The True Cost of Buying a Home in Toronto
The purchase price is just the beginning. Many first-time buyers are surprised by the additional costs that come with purchasing a home in Toronto. This comprehensive guide breaks down every expense you need to budget for in 2026.
Down Payment Requirements
Your down payment depends on the purchase price:
- Under $500,000: Minimum 5% ($25,000 on a $500K home)
- $500,000 - $999,999: 5% on first $500K + 10% on remainder
- $1,000,000+: Minimum 20% ($200,000 on a $1M home)
In Toronto, with average prices exceeding $1 million for detached homes, most buyers need at least 20% down. For a typical $1.1M detached home, that's $220,000.
Down Payment Sources
Common sources include:
- Savings: Traditional but challenging given Toronto prices
- FHSA: First Home Savings Account (up to $40,000 tax-free)
- RRSP Home Buyers' Plan: Withdraw up to $60,000 ($120,000 per couple)
- Family gifts: Must be documented with a gift letter for lenders
- Equity from current home: For move-up buyers
Land Transfer Tax — Toronto's Double Tax
Toronto is the only city in Ontario that charges a municipal land transfer tax on top of the provincial one. This is often the biggest surprise for buyers.
Provincial Land Transfer Tax
- 0.5% on first $55,000
- 1.0% on $55,001 - $250,000
- 1.5% on $250,001 - $400,000
- 2.0% on $400,001 - $2,000,000
- 2.5% on amounts over $2,000,000
Toronto Municipal Land Transfer Tax
- 0.5% on first $55,000
- 1.0% on $55,001 - $400,000
- 1.5% on $400,001 - $2,000,000
- 2.0% on amounts over $2,000,000
Example: $1,100,000 Home in Toronto
- Provincial LTT: ~$18,475
- Municipal LTT: ~$14,725
- Total LTT: ~$33,200
First-time buyer rebate: Up to $4,000 provincial + $4,475 municipal = $8,475 savings. This helps, but still leaves over $24,000 in land transfer taxes on a typical Toronto home.
Closing Costs Breakdown
Legal Fees
A real estate lawyer handles title searches, document preparation, registration, and fund transfers.
- Cost: $1,500 - $2,500
- Includes: Title search, registration, disbursements
Title Insurance
Protects against title defects, survey issues, and fraud.
- Cost: $300 - $600
- Note: Most lenders require this
Home Inspection
Not required but strongly recommended, especially for older Toronto homes.
- Cost: $400 - $600
- Specialized inspections: Additional $200-$500 each (HVAC, foundation, pest)
Appraisal
Lender may require an independent appraisal to confirm property value.
- Cost: $350 - $500
- Note: Sometimes covered by the lender
Mortgage Insurance (CMHC)
Required if down payment is less than 20% (only applies to homes under $1M).
- Cost: 2.8% - 4.0% of mortgage amount
- Example: $28,500 on a $950K purchase with 5% down ($902,500 mortgage at 3.15%)
- Note: Can be added to mortgage balance
Property Tax Adjustment
If the seller has prepaid property taxes, you reimburse them for the portion after closing.
- Cost: $0 - $3,000 depending on closing date
Utility and Condo Fee Adjustments
- Cost: $100 - $500
Moving and Setup Costs
- Professional movers: $800 - $2,500 (depending on distance and volume)
- Utility connections: $100 - $300
- Lock changes: $200 - $400
- Immediate repairs/updates: $1,000 - $10,000+ (budget at least something)
- Furniture and appliances: Highly variable
Ongoing Monthly Costs
Beyond your mortgage payment, budget for:
- Property taxes: ~0.6-0.7% of assessed value annually ($550-$650/month on a $1.1M home)
- Home insurance: $100 - $200/month
- Utilities (house): $250 - $400/month (hydro, gas, water)
- Maintenance reserve: 1% of home value annually ($917/month on $1.1M)
- Condo fees (if applicable): $400 - $900/month
Total Cost Summary: Buying a $1.1M Toronto Home
- Down payment (20%): $220,000
- Land transfer taxes: $33,200
- Legal fees: $2,000
- Title insurance: $450
- Home inspection: $500
- Appraisal: $400
- Moving costs: $1,500
- Immediate repairs/setup: $3,000
- Total upfront cash needed: ~$261,050
That's roughly 24% of the purchase price in cash — significantly more than just the 20% down payment.
How to Save on Costs
- Claim first-time buyer rebates — save up to $8,475 on land transfer taxes
- Shop mortgage rates — even 0.1% lower saves thousands over the term
- Negotiate inclusions — appliances, window coverings, and fixtures included in the sale
- Time your closing — mid-month closing reduces property tax adjustments
- Use a cashback credit card for moving expenses and new purchases
Plan Your Budget With Confidence
Understanding the full cost picture prevents surprises and helps you plan effectively. We walk every client through these numbers before they start house hunting. Contact us for a personalized cost breakdown based on your target price range and neighbourhood.
