Closing Costs When Buying a Home in Edmonton

1.0 Budgeting Beyond the Down Payment

When you’re saving to buy a home, the down payment gets all the attention. However, it’s crucial to also budget for “closing costs.” These are a series of one-time fees associated with the legal and administrative process of transferring ownership of the property from the seller to you. Forgetting to account for these costs can lead to a major financial scramble right before you get your keys.

As a general rule of thumb in Edmonton, you should budget between 2% and 4% of the home’s purchase price for closing costs.

2.0 A Detailed Breakdown of Buyer Closing Costs

Here are the most common expenses you can expect to pay on or before your possession day.

Legal Fees: You will need a real estate lawyer to handle the legal transfer of the property. Their fee covers the title search, registering the title in your name, and registering your new mortgage. In Edmonton, expect this to cost between $1,200 and $1,800.
Title Insurance: While not mandatory, most lenders will require you to purchase a title insurance policy. This protects you and the lender from potential issues with the property’s title, such as fraud or survey errors. This is a one-time fee, typically costing between $250 and $400.
Property Tax Adjustments: The seller may have already paid the property taxes for the entire year. The “statement of adjustments” prepared by your lawyer will calculate the portion of taxes you owe the seller for the days you will own the home in that year. This can be a significant amount depending on your possession date.
Home Inspection Fee: While you pay for this before closing (during your “conditional” period), it’s an essential part of your total purchasing cost. Expect to pay between $400 and $600 for a professional inspection.
Property Appraisal Fee: Sometimes, your mortgage lender will require a formal appraisal of the property to confirm its value before they approve their loan. This can cost between $300 and $500.
Home Insurance: Your lender will require you to provide proof that you have a home insurance policy in place, effective on your possession day. You’ll need to pay the first year’s premium upfront.

3.0 Other Possible Costs

Depending on your purchase, you may encounter these additional costs:

Condo Document Review: If you are buying a condominium, your lawyer will recommend a specialized review of the condo documents (bylaws, financials, etc.). This review typically costs between $200 and $500.
GST on New Builds: If you are purchasing a brand-new home from a builder, you will be required to pay Goods and Services Tax (GST) on the purchase price.
Utility Hookups/Deposits: You may need to pay small fees to set up your new utility accounts for services like electricity, water, and gas.

4.0 Sample Closing Cost Calculation

Let’s look at a hypothetical example for a $450,000 home purchase to see how these costs can add up:

Legal Fees: $1,500
Title Insurance: $300
Home Inspection: $500
Appraisal Fee: $400
Estimated Total Closing Costs: ~$2,700 (+ any property tax adjustments)

5.0 Budgeting for a Faster, Smoother Purchase

Understanding and saving for closing costs is a critical part of a successful home purchase. By having these funds set aside, you demonstrate to sellers that you are a serious, well-prepared buyer. More importantly, it ensures there are no financial surprises that could delay your closing day. A prepared buyer is a buyer who can move faster and more confidently toward their goal of homeownership.

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Each step in the home-buying journey is an important one. To see how this topic fits into the complete process, review our Ultimate Guide to Buying a Home in Edmonton.

Financial FAQs

Have more financial questions? Contact us for a free consultation.

How much income do I need to afford a home in Edmonton?

As a general guideline, lenders often use a Gross Debt Service (GDS) ratio of 32%. This means your total monthly housing costs (mortgage principal and interest, property taxes, heating) should not exceed 32% of your gross monthly income. For example, to afford a $1,800 monthly housing payment, you’d need a gross monthly income of around $5,625.

How does my credit score affect my mortgage application?

Your credit score is a critical factor. A higher score demonstrates to lenders that you are a reliable borrower, which allows you to qualify for the best interest rates. While it’s possible to get a mortgage with a lower score, a score of 680 or higher is typically required to qualify for the most competitive rates from A-lenders.

How much down payment do I need in Canada?

The minimum down payment depends on the home’s purchase price. For homes under $500,000, the minimum is 5%. For homes between $500,000 and $999,999, it is 5% on the first $500,000 and 10% on the remaining portion. For homes of $1 million or more, the minimum down payment is 20%.

What government programs can help me buy my first home?

First-time homebuyers in Canada can take advantage of several programs. The Home Buyers’ Plan (HBP) allows you to withdraw from your RRSPs tax-free for a down payment. There is also the First-Time Home Buyer Incentive, which is a shared-equity program that can lower your monthly mortgage payments.

Should I use a mortgage broker or go directly to my bank?

While your bank can only offer you their own products, a mortgage broker works with dozens of different lenders. They can shop the market on your behalf to find the best possible interest rate and mortgage terms for your specific situation, often saving you a significant amount of money over the life of your loan.