Hidden Costs of Buying a House in Canada: What We Actually Paid

Introduction

We did the work. We saved the down payment, read the guides, and went into our first home purchase feeling like we had a solid handle on what it was going to cost us. And then I looked at our bank account after closing day — and felt it anyway. The hidden costs of buying a house in Canada were steeper than we thought.

Not panic. Just that quiet, stomach-dropping moment when you realize the number is smaller than you expected, and you don’t have a whole lot left. We had planned for most of it. We still got hit.

That’s the thing nobody really prepares you for. Everyone talks about the down payment like it’s the finish line. Save 5%, save 10%, get to that number and you’re good. But the down payment is just the ticket in the door. There’s a whole other list of costs waiting for you on the other side — and if you’re not ready for them, they can seriously disrupt your timeline or leave you cash-poor right after the biggest purchase of your life.

We bought our first home in PEI in 2024 for close to $450,000. Here’s exactly what the hidden costs looked like for us — and a few things we did that saved us money along the way that most people don’t know about.

If you haven’t read how we approached the full process, start with my First-Time Buyer: 10-Step Plan for Buying Your First Home. It covers everything from getting pre-approved to closing day.

Why Closing Costs Catch First-Time Buyers Off Guard

Everyone’s laser-focused on the down payment — and I get it, because that’s the big number. But closing costs in Canada typically run an additional 1.5–4% of your purchase price on top of your down payment. On a $450,000 home, that’s anywhere from $6,750 to $18,000 you need liquid and ready to go before you get the keys.

That’s not a rounding error. That’s a serious chunk of cash that needs its own savings plan.

I break down exactly how to structure your savings in my Down Payment Savings Plan guide — the advice there applies directly to budgeting for closing costs too.

The other reason people get caught off guard is timing. Most of these costs land all at once, right at closing, when your down payment is already spoken for. Either that or the costs come up the first of the following month, so you don’t have long to save up more money. So you’re not just dealing with the sticker shock — you’re dealing with it at the worst possible moment.

The Hidden Costs We Actually Paid (PEI, 2024)

Home Inspection — $200

This one we knew about and budgeted for. Our inspection ran $200, which is on the lower end — depending on where you are in Canada and the size of the home, inspections typically range from $300–$600.

Don’t skip this. I know some buyers waive inspections in competitive markets to make their offer more attractive, but unless you’re a contractor who can evaluate a home yourself, this is not the place to cut corners. The $200 we spent gave us peace of mind going in and flagged a few small things we were able to negotiate on. Some brokerages, insurance companies etc. also require you get a home inspection before they’re willing to insure you / give you your loan. So keep this in mind too when you’re getting quotes and moving forwards.

Legal / Lawyer Fees — ~$3,500–$4,000

This was the one that stung the most. Lawyer fees in PEI for a real estate transaction ran us roughly $3,500–$4,000 all in. This covers the title search, reviewing your purchase agreement, handling the transfer of funds, registering the property in your name, and a stack of paperwork you’ll sign more times than you thought humanly possible.

Some buyers try to shop around on legal fees, and to a degree that’s fine — but real estate law is not the place to go with the cheapest option you can find. A good real estate lawyer protects you. Ours caught a few things in the paperwork that needed to be addressed before closing. Worth every dollar.

Budget for at least $2,000–$4,000 depending on your province, and know that this is a non-negotiable part of the process. It may be larger depending on what you’re buying or the complexity of your sale (ours was a private sale so pretty straightforward).

Land Transfer Tax — $0 (Yes, Really)

Here’s something most people in PEI don’t know: if this is your first home purchase in PEI, you don’t pay land transfer tax. We qualified for the full exemption and paid nothing.

In most other provinces, land transfer tax is one of the larger closing costs — in Ontario, for example, it can run into several thousand dollars depending on the purchase price. If you’re buying in PEI as a first-time buyer, make sure you’re aware of this exemption and that your lawyer applies it. Don’t assume it’s automatic.

If you’re buying outside PEI, research your province’s land transfer tax and first-time buyer rebates — many provinces offer partial rebates that can soften the blow significantly. This was super helpful and saved us thousands.

Mortgage Default Insurance (CMHC) — We Did It Differently

If your down payment is less than 20% of the purchase price, you’re required to have mortgage default insurance in Canada. Most people get this through CMHC (Canada Mortgage and Housing Corporation), and the premium — which can be 2.5–4% of the mortgage amount — gets added to your mortgage principal. The bank benefits from that insurance, and you’re paying for it on top of your mortgage for the life of the loan.

In our case, we still had to meet the mortgage insurance requirements, but we also chose to set up a separate term life insurance policy to protect ourselves financially.

• The monthly cost for both myself and my partner Rachel to be covered is $110/month
• At the end of the policy term which is often the length of your mortgage, we get our contributions returned to us — something CMHC never offers
• With CMHC, the bank keeps every dollar of those premiums, even after your mortgage is paid off.

