How Much Money Do You Actually Need to Buy a Home?

When you're thinking about buying a home, the first number that probably comes to mind is your down payment.

But your down payment isn't the only money you'll need.

There are a few other costs you'll want to plan for before you start shopping so there are no surprises when it comes time to close.

Your Down Payment & Deposit

Your down payment will likely be your biggest upfront expense.

When your offer is accepted, you'll also typically be required to provide a deposit. But don't worry , your deposit isn't an additional cost. It forms part of your total down payment and is credited toward the amount you need at closing.

The important thing is making sure your deposit funds are accessible when you're ready to make an offer.

Land Transfer Tax

This is a big one , especially if you're buying in Toronto.

When you purchase a home in Ontario, you'll pay Ontario Land Transfer Tax.

If you're buying within the City of Toronto, you'll also pay a Municipal Land Transfer Tax. That means Toronto buyers are responsible for both.

The amount depends on the purchase price of the property, so it's something you'll want to calculate before deciding on your budget.

First-time buyer? There's some good news.

Eligible first-time home buyers may receive up to $4,000 back on the Ontario Land Transfer Tax and up to $4,475 back on Toronto's Municipal Land Transfer Tax.

That's potentially $8,475 in savings for an eligible first-time buyer purchasing in Toronto.

USE THE LAND TRANSFER CALCULATOR HERE

Other Closing Costs

You'll also want to leave room in your budget for things like:

• Lawyer fees and title insurance
• Closing adjustments, such as prepaid property taxes
• Home inspection, if applicable
• Tax on mortgage default insurance, if applicable
• Moving and move-in expenses

These costs will vary depending on the property and your purchase.

Don't Use Every Dollar to Buy the Home

Here's something I always want buyers to think about:

Just because you have enough money to close doesn't mean you should spend every dollar you have.

Owning a home comes with expenses, and sometimes unexpected ones. Ideally, you want to have some money left over after you get the keys.

Know Your Numbers Before You Start Shopping

Before you start looking at homes, know three things:

How much you need for your down payment.
How much you should budget for closing costs.
How much you want left in the bank after closing.

Knowing your numbers ahead of time can help you set a realistic budget and avoid surprises later.

And if you think you need a 20% down payment before you can buy ....you might be surprised. We'll break that down in the next blog.

Thinking about buying in Toronto or the GTA? Your next move starts here.