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Closing Costs in PEI: What First-Time Buyers Actually Pay

You’ve saved your down payment. Nobody warned you about the rest.

You’ve been saving for months, maybe years, and your down payment number finally feels within reach. Then, a week before your closing date, your lawyer sends over a trust ledger with a number you didn’t plan for. That’s how most people first learn what closing costs in PEI actually add up to, and it’s the wrong time to find out.

Why this trips people up

Closing costs aren’t optional, and they can’t go on your mortgage. Your lender isn’t financing them, so you need the cash sitting in your account on closing day, separate from your down payment. Coming up a few thousand dollars short at the last minute is stressful, and it can delay your closing or send you scrambling for a loan from family at the worst possible time.

What closing costs actually are

Your down payment is what you’re putting toward the price of the home. Closing costs are everything else you pay to legally take ownership of it. That usually includes:

  • Legal fees
  • Title insurance
  • A home inspection
  • An appraisal, if your lender requires one
  • A property tax adjustment (reimbursing the seller for taxes they already paid)
  • Your first year of home insurance
  • Moving costs

A rough range to plan around

For a typical purchase in PEI, budget somewhere between $2,500 and $6,000 beyond your down payment, more if you owe the full land transfer tax (see below). These numbers move around, so ask your lawyer for a trust ledger estimate before your closing date, not the week of it.

The transfer tax exemption most first-time buyers miss

Here’s the part that surprises people. Every buyer in PEI normally pays a Real Property Transfer Tax of 1% of the purchase price or the assessed value, whichever is higher, when the deed is registered. On a $350,000 home, that’s $3,500 due on closing day.

As a first-time buyer, you may be able to have that tax waived entirely under PEI’s Real Property Transfer Tax Act, and there’s no cap on the purchase price. Broadly, you’ll need to:

  • Be a Canadian citizen or permanent resident
  • Have lived in PEI for at least six months before the registration date, or have filed PEI income tax returns in at least two of the past six years
  • Have never held a principal residence anywhere before
  • Not have used this exemption before

Your lawyer files a signed declaration to claim it. Eligibility rules can be specific, so confirm your own situation with your lawyer before you count on that $3,500 staying in your pocket.

The Closing Cost Support Program: PEI’s other quiet win

Beyond the tax exemption, PEI also runs a Closing Cost Support Program: a direct contribution of up to $2,500 toward closing costs for eligible first-time buyers, generally for households under a set income threshold buying a home under $350,000. There’s no fee to apply. It’s easy to miss because it’s not something your realtor or lender is likely to bring up, and combined with the transfer tax exemption, it can meaningfully shrink the cash you need on closing day. Program details do shift, so check the current thresholds before you build it into your plan.

The other costs that sneak in

Even with those two breaks, expect these:

  • Legal fees: roughly $800 to $1,500
  • Title insurance: roughly $200 to $350
  • Home inspection: roughly $300 to $500, and worth every dollar
  • Property tax adjustment: varies by when you close in the year

Common Questions

Do I have to pay the transfer tax if I don’t qualify for the exemption?

Yes. It’s 1% of the purchase price or assessed value, due when the deed is registered, whether or not you’re a first-time buyer.

Can I roll closing costs into my mortgage?

No. Your lender funds the purchase price, not your closing costs. You’ll need that money separately, usually as a certified cheque or bank draft to your lawyer.

When will I know my exact number?

Your lawyer typically sends a trust ledger statement a few days before closing, showing exactly what to bring. That’s your real number, not an estimate.

Where to start

  • Down payment and closing costs are two different piles of money. Plan for both.
  • Ask early whether you’ll qualify for the transfer tax exemption, it can be a difference of thousands.
  • Look into the Closing Cost Support Program before you assume you don’t qualify.
  • Get a trust ledger estimate from your lawyer well before closing week.

If you want to see how closing costs fit into your overall budget, track them in the Yearly Budget Planner alongside your down payment savings. If you’ve already worked out your down payment side, my post on PEI’s Down Payment Assistance Program is a good next read. Questions before then? Email me directly.