sales tax amount advertised as it is common practice for builders to include the HST in the listed purchase price. Which means it will be automatically included in your mortgage.

Note – If you are a first-time homebuyer, you could be eligible to claim a rebate of the HST sales tax. The maximum Ontario new housing rebate amount available is $24,000.


Land Transfer Tax

0.5% to 2.5% (One-time fee)

In Ontario, when buying a property you are expected to pay an Ontario land transfer tax. However, some municipalities, like Toronto, require an added municipal land transfer tax.

Essentially you are paying twice as much.

Land transfer tax percentages are calculated using brackets/tiers (see below).

Amount RangeRateMaximum Taxed Amount
Up to and including $55,000.000.5%$275
$55,000.01 to
$250,000.01 to $400,000.001.5% $2,250
$400,000.01 to $2,000,000.002.0%$32,000
Over $2,000,000.002.5%Varies 

Many provinces use a tier system to calculate the land transfer tax. In Ontario, the land transfer tax percentages are as follows: 


Let’s say you are purchasing a house in Toronto at a purchase value of $900,000. You will have to pay two land transfer taxes.

Calculating land transfer tax is not as simple as identifying the total purchase price and multiplying it against the corresponding percentage (i.e. $900,000 x 2% = $18,000).

Land transfer taxes are calculated based on brackets/tiers.

1. Ontario Land Transfer Tax

You will pay $14,475 in taxes. See below for the breakdown of how the taxes are calculated.

Land Transfer Taxes v4
2. Municipal Land Transfer Tax

Since the house is located in Toronto, you will pay an additional $14,475 in taxes.

The Municipal Land Transfer Tax (MLTT) in Toronto is identical to the Ontario Land Transfer Tax, which means you are paying twice as much in land transfer taxes for purchasing a home in Toronto.


Adding together the Ontario Land Transfer Tax of $14,475 and Municipal Land Transfer Tax of $14,475, you will end up paying $28,950.

Municipal Land Transfer Tax does not apply to areas outside of Toronto, such as Markham, Vaughan, or Pickering. If you are curious, Ratehub offers a calculator that allows you to figure out how much you could be paying in taxes.

NoteFirst-time homebuyers in Ontario may qualify for a refund on all or a portion of the tax at a maximum amount of $4,000.


New Home Warranty

$330 to 2136

This only applies to buyers who purchase their home from a builder. Ontario requires the builder to provide home-buyers with a third-party warranty, which the builder passes on the cost to the buyer.

In Ontario, builders often use Tarion to provide warranty coverage.  The cost of the warranty depends on the sale price of the home.  To determine how much it will cost you, visit Tarion.


Land Survey

$1000 to 2000

A land survey is not always necessary in order to close on a property (and is not required for condos). However, by not obtaining a land survey, the owner accepts risks such as a fence landing on the neighbour’s property or the land that is covered on the deed is not where the house is located. 

Note – Some sellers may already have the land survey available for you. Also, some lenders may require the land survey prior to closing.

Land survey


Home Insurance

$700 to 2000/annually

Home insurance is not required by law, but lenders will not offer you a mortgage without home insurance. The insurance will typically cover any damages related to your home. The cost varies depending on the size of the home, location, features, and amount of coverage you require.


Title Insurance

$250 and Up

The builder or previous owner will sign the deed over to you when a property is purchased. The deed is referred to as the title and once you own it, you become the legal owner of the property.

In Ontario, it is not mandatory to purchase title insurance, but it is highly recommended. Title insurance protects you from things like fraud or forgery (i.e., someone taking the title of your home), and encroachment (i.e., neighbour building a deck on your property).

Title insurance is a one-time fee and it is valid as long as you own the property.


Mortgage Life Insurance

Cost Varies

When you qualify for a mortgage with your lender, you will be given the option of purchasing mortgage life insurance, which is equal to the amount you owe. As you pay down your mortgage, the amount of coverage declines accordingly. 

Some people choose to purchase this insurance to give their families peace of mind, should the owner of the home pass away. 

It is also important to note that if you ever decide to move your mortgage to another lender, the coverage is lost. 


Mortgage Default Insurance (CMHC)

Cost Varies

Mortgage Default Insurance or more commonly referred to as CMHC Insurance (Canada Mortgage and Housing Corporation Insurance) provides protection to the mortgage lender in case of a default (i.e. not able to make your mortgage payments).

CMHC was created by the Government of Canada to make housing more accessible to those who could not put in a 20% Down Payment.

Buyers who put in a Down Payment of less than 20%, by default are required to get mortgage default insurance. This insurance premium can be paid as a lump sum or added to your mortgage. 

To qualify for CMHC Insurance, you will need to have a minimum down payment of 5% for the home purchase price of $500,000 or less.

