Budgeting for Closing Costs
Learn how to calculate your expected closing costs, why they matter for mortgage approval, and how Optimize helps you prepare your budget with confidence and clarity
Why accurate closing cost estimates are essential
Closing costs are often underestimated or overlooked in home purchase planning. Yet, lenders require you to demonstrate you can cover these costs in addition to your down payment. Without proper budgeting, you risk cash flow strain or last-minute financing issues.
At Optimize, we make sure closing costs are factored into your affordability analysis from the beginning — not left as a surprise expense when you least expect it.
What closing costs you should include in your budget
When budgeting, we recommend assuming 2% to 5% of the property’s purchase price for closing costs. The exact amount depends on location, value, and lender requirements.
| Expense | Estimated Range | Notes |
|---|---|---|
| Legal Fees & Disbursements | $1,500–$2,500 | Lawyer/notary handles title registration, paperwork, disbursements |
| Land Transfer Tax (LTT) | Varies ($0–$15,000+) | Based on property value and region; rebates may apply for first-time buyers |
| Title Insurance | $300–$500 | One-time cost to protect against title issues |
| Appraisal Fee | $400–$600 | Often required by lender for loan validation |
| Tax & Utility Adjustments | Varies | Reimbursement to seller for prepaid taxes or condo fees |
| Mortgage Insurance Tax (PST) | Provincial rates apply | Paid in cash at closing for insured mortgages |
| Home Inspection | $400–$700 | Strongly recommended, especially for older properties |
| Miscellaneous Admin Fees | $200–$500 | Courier, registration, and lender admin charges |
For a $600,000 home, total closing costs could fall between $12,000 and $30,000. Optimize tailors these numbers based on your transaction so you're always clear on what to expect.
Tip: Set aside these funds in a separate, liquid account as early as possible. This keeps your closing costs from competing with moving expenses or emergency reserves.
How to budget effectively for closing costs
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Include closing costs in your total savings target before home shopping
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Keep the funds in a high-interest savings or cashable investment account
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Factor in timing: closing costs are due close to possession date
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Add a buffer (5–10%) above your estimate for minor surprises
We guide you through building a tailored budget that reflects your real costs — not generic percentages.
Closing costs and mortgage approval: the connection
Lenders require you to verify:
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That you have sufficient cash on hand for both the down payment and closing costs
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That your source of funds is documented (e.g., bank statements, RRSP withdrawals, gift letters)
Important: Closing costs are not optional — they’re a required part of mortgage approval. Underestimating or omitting them from your application can jeopardize your purchase.
Optimize ensures this is never a problem by addressing it clearly, early, and thoroughly.
How Optimize helps you budget confidently
We support you by:
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Providing customized closing cost estimates based on location, property type, and mortgage structure
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Helping you align your savings and cash flow strategy for timely payments
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Coordinating with legal professionals to clarify final amounts well ahead of closing
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Ensuring your mortgage plan includes all costs, not just the down payment and rate
With Optimize, closing costs are never an afterthought — they’re a planned, managed part of your path to homeownership.