Buying your first home in Toronto is exciting, but it can also feel overwhelming once you start looking at the numbers. Beyond the purchase price, there are several costs first-time buyers need to understand before making an offer.
From mortgage pre-approval to land transfer tax, legal fees, deposits, down payments, adjustments, and insurance, knowing what to expect can help you buy with more confidence and avoid unpleasant surprises on closing day.
Here are some of the most important costs and financial decisions to keep in mind when buying your first home in Toronto.
Start With a Mortgage Broker or Lender
One of the best first steps you can take as a first-time home buyer is to speak with a mortgage broker or lender. Before you start seriously looking at properties, you want to know how much you can realistically afford.
A mortgage professional can help you understand:
- How much mortgage you may qualify for
- What your monthly payments could look like
- How your income, debts, and credit affect your approval
- Whether you should get a mortgage pre-approval
- Whether a rate hold is available to you
A rate hold can be especially helpful if you are worried about interest rates going up. In some cases, a lender may be able to hold a rate for a set period, such as 90 days, while you search for your first home. That can give you more peace of mind while you shop.
Consider Working With a Financial Planner
Getting approved for a mortgage is one thing. Feeling comfortable with the payments is another.
Some first-time buyers choose to work with a financial planner before buying so they can get a clearer picture of their budget. This can help you understand where your money is going, how much you can save, and what monthly mortgage payment would actually feel manageable.
The goal is not just to buy a home. The goal is to buy a home without becoming house poor.
Before you purchase, it is worth looking carefully at:
- Your monthly income
- Your current debts
- Your savings
- Your emergency fund
- Your lifestyle costs
- Your comfort level with monthly housing payments
Avoid Big Financial Changes Before Buying
When you are preparing to buy your first home, consistency matters.
Your lender wants to see stable income, stable employment, and a clear financial picture. That means this may not be the best time to change jobs, take on new debt, or finance a major purchase.
For example, buying or leasing a new car before purchasing a home can affect your mortgage approval. A monthly car payment of $700, $800, or $1,000 can reduce the amount a lender is willing to offer you because it changes your debt ratios.
If you are planning to buy your first home soon, be careful before you:
- Change jobs
- Buy or lease a new car
- Take on new loans
- Make large credit purchases
- Miss payments
- Open new credit accounts unnecessarily
These decisions can affect how much mortgage you qualify for and may delay your ability to buy.
Understand Land Transfer Tax in Toronto
One of the biggest closing costs for Toronto buyers is land transfer tax.
In Toronto, buyers generally need to account for both the Ontario provincial land transfer tax and the City of Toronto municipal land transfer tax. The City of Toronto notes that the municipal land transfer tax applies to purchases in Toronto in addition to the provincial land transfer tax.
Ontario’s land transfer tax is calculated on a graduated scale. For agreements entered into after November 14, 2016, Ontario lists rates of 0.5% up to $55,000, 1.0% above $55,000 up to $250,000, 1.5% above $250,000 up to $400,000, 2.0% above $400,000, and 2.5% above $2,000,000 where the land contains one or two single-family residences.
Toronto has also introduced new graduated municipal land transfer tax rates for high-value residential properties containing one or two single-family residences, effective April 1, 2026.
Because land transfer tax depends on the purchase price, it is important to calculate it before you make an offer. Your lawyer will confirm the exact amount owing before closing, but you should have an estimate early in the buying process.
First-Time Buyer Rebates Can Help
The good news is that first-time home buyers may qualify for rebates.
For eligible first-time home buyers, the City of Toronto offers a municipal land transfer tax rebate of up to $4,475. Ontario also provides a first-time homebuyer land transfer tax refund, with the maximum refund listed at $4,000.
However, eligibility matters.
According to the City of Toronto, to qualify for the municipal rebate, a first-time purchaser must be at least 18 years old, must occupy the home as their principal residence within nine months, cannot have previously owned a home anywhere in the world, and must be a Canadian citizen or permanent resident, subject to the City’s rules.
This is where some buyers get caught off guard.
