What Are The Normal Closing Costs and Who Pays?

When buying a home, most buyers will face a list of closing costs. These fees vary from province to province, but they usually include mortgage insurance, property taxes, legal fees, etc.

In this article, we’ll look at the typical closing costs in Alberta. But first, I’ll go over the standard closing costs and how much you should expect to pay, so you can ensure you’re getting the best deal possible.

What are closing costs?

Closing costs are the administrative fees that come with your sale/purchase of a property. They’re called closing costs because they happen on closing day. Closing costs include real estate agent commissions, legal fees, appraisal fees and more. They can range anywhere from 2-10% of the house’s purchase price, depending on where you live in Canada. In Alberta, closing costs are commonly between 3-5% of the home sale price.

Here’s an overview of the usual closing costs:

Closing CostWho Pays?Estimated Cost
A DepositBuyer$5-10K
Down PaymentBuyer5-20% of purchase price
Adjustment Costs (Property Tax)Buyer$0-3,000
Legal FeesBuyer and Seller$1-2,000
Title InsuranceBuyer$300
Property InsuranceBuyer$500-1,500
Mortgage InsuranceBuyerUp to 4% of mortgage amount
Property AppraisalBuyer or Seller$500 or less
Home InspectionBuyer$500
Estoppel CertificateBuyer$100
Goods & Services Tax (GST)Buyer5% in Alberta (see details)
New Home WarrantyBuyer$2,000
Land Transfer TaxBuyer$200-1,000
Real Property Report (RPR)Seller$600
Mortgage PenaltiesSellerDependant on contract
Realtor CommissionSellerDependant on contract

Read on for a more detailed breakdown of the different closing costs for buyers and sellers.

What are the closing costs when buying a house?

During the buying process, the buyer generally covers most of the closing costs. These include fees like land transfer tax, title insurance, property taxes, homeowner’s insurance, and other expenses related to purchasing a home. 

The seller is usually responsible for some of the closing costs, which will be covered further down the page. 

Here are some of the costs you can expect as a buyer.

A Deposit

Once your offer has been accepted, you will have a predetermined amount of time (usually seven days) to submit a deposit. Your deposit will likely be between $5K and $10K, depending on the seller’s request. The deposit is then deducted from the amount owed for your downpayment at a later date.

Down Payment

This is money paid by the buyer towards their share of the home’s total cost. It’s typically at least 20% of the purchase price.

In Alberta, you can opt for a mortgage as low as 5%. However, you will need to pay mortgage insurance and other fees. Mortgage insurance protects lenders against defaulting borrowers.

Adjustment Costs (Property Tax)

You may have to pay an adjustment fee if you buy a new home. This is because the previous owner paid property taxes, and you owe them the difference. This can be anywhere from $0 to $3,000+, depending on the annual property tax assessment of the property.

Legal Fees

These fees vary depending on where you live but typically range from $1,000 to $2,000. This covers your side of getting the paperwork done, and your real estate lawyer will usually also complete other tasks for you, like transferring the funds. So be sure to ask your real estate agent about these fees when looking at properties.

Title Insurance

Title insurance is another one of those fees that varies depending on where you live. Title insurance protects the lender if something goes wrong during the transaction. For example, if there were a problem with the property title, it would protect the bank or lending institution. This usually costs around $300.

Property Insurance

You should always insure your home. If anything were to happen to your home while you weren’t living there, you’d want to be able to cover the repairs without hassle. Property insurance helps you do just that. Property insurance is also required for you to get a mortgage. Property insurance is paid annually and usually costs $500 to $1,500 – but varies based on your coverage and property value.

Mortgage Insurance

Mortgage insurance protects the lender if you default on your payments. You only need to pay mortgage insurance in Alberta if you’re putting less than 20% down. Be sure to speak with your mortgage broker about your best option.

Be aware that you will likely also need to pay CMHC premiums. CMHC premiums can be up to 4% of the mortgage amount. These can either be paid upfront or added to your mortgage amount owing, which increases your mortgage payments.

Property Appraisal

A property appraiser determines how much your home is worth. Usually, this is only needed if specifically requested by your mortgage provider. They want to check that what you’re paying is a reasonable amount for the property and that they would be able to recover the debt by selling the property if you defaulted on your mortgage. This usually costs $500 or less.

