Closing costs are the fees and taxes paid to complete a property purchase, on top of the down payment. They pay the people and systems that make a sale legally safe — lenders, lawyers, surveyors, title companies and land registries — plus any tax the government charges on the transfer. Because they're due in cash at closing, they can catch first-time buyers off guard.
United States: typically 2%–5% of the purchase price
Your lender must give you a Loan Estimate within three business days of applying and a Closing Disclosure at least three business days before closing, listing every cost. The main categories are:
- Lender fees: origination or underwriting fees, and optional discount points paid to lower your rate.
- Third-party services: appraisal, credit report, survey, pest or home inspection.
- Title and settlement: title search, lender's title insurance (required) and owner's title insurance (optional but recommended), plus the settlement or escrow agent's fee.
- Government fees: recording fees and, in some states and cities, transfer taxes.
- Prepaids and escrow: homeowners insurance premium, a few months of property tax and insurance to fund your escrow account, and interest from closing to the end of the month.
United Kingdom: stamp duty plus fees
In England and Northern Ireland, the largest cost is usually Stamp Duty Land Tax, unless you're a first-time buyer under the relief thresholds. Other costs include:
- Conveyancing: your solicitor or licensed conveyancer's fee plus disbursements such as local authority, drainage and environmental searches.
- Survey: a basic mortgage valuation is often free, but an independent RICS Level 2 or Level 3 survey costs extra and is strongly recommended for older properties.
- Mortgage fees: arrangement or product fees, broker fees and sometimes a valuation fee.
- Land Registry fee: to register you as the new owner, based on the price.
- Leasehold extras: for flats, management pack fees and sometimes service charge adjustments.
Canada: often 1.5%–4% of the price
- Land transfer tax: the biggest item in most provinces — and doubled in Toronto. Use our land transfer tax calculator for Ontario, Toronto and BC. Alberta and Saskatchewan charge only small title registration fees instead.
- Legal fees and disbursements: your real estate lawyer (or notary in Quebec) handles the title transfer and mortgage registration.
- Title insurance: commonly required by lenders.
- Home inspection and appraisal.
- Sales tax on mortgage default insurance: if you put down less than 20%, the insurance premium itself is added to the mortgage, but Ontario, Quebec and Saskatchewan charge provincial sales tax on it, payable in cash at closing.
- Adjustments: reimbursing the seller for property tax or utilities they've prepaid past the closing date.
- GST/HST on new homes: may apply to newly built properties, partly offset by rebates for eligible buyers.
How much cash should you set aside?
Add your down payment, closing costs and moving costs, then keep an emergency fund on top. A simple way to plan:
- Calculate the transfer tax for your location with our calculators.
- Add a further 1%–3% of the price for legal, lender and inspection costs (more in high-fee US states).
- Estimate your move with the moving cost calculator.
- Keep several months of expenses in reserve for repairs and surprises after you move in.