If you owned property outside Canada, you may not qualify as a first-time buyer for these rebates. If you are buying with someone else who has owned property before, your rebate may also be affected. If a parent is going on title to help you qualify, that can also change the rebate calculation.
Before you rely on any rebate, speak with your lawyer and mortgage professional so you understand exactly what applies to your situation.
Land Transfer Tax Cannot Be Rolled Into Your Mortgage
One important thing to know is that land transfer tax is paid on closing. It is not typically something you can simply roll into your mortgage.
That means you need to have the money available in addition to your deposit and down payment.
For many first-time buyers, this is one of the biggest surprises. You may have saved carefully for your down payment, only to realize that land transfer tax, legal fees, moving costs, and adjustments also need to be paid.
That is why it is important to budget for closing costs early.
Legal Fees and Title Insurance
Another cost to prepare for is your lawyer’s fee.
Your real estate lawyer helps with the legal side of the transaction, including reviewing documents, handling funds, registering the property, and making sure the closing is completed properly.
Legal fees often include title insurance. Title insurance can help protect you if there are certain title-related issues with the property after closing. Your lawyer can explain what is covered and why it is recommended.
The exact cost can vary, so ask your lawyer for an estimate before you buy.
Deposit vs. Down Payment
Many first-time buyers are confused about the difference between a deposit and a down payment.
The deposit is the amount you provide shortly after your offer is accepted. In Toronto, a deposit is often around 5% of the purchase price, although this can vary depending on the property and situation.
The down payment is the total amount of your own money going toward the purchase.
The good news is that your deposit counts toward your down payment.
For example, if your total down payment is 10% and you already submitted a 5% deposit after your offer was accepted, that deposit becomes part of your total down payment on closing.
Adjustments on Closing
Another closing cost to understand is adjustments.
Adjustments happen when the seller has prepaid certain costs that apply to the period after you take ownership.
For example, if you are buying a condo and the seller has already paid the maintenance fees for the full month, but you take possession halfway through the month, you may need to reimburse the seller for your portion.
Adjustments can also apply to things like:
- Condo maintenance fees
- Property taxes
- Utilities
- Other prepaid expenses
Your lawyer will calculate these amounts before closing and include them in the final statement of adjustments.
Moving Costs and Insurance
Do not forget about moving costs.
Whether you hire professional movers, rent a truck, or need temporary storage, moving can add up quickly. It is a good idea to include moving expenses in your overall home-buying budget.
You should also arrange insurance before or shortly after moving in. Whether you are buying or renting, insurance helps protect your belongings and can provide important coverage.
If you are buying a condo, your lender may require proof of insurance before closing.
Do Buyers Pay Their Real Estate Agent Directly?
In many resale transactions, buyers do not write a separate cheque directly to their real estate agent for commission. Typically, the commission is paid from the seller’s proceeds.
That said, the money ultimately comes from the transaction itself, so it is still part of the overall cost of buying and selling real estate.
What matters most is making sure you have your own representation.
Walking into an open house and asking the listing agent to represent your interests can create a conflict. The listing agent is already working for the seller. As a buyer, especially a first-time buyer, you want your own agent helping you understand the property, the pricing, the risks, the offer strategy, and the conditions you may need.
Having your own agent can help you avoid costly mistakes.
Final Thoughts: Know Your Numbers Before You Buy
Buying your first home in Toronto is a major financial decision. The more prepared you are, the more confident you will feel when the right property comes along.
Before you start making offers, make sure you understand:
- How much mortgage you can afford
- Whether you have a rate hold
- Your monthly budget
- Your land transfer tax estimate
- Whether you qualify for first-time buyer rebates
- Your legal fees
- Your deposit and down payment
- Your closing adjustments
- Your moving and insurance costs
The purchase price is only one part of the equation. A smart first-time buyer looks at the full picture.
If you are thinking about buying your first home in Toronto, our My First Home magazine and first-time buyer seminars are great places to start. You will get practical advice from real estate agents, mortgage professionals, lawyers, and other experts who can help guide you through the process with more confidence.