What is included in closing costs?

Closing costs typically include: loan origination fee (US, ~0.5–1% of the loan), title insurance or title search (~0.5–1%), appraisal (~$500–$900), home inspection (~$300–$600), legal/attorney fees ($800–$2,000+), prepaid property taxes and insurance, recording fees, and — in Canada — land transfer tax (1–2% of the price, sometimes more in Toronto). On a $500,000 home in the US, budget $8,000–$15,000 total.

Can closing costs be rolled into the mortgage?

In the US, some loan programs allow "lender credits" where the lender covers closing costs in exchange for a slightly higher interest rate. Some programs (like USDA loans ) allow rolling costs into the loan if the appraisal supports it. In Canada, the CMHC insurance premium can be added to the principal, but most other closing costs must be paid in cash at closing.

What is a Good Faith Estimate?

A Good Faith Estimate (GFE) was a US form lenders were required to provide within 3 days of your application, disclosing estimated closing costs. Since 2015 it was replaced by the Loan Estimate form under the TRID rules . The Loan Estimate gives a standardized, itemized breakdown of all expected closing costs, making it easier to compare offers from different lenders.

How do closing costs differ between the US and Canada?

The US has loan origination fees, title insurance, and prepaid escrow items as major components. Canada has land transfer tax (a major variable by province and city — Toronto buyers pay both provincial and municipal LTT), legal fees, title insurance, home inspection, and possibly HST on new construction. Canada does not have a standard loan origination fee. The CMHC premium is separate and added to the mortgage, not usually counted as a closing cost.

When do I pay closing costs?

Closing costs are due on the closing date — the day the property legally transfers to you. You typically receive a final closing disclosure (US) or statement of adjustments (Canada) 1–3 business days before closing showing the exact amounts. You fund these separately from the down payment, usually by certified cheque or wire transfer.

Closing costs

Closing costs are the one-time expenses you pay when a home purchase completes: legal fees, title insurance, inspection, appraisal, and more. Budget roughly 2% of the purchase price in the US and 1.5–4% in Canada, on top of your down payment.

Updated August 2026

Definition

Closing costs are the one-time fees and charges due on the day a property purchase completes. They are separate from the down payment and are paid in cash at the closing table. In the US budget roughly 2% of the purchase price; in Canada budget 1.5% to 4%, with land transfer tax being the largest variable.

Where closing costs typically come from

Each segment below slides in to show a typical breakdown of closing costs. Proportions vary by location — land transfer tax is the single largest item in major Canadian cities.

Real numbers: closing costs on a $500,000 home

United States (~2%)

Loan origination (0.5%)	$2,500
Title insurance + search	$2,200
Appraisal	$750
Home inspection	$500
Attorney / escrow fees	$1,200
Recording & misc	$450
Total estimate	~$7,600

Canada (~2.5–4%)

Provincial land transfer tax	$8,000
Legal fees + disbursements	$1,800
Title insurance	$500
Home inspection	$550
Appraisal	$600
Misc (PST on CMHC, moving)	$1,000
Total estimate	~$12,450

Toronto buyers also pay a municipal LTT, adding ~$6,475.

How closing costs affect your purchase plan

Cash needed at closing = down payment + closing costs

On a $500,000 US purchase with 10% down, you need $50,000 for the down payment plus roughly $8,000–$12,000 in closing costs — a total of $58,000–$62,000 liquid. Many first-time buyers underestimate this and are caught short.

Closing costs do not affect your monthly payment

Unless you roll them into the loan (increasing the principal), closing costs are a one-time cash outlay. They reduce your net worth at purchase but do not change your monthly P&I. They do affect your break-even on a refinance.

Negotiate and shop around

Title insurance, attorney fees, and even origination fees can vary significantly between providers. The US Loan Estimate lets you compare lenders line by line. In Canada, get two real-estate lawyer quotes — fees vary by $500–$1,000 for identical work.

Frequently asked questions

What is included in closing costs?: Closing costs typically include: loan origination fee (US, ~0.5–1% of the loan), title insurance or title search (~0.5–1%), appraisal (~$500–$900), home inspection (~$300–$600), legal/attorney fees ($800–$2,000+), prepaid property taxes and insurance, recording fees, and — in Canada — land transfer tax (1–2% of the price, sometimes more in Toronto). On a $500,000 home in the US, budget $8,000–$15,000 total.
Can closing costs be rolled into the mortgage?: In the US, some loan programs allow "lender credits" where the lender covers closing costs in exchange for a slightly higher interest rate. Some programs (like USDA loans) allow rolling costs into the loan if the appraisal supports it. In Canada, the CMHC insurance premium can be added to the principal, but most other closing costs must be paid in cash at closing.
What is a Good Faith Estimate?: A Good Faith Estimate (GFE) was a US form lenders were required to provide within 3 days of your application, disclosing estimated closing costs. Since 2015 it was replaced by the Loan Estimate form under the TRID rules. The Loan Estimate gives a standardized, itemized breakdown of all expected closing costs, making it easier to compare offers from different lenders.
How do closing costs differ between the US and Canada?: The US has loan origination fees, title insurance, and prepaid escrow items as major components. Canada has land transfer tax (a major variable by province and city — Toronto buyers pay both provincial and municipal LTT), legal fees, title insurance, home inspection, and possibly HST on new construction. Canada does not have a standard loan origination fee. The CMHC premium is separate and added to the mortgage, not usually counted as a closing cost.
When do I pay closing costs?: Closing costs are due on the closing date — the day the property legally transfers to you. You typically receive a final closing disclosure (US) or statement of adjustments (Canada) 1–3 business days before closing showing the exact amounts. You fund these separately from the down payment, usually by certified cheque or wire transfer.