This isn’t right for everyone and you should talk to a licensed insurance advisor before making this call, but if you’re a first-time buyer who qualifies, it’s worth having the conversation. It saved us money in the long run and we actually get something back at the end. Another positive is that you can continue paying into this life insurance policy even if you move, that way you don’t miss out on the contributions you actually made and you’re still have coverage at all times incase the worst was to happen. You can apply your policy to new loans and mortgages, and the level of coverage is maintained throughout the entire loan – whereas CMHC coverage goes down as your mortgage amount goes down.

Moving Costs — ~$400 total

We kept this lean. We rented a U-Haul for a few hundred dollars, and then did what I’d recommend to anyone in their 20s with a good network: we called in favours. A fleet of trucks and a solid crew of friends showed up and got the job done.

The cost to feed everyone? About $200. Total moving costs came to roughly $400, which is a fraction of what professional movers would have charged on a $450K home purchase.

If you don’t have that network yet, moving companies in Canada can run anywhere from $1,000 to $3,000+ depending on distance and volume. Build it into your budget.

What Hit Us After We Moved In

This is the part that nobody writes about, and honestly it’s where the real surprises were.

The Heating Bill

We had never used heat pumps before moving into our new place. What we didn’t know is that there’s a learning curve to running them efficiently. That first winter, our electric bill averaged $600 a month. That was a hard lesson learned.

Once we figured out the most efficient way to run the heat pump — the right temperature settings, when to let it run continuously versus cycling — the bills came down significantly. But that first winter cost us more than it should have because we simply didn’t know what we were doing.

If you’re moving into a home with heat pumps for the first time, do yourself a favour: ask the previous owners how they ran them, or look up the optimal settings before that first cold month hits. It’s not obvious and the difference on your bill is real.

Internet — The Provider Switch

We moved in expecting to use a cheaper internet provider. It wasn’t cutting it. Within a few months we switched to Starlink, which in PEI we were fortunate to have a provincial plan that covered the hardware cost (normally $899) completely. But the monthly jumped to $160/month plus taxes.

It’s a great service and worth it for us, but it’s a real monthly cost that wasn’t in our original budget. If you’re moving somewhere rural or semi-rural, factor in the internet situation before you finalize your budget. Don’t assume you’ll get what you had in your last place, odds are your options will be limited and more expensive than you think.

Electricity Deposit

Depending on your province and provider, you may be required to put down a deposit to establish your electricity account at a new address. It’s usually refundable, but it’s still cash out the door right after closing when your account is already lean. We had to account for this and it’s one of those things that’s easy to forget.

Home Insurance — $80/month

This one you can’t skip — your lender will require it. Our home insurance (fire, liability, etc.) runs us $80/month. This varies depending on the home, location, and coverage, but budget at least $80–$150/month and shop around before you close because you need proof of insurance before you get the keys. Our insurance is through TD which gave us a discount for having our car insurances through the same company, and a 5% extra discount for being UPEI graduates (TIP: if you went to University, there’s a good chance your provider has a discount to, make sure to ask!).

One thing worth noting: we have a well, so our water is included and free. If you’re connecting to municipal water, factor in that monthly cost as well.

How to Actually Budget for This

Here’s the honest version of the advice: don’t treat closing costs as an afterthought to your down payment savings. They need their own line item.

We were advised by our mortgage broker to save an extra 3% on top of our downpayment to accommodate for these fees – and honestly? This was pretty bang on. On a $450,000 home with a 5% downpayment (because of first time home buyers incentives here) that would be $27,500, for 8% to include the extra 3% for closing costs, you’d be looking at $36,000.

My Down Payment Savings Plan guide walks through exactly how to structure this kind of savings system so nothing sneaks up on you.

And beyond closing day — budget a cushion for the first three months. The heating bills, the internet situation, the small things you didn’t see coming. We were prepared for closing. The months after closing were the real adjustment.

The Bottom Line

We planned. We saved. We still looked at our bank account after closing and felt the weight of it.

That’s not a failure — that’s just what buying a home actually looks like. The goal isn’t to avoid every surprise; it’s to absorb them without derailing your financial stability. The way you do that is by going in with eyes open and a buffer built in. Don’t be naive on how costly it can be.

On a $450,000 home in PEI, our closing costs included a $200 inspection, roughly $3,800–$4,000 in legal fees, zero in land transfer tax (first-time buyer exemption), a $110/month insurance policy instead of CMHC, and a few hundred for the move. Then the first few months added the heating learning curve, an internet switch, deposits, and insurance.

None of it was catastrophic. All of it was manageable — because we knew most of it was coming.

Now you do too. Cheers for reading,

Alex :)

Ready to go deeper on the home buying process? Start with the full First-Time Buyer: 10-Step Plan, learn how the FHSA can accelerate your savings, or build out your Down Payment Savings Plan before you do anything else.