Home Inspection

Your realtor will likely recommend having a home inspection completed before you close on the sale. A home inspector checks all aspects of the home, from the roof to the plumbing. They’ll ensure everything is up to code and give you a report detailing any issues found. This usually costs around $500.

Estoppel Certificate

An estoppel certificate only applies if you’re buying a condo or strata property. The estoppel certificate tells you if the seller still owes any condo fees or other funds to their condo board. This usually costs around $100.

Goods & Services Tax (GST)

The rate of GST in Alberta is 5%, and with no provincial tax, that’s all you’ll pay. Note that GST only applies to new homes where you’re buying from the builder. GST is often included in the purchase price, so you may or may not be aware of it.

You could be eligible for a 36% refund on GST if you buy a newly built house with a sale price of up to $350,000. A smaller rebate is available on properties between $350,000-$$450,000, but anything over $450,000 is ineligible for the GST rebate. Make sure to check with your accountant!

New Home Warranty

If you’re purchasing a new home in Alberta, you will be provided with a mandatory warranty. At the time of writing, the Alberta new home warranty covers one year for labour and materials, two years for delivery and distribution systems, five years for building envelope protection and ten years for major structural components. This usually costs around $2,000.

Land Transfer Tax

Alberta charges a minimal land transfer tax comprised of a mortgage registration fee and a property registration fee.

  • The mortgage registration fee is charged at a rate of $50 plus $2 for every $5,000 of the purchase price, rounded up. So, for example, on a $500,000 purchase, you would pay $50 plus $200 (100 lots of $5,000, at $2 each), so $250 total.
  • The property registration fee is charged at a rate of $50 plus $2 for every $5,000 of the mortgage amount, rounded up. For example, on the same purchase, let’s say you put down 20%, making it a $400,000 mortgage. You would pay $50 plus $160 (80 lots of $5,000, at $2 each), so $210 total.
  • Your total land transfer tax in the above example would be $460.

The only province with a lower property transfer tax rate is Quebec, which does not charge a tax at the time of writing.

What are the closing costs when selling a house?

Selling a house can be an expensive process. Buyers are responsible for most of the costs, but sellers often have some of the higher costs to cover. As a seller, almost all of your expenses will come from the buyer’s funds. However, some of them will need to be paid upfront, depending on your situation. 

Here are some of the most common costs associated with selling a house:

Appraisal Fee

This is usually done by a licensed appraiser who will determine the current market value of your home. This isn’t necessary if you’re working with a realtor, as they will appraise your house based on more current market conditions and aren’t governed by the strict criteria of licensed appraisers. Typically an appraisal from a licensed appraised will come in below the potential sale price of a home. If you do opt for a professional home appraisal, it will set you back around $500.

Real Property Report (RPR)

An RPR is required if you want to sell your home through a real estate agent. An RPR is a drawn document that needs to be prepared by a surveying company and is approved by the city the property is in.

If you have built or changed any structures on your property since owning it, like a deck or garage, you will likely need to get a new RPR. This usually costs around $600 but can vary a little.

Mortgage Penalties

When you pay off your mortgage, lenders often make you pay specific penalties based on your contract. These penalties are called “prepayment penalties” and can cost you thousands. Check with your mortgage provider if you’ll incur any penalties when selling your home. This cost entirely depends on your lender and your agreement with them.

Legal Fees

You will have to pay legal fees to prepare contracts or documents related to buying or selling a house. Legal fees vary greatly depending on the location and complexity of the transaction. This will usually cost around $1,000 to $2,000.

Realtor Commission

Most real estate agents receive a commission from the seller as part of their contract. For example, in Alberta, realtors receive a commission of 7% on the first $100K and 3% on the remaining balance of the home’s sale price. This fee is usually split 50/50 between the buyer’s agent and the seller’s agent.


Closing costs can vary quite a lot depending on your situation. So whether you’re buying or selling, the best thing to do is ask your real estate agent. Even if they can’t answer your question, they can connect you with other professionals who can. 

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Derek Timmons

Derek is a top performing REALTOR® in Airdrie, Alberta, Canada. Aside from knowing the market, he uses his knowledge and experience in construction to help clients understand exactly what they’re in for when buying and selling real estate.


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