With a purchase price between $500,000 and below $1,000,000, a minimum down payment of 5% on the first $500,000 and 10% for the remaining portion is needed.

Your CMHC insurance premium depends on how much down payment you put in.

Down PaymentCMHC Premium
Down payment of 5% up to 9.99%4%
Down payment of 10% up to 14.99%3.5%
Down payment of 15% up to 19.99%2.8%


As with the example before, let’s say you are purchasing a house in Toronto at a purchase value of $900,000. If you are to qualify for CMHC Insurance, you will need at least a Down Payment of $65,000.

CMHC Down Payment v1
CMHC Insurance Premium

With $65,000, you are essentially putting a total Down Payment of 7.22% of the total purchase price.

This results in paying a premium of 4% on the amount owed, which is $33,400.

CMHC Premium
Don’t Forget the Provincial Sales Tax

In Ontario, a Provincial Sales Tax (PST) of 8% would also apply. This means another $2,672 would be added to the total.

House Value$900,000
Down Payment$65,000
New Total Mortage Amount$871,072
CMHC New Total Mortgage Amount

Here’s a CMHC Insurance Calculator to help you figure out the amount owed.

The more down payment you put in, the less premium you will be required to pay.  However, this cost can be avoided altogether if you put in a minimum of 20% down payment.



Cost Varies

In some cases, you may have to pay back the previous homeowner, for any property tax or utilities (water heater rental, electricity, gas, water, property tax, condo maintenance fees, etc) that they may have paid for, which is beyond the closing date. 

For example, some people pay the property tax for the year in full.  If they sell their home mid-year, then they have overpaid – you will be required to pay back the difference.  Adjustments ensure that the buyer and seller only pay for taxes and utilities for the period they owned the home. 


Home Maintenance Costs

Items below are potential additional costs you should take into consideration.

New Appliances

With newly built houses, the builder will typically provide basic appliances without any added features. You may have the option to opt-out and purchase something more specific to fit your needs.

With pre-owned houses, the owner may or may not include some or all of the appliances with the house. The cost of purchasing new or used appliances can easily add up to thousands of dollars.

Fridge – $900+
Dishwasher – $500+
Stove & Oven – $1200+
Washer & Dryer – $1800+

New Roof

A typical roof with Asphalt Shingles can last around 15-18 years. You should confirm with the previous owners when the roof was last replaced. Cost is often dependent on the size of the house. The price can vary between $3.00 to $5.50 per square foot.

For example, you can expect to spend approximately $5,000 and up for replacing the roof on a 2,000-square-foot house.

Air Conditioning

New houses do not generally include an Air Conditioning (A/C) unit and pre-built homes may come with an aged unit. The typical lifespan is between 10-15 years if it is well maintained.

Depending on the size of the A/C unit, the cost can start around $5000 for a 2-ton AC unit.

The estimated size of the A/C unit your home requires is based on the square footage of your home. Roughly estimate 1 ton per 750-1000 square feet. A 2,000-square-foot home may require a 2.0 – 2.5 ton unit.

Landscaping & Snow Removal

With seasonal changes, your lawn and driveway require regular upkeep. Your options are either to invest in equipment and supplies or hire a company to maintain your property.

Lawnmower – $250+
Trimmer – $100+
Lawncare (Seeds, Soil, Weed Control) – $250+ per season
Snowblower – $500+

Utility Services

You may be required to pay upfront fees for setting up utility services, such as gas and electricity. This is primarily for new homeowners who have never owned a house before. Cost varies depending on the utility company and service.

Window Covering

New houses do not typically include window coverings. Depending on the number of windows, size of the windows, and your preference, the cost can add up to tens of thousands of dollars.

Renovation & Repairs

Prior to purchasing your home, determine what needs immediate fixing and/or improvement. Do your research to determine how much it will cost. Have a contractor come to the home prior to closing, to evaluate and determine how much repairs or renovations will cost you.

Summary of Costs

1. Legal Fees$900 to $2000
2. Home Inspection Fees$300 to $1000
3. Appraisal Fee$250 to $600
4. Sales TaxVaries
5. Land Transfer TaxVaries
6. New Home Warranty$330 to $2136
7. Land Survey$1000 to $2000
8. Home Insurance$700 to $2000/annually
9. Title Insurance$250 and Up
10. Mortgage Life InsuranceVaries
11. Mortgage Default Insurance (CMHC)Varies
12. AdjustmentsVaries
13. Home Maintenance CostVaries

As mentioned at the beginning of the article, the information provided is meant to be a general guide and not to be considered legal advice. We highly recommend you speak with a qualified real estate broker or lawyer for specific advice that meets your needs.


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Designer, photographer, and all-around tech enthusiast. You can find him creating helpful resources, articles, and how-to guides for Skool House.

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