You've saved for a down payment and found a home you love. But do you have enough money to complete the purchase?
Your budget also needs to cover land transfer tax, legal costs, closing adjustments, and any applicable tax on mortgage insurance.
Where you buy in the GTA matters. A property within the City of Toronto attracts an additional municipal land transfer tax. A purchase in Mississauga, Vaughan, Markham, or another GTA municipality outside Toronto does not attract Toronto's tax.
Let's walk through a $1.1 million GTA purchase, comparing minimum-down-payment financing with a 20% down payment.
Meet our example buyers
A couple is purchasing their first home to live in. They both qualify for the full applicable first-time buyer land transfer tax refunds.
They're buying a resale home, so this example excludes new-build HST and builder adjustments. We'll use a 30-year amortization and assume they qualify for either financing option, including the first-time buyer eligibility requirements for a 30-year insured mortgage.
Option one: buy with the minimum down payment
For this purchase, the minimum down payment is:
- 5% of the first $500,000: $25,000
- 10% of the remaining $600,000: $60,000
- Total down payment: $85,000.
Because that is less than 20%, mortgage default insurance is required. Their mortgage before insurance is $1,015,000.
With a 30-year amortization, the CMHC premium rate is 4.2%, including the 0.20-percentage-point surcharge for the longer amortization. That produces a $42,630 premium and, when financed, a starting mortgage balance of $1,057,630.
They don't need to bring that entire premium to closing if it's added to the mortgage. It becomes part of the balance they repay, with interest.
However, Ontario's 8% provincial sales tax on the premium — $3,410.40 — must be paid separately. It cannot be added to the mortgage and is not 13% HST.
Option two: put down 20%
A 20% down payment on the same home is $220,000, leaving an uninsured mortgage of $880,000, also amortized over 30 years. There is no borrower-paid CMHC premium or related premium tax in this example.
This option requires more cash upfront but creates a smaller mortgage. A longer amortization generally reduces payments compared with a shorter repayment period at the same rate, but increases total interest if the mortgage is repaid on schedule.
Land transfer tax: your location matters
At $1.1 million, Ontario land transfer tax is $18,475. After the full $4,000 first-time buyer refund, our couple pays $14,475.
If the home is within Toronto, municipal land transfer tax adds another $18,475. After the full $4,475 municipal rebate, that adds $14,000 to their closing budget.
| Location | Land transfer taxes after full first-time buyer refunds |
|---|---|
| GTA outside the City of Toronto | $14,475 |
| Within the City of Toronto | $28,475 |
These figures assume both buyers qualify for the full refunds and their lawyer applies them at closing.
What about the other costs?
For this example, we'll budget:
| Other expense | Illustrative allowance |
|---|---|
| Legal fees, applicable tax, title insurance, registration, and disbursements | $2,500 |
| Property tax and other closing adjustments | $1,500 |
| Total allowance | $4,000 |
These are budgeting assumptions, not quotes. Actual costs depend on the lawyer, property, closing date, and amounts already paid by the seller. Inspection, appraisal, home insurance, and moving expenses may require additional funds.
Their total cash budget
| Item | Insured: minimum down | Uninsured: 20% down |
|---|---|---|
| Down payment | $85,000 | $220,000 |
| Ontario land transfer tax after refund | $14,475 | $14,475 |
| Ontario tax on CMHC premium | $3,410.40 | $0 |
| Other closing-cost allowance | $4,000 | $4,000 |
| Total: GTA outside Toronto | $106,885.40 | $238,475 |
| Additional Toronto tax after rebate | $14,000 | $14,000 |
| Total: within Toronto | $120,885.40 | $252,475 |
Suppose they already paid a $55,000 deposit when their offer was accepted. That deposit forms part of their down payment.
For a GTA purchase outside Toronto, their estimated remaining funds to provide through their lawyer would be $51,885.40 with insured financing, or $183,475 with uninsured financing. For a property within Toronto, those amounts would be $65,885.40 and $197,475, respectively.
Plan beyond the down payment
Having $85,000 saved could cover the minimum down payment on this home — but it wouldn't cover the full purchase budget.