Closing costs the down payment never covers

Saving the down payment does not mean you can close. The notary still needs cash for legal work, tax adjustments, municipal transfer duties and, if the lender asks, a current certificate of location. Households that treat those lines as optional discover them after the offer is firm, when there is no time left to save.

A federal range is not an invoice

The Financial Consumer Agency of Canada calls closing costs one-time charges, usually due by the time the sale completes. The examples it names are the home inspection, legal fees, property-tax adjustments and title insurance. It tells buyers to be prepared to spend between 1.5% and 4% of the purchase price on those costs.

That band is a planning range, not a receipt. It does not tell you what your notary will collect, or what the municipality will bill once the deed is registered. CMHC lists further lines: an appraisal of $250 to $350 if the lender requires one, an inspection around $500, legal fees of at least $500, a survey or certificate of location of $1,000 to $2,000 if an up-to-date document is required, plus property insurance, which must be in force on closing day.

Our guide to minimum down payment and cash to close is about the savings plan and the tax accounts that can feed it. This article is about the cash that sits beside that plan, especially the bills people postpone until the offer is already accepted.

Transfer duties often show up after you have the keys

Municipal transfer duties, often nicknamed the welcome tax, are not a notary's fee. They are a levy on the transfer of the immovable. The Act respecting duties on transfers of immovables makes the transferee liable to the municipality. Duties are payable from the thirty-first day after the municipality sends the account, with interest from that day if they are unpaid. Many buyers leave the notary's office assuming every government charge has already been settled. The municipal account arrives later.

The basis of imposition is not automatically the offer price. It is the highest of the consideration actually paid, the consideration stated in the deed, and market value at the time of transfer. Buying "under the roll" does not, by itself, shrink the duty.

For the 2026 municipal year the statute's bands are 0.5% on the first $62,900, 1% on the portion above that up to $315,000, and 1.5% above $315,000. A municipality may, by by-law, set a higher rate on any portion above $500,000, within the cap the statute allows. On a $350,000 basis the three bands produce $314.50 plus $2,521 plus $525, or $3,360.50, before any surcharge on a higher-value property.

A refundable tax credit for access to homeownership can repay up to $5,875 of that duty for a first qualifying home acquired in 2026, or for a more accessible home for a person with a disability, on the program's terms. The published math is 100% of the first $5,000 paid, then 25% of the next $3,500. On the $3,360.50 illustration, an eligible buyer could recover the whole amount. The credit does not replace the cheque. The tax authority is explicit: the individual or their spouse must have paid the duties. An advance payment is available if the estimated credit is more than $1,000 and the application is filed by 1 December of the taxation year. That is not cash on the notary's table.

A worked file: the down payment clears, the cash does not

Take a $350,000 resale, the same basis as the illustration above. CMHC puts the insured minimum down payment at 5% of price, or $17,500. The loan is $332,500. That $17,500 is not cash to close. It is not an offer. It is the equity floor on a sample file.

On the same $350,000, the federal 1.5% to 4% band is $5,250 to $14,000. Transfer duties of about $3,361 already sit inside that order of magnitude before inspection, legal fees and adjustments. Add around $500 for the inspection and at least $500 for legal work. If the lender will not accept an outdated certificate of location, add $1,000 to $2,000. A required appraisal adds $250 to $350. Property-tax and utility adjustments depend on the closing date and on what the seller has already prepaid. They are not a percentage of price. They are a reimbursement, sometimes a few hundred dollars, sometimes more if you close early in the municipal tax year.

A household that arrives with exactly $17,500 has the down payment. It does not have closing. The lender may also want proof that those extra costs sit in a separate account. Emptying the savings to hit 5%, then counting on a later tax credit for the transfer duty, leaves the municipality's 31-day clock unfunded. If the credit is paid, it is paid after.

If the mortgage loan insurance premium is added to the loan, principal rises. Provincial sales tax on that premium cannot be added to the loan amount. Our article on who pays the insurance premium is about that cheque. It is due in cash, beside the other closing lines.

What will not ride on the mortgage

The usual lever is to finance the price minus the down payment, and sometimes the insurance premium. Everything else is cash. The inspection happens before closing, often as a condition of the offer. The deposit you pay with the offer counts toward the down payment, but it leaves the account weeks or months earlier. Property insurance must be in force on the day you take possession: the first premium does not wait for the first mortgage payment.

The certificate of location is the line many files meet late. A seller's certificate from several years ago is not always enough. That is not a surveyor's luxury. It can be a funding condition. Adjustments are not a service fee: if the seller has paid taxes through year-end and you close in October, you reimburse the unused portion. The notary runs the numbers on the actual bills. You cannot lock that figure into a 1.5% budget drawn six months earlier.

New builds, wells, and co-ownership change the list

The sale of a home that is not new is tax-exempt. The sale of a new home, or one that has undergone major renovations, is taxable. A partial rebate exists, on the program's terms: first occupant, usual residence, and a price or fair market value under $450,000 for GST and under $300,000 for QST. The published maximum is 36% of GST paid and 50% of QST paid, capped at $6,300 and $9,975. The QST rebate is already zero at $300,000. On the $350,000 illustration, a resale does not carry that tax bill. A new build at the same price, if it is taxable, no longer gets the provincial rebate. The GST rebate begins to phase out at $350,000 and is gone at $450,000. Treating those two files as the same closing budget is how a construction contract inherits a resale worksheet.

If the house has a well, CMHC flags a water test. If it has a septic tank, an inspection of the system. In co-ownership, condo fees start after you have the keys: they sit beside the mortgage payment, the taxes and the insurance, and they do not pay the notary. The failure mode that belongs to these lines is the household that assembled the down payment, treated 1.5% as a ceiling, and meets a taxable new build, a certificate that has to be redone, and a municipal account on a 31-day clock.

What to get in writing before you offer

Split the file into three columns first: the down payment, the amounts due at the notary on closing day, and the accounts that will arrive after you have the keys, including transfer duties. Then have someone price, for the actual address, the duty on the highest basis of imposition, not only on the offer price, and say whether a tax credit is even in play. A credit is not a line of credit.

Ask whether the lender will require a current certificate of location, an appraisal, and proof that closing funds exist beside the down payment. Have it stated whether the insurance premium will be added to the loan, and how much tax on that premium will still be due in cash. On a new build, have it stated whether the advertised price includes the taxes, who files the rebate, and against which ceiling.

The useful work is to see, before you sign, which cash actually leaves, on which date, and what cannot be borrowed. You can have that total estimated before you tour. A first conversation is free and does not commit you to a lender.

Certain conditions may apply. Subject to change without notice.