How much cash do you actually need on closing day in Ontario?
The down payment is the part everyone plans for. The land transfer tax and the sales tax on your mortgage insurance are the parts that surprise people three weeks before closing.
The short answer
On a $750,000 home in Toronto with 10% down, a first-time buyer needs about $91,000 in cash on closing day: the $75,000 down payment, $14,475 in land transfer tax after both rebates, and $1,674 in Ontario sales tax on the mortgage insurance premium. Robin Patel works this through with buyers before they make an offer.
Written forFirst-time buyers in the GTA budgeting for closing day, and anyone comparing a purchase inside the City of Toronto with one outside it.
The short version
- Cash at closing is the down payment plus land transfer tax plus the Ontario sales tax on your mortgage default insurance premium.
- The CMHC premium itself is added to your mortgage. The 8% Ontario sales tax on that premium is not, and cannot be.
- A first-time buyer in Toronto claims two rebates, not one: up to $4,000 provincially and up to $4,475 municipally.
- Buying inside the City of Toronto means paying the land transfer tax twice — once to Ontario and once to the city.
- Legal fees, title insurance and the home inspection are quotes rather than rates, so budget for them separately.
What makes up the cash you need at closing
Three separate amounts have to be in your account on closing day, and only one of them is the down payment. The other two are government charges that arrive late in the process, which is why they catch first-time buyers.
The first is your down payment. The second is land transfer tax, which Ontario charges on every purchase and which the City of Toronto charges again on top if the property sits inside the city. The third is the Ontario sales tax on your mortgage default insurance premium, which applies whenever you put down less than twenty per cent.
A worked example on a $750,000 purchase
The figures below are calculated at the rates published by the Ontario Ministry of Finance, the City of Toronto and CMHC, for a first-time buyer putting ten per cent down on a home inside the City of Toronto.
| Item | Amount | Paid how |
|---|---|---|
| Down payment | $75,000 | Cash |
| Ontario land transfer tax | $11,475 | Cash |
| Toronto municipal land transfer tax | $11,475 | Cash |
| First-time buyer rebates | − $8,475 | Reduces the above |
| CMHC insurance premium | $20,925 | Added to the mortgage |
| Ontario sales tax on the premium | $1,674 | Cash |
| Total cash needed | $91,149 | Cash |
Three separate amounts have to be in your account on closing day, and only one of them is the down payment.
Why buying in Toronto costs more before you own anything
Toronto is the only municipality in Ontario that charges its own land transfer tax, and it is charged in addition to the provincial one rather than instead of it. On a $750,000 purchase that doubles the bill from $11,475 to $22,950 before rebates.
Etobicoke, North York, Scarborough, York and East York are all inside the City of Toronto for this purpose. They stopped being separate municipalities in 1998, and a buyer looking at a house in Etobicoke pays the municipal tax exactly as a buyer in the downtown core does.
What this figure does not include
Legal fees, title insurance, the home inspection, the status certificate on a condominium and the adjustments your lawyer calculates are all real costs, and none of them is a published rate. They are quotes, and they vary by firm and by property.
Robin will tell you what those have actually come to on recent transactions in your price range, so the number you budget is the number you need rather than a placeholder.
Written by
Robin PatelSalesperson · The Agency Toronto
Updated
Published
Read in your language
A machine translation, not Robin’s words. For anything that decides money, ask him in Gujarati or Hindi directly.
