The Real Cost of Buying a Home on PEI (It's More Than the Down Payment)

Most first-time buyers on PEI start their research with one number in mind: the down payment. That makes sense — it's the largest single amount you need to save, and it feels like the main barrier to getting started.

But focusing only on the down payment is one of the most common ways buyers get caught off guard at the finish line. By the time possession day arrives, there are several other real costs that need to be covered — and if you haven't planned for them, you can find yourself scrambling.

Here's the complete picture of what buying a home on PEI actually costs.

The Down Payment — What You Actually Need

In Canada, the minimum down payment is 5% on homes priced under $500,000. On a $325,000 purchase, that's $16,250. That's the minimum to get in the door.

A few things worth knowing:

If your down payment is less than 20% of the purchase price, you'll need mortgage loan insurance — commonly called CMHC insurance after the crown corporation that administers it. This is not optional. The premium ranges from 2.8% to 4% of your mortgage amount depending on your down payment percentage, and it's added to your mortgage balance (so you don't pay it as a lump sum, but you do pay interest on it over the life of your loan).

At 5% down on a $325,000 home, your CMHC premium would be approximately $12,480 — added to your mortgage, not paid upfront. Worth factoring into your overall cost picture.

The larger your down payment, the lower your insurance premium — and the lower your monthly payment. Buyers who can reach 10% or 15% down meaningfully improve their financial position, even if 5% gets them into the market.

Legal Fees

You need a real estate lawyer. This is not optional in PEI.

Your lawyer handles the title search, reviews the purchase agreement, manages the transfer of funds, and registers the property in your name. Without them, the transaction doesn't close.

Budget $1,500–$2,500 in legal fees depending on the complexity of the transaction. If there are issues with title or the deal is more involved, it could run a bit higher. Ask for a quote upfront — most real estate lawyers will give you an estimate when you call.

Land Transfer Tax

PEI charges a provincial land transfer tax on property purchases. The rate is 1% of the greater of the purchase price or assessed value.

On a $325,000 home, that's $3,250 — paid at closing, not rolled into your mortgage.

The good news: first-time buyers on PEI are eligible for a rebate of up to $2,000 on this tax. You pay it upfront and claim the rebate when you file your provincial taxes. It doesn't eliminate the cost, but it softens it.

Home Inspection

Budget $400–$600 for a professional home inspection.

If you're buying a resale home — which the majority of first-time buyers on PEI are — a home inspection is one of the most important things you can do. An inspector walks through the property systematically and identifies issues with structure, roof, electrical, plumbing, insulation, and more. The inspection report gives you either confidence that the home is in solid shape, or early warning of problems that could become expensive.

Some buyers in competitive markets waive inspections. I'll be straight with you: I recommend against it unless you deeply understand what you're buying and have priced in the unknown risk.

Title Insurance

Title insurance is typically $200–$400 and your lender may require it. It protects against issues with the property's title that might not surface during a standard title search — things like survey errors, undisclosed liens, or encroachments. It's a relatively small cost for real protection.

Moving Costs

Easy to overlook until you're booking a truck and realize what it costs.

Local moves within PEI typically run $800–$1,500 depending on how much you're moving and how far. If you're coming from the mainland, add significantly to that. Don't forget boxes, packing supplies, and the reality that something always needs to be replaced or updated when you arrive.

Immediate Post-Purchase Expenses

Even move-in-ready homes usually need something in the first few months. A new appliance that fails sooner than expected. A bathroom that needs updating. Landscaping work that wasn't apparent in winter. New locks. Window coverings.

Budget a cushion of at least $2,000–$5,000 for the first six months. Buyers who have this buffer sleep better. Buyers who spent every dollar getting to possession day and have nothing left feel every small surprise acutely.

The Full Picture

On a $325,000 home with 5% down, here's a realistic cost summary:

Down payment: $16,250 Legal fees: $1,800 (estimate) Land transfer tax: $3,250 (less up to $2,000 rebate for first-time buyers) Home inspection: $500 Title insurance: $300 Moving costs: $1,200 Post-purchase buffer: $3,000

Total out-of-pocket at purchase: approximately $26,300 before the rebate, $24,300 after

Plus your CMHC premium of ~$12,480 added to your mortgage balance.

This is why the advice to save "just the down payment" leaves buyers underprepared. The real number to have ready is meaningfully higher — and the buyers who plan for it move through closing with confidence.

What Helps

Two things move the needle here more than anything else:

The First Home Savings Account (FHSA) lets you contribute up to $8,000/year toward your first home, with tax-deductible contributions and tax-free withdrawals on qualifying purchases. If you're not using one yet, open one.

The Home Buyers' Plan (HBP) lets you withdraw up to $60,000 from your RRSP tax-free for a first home purchase, to be repaid over 15 years. These two programs can be combined.

The goal of laying all this out isn't to overwhelm you — it's to make sure nothing surprises you. Buyers who know the full picture going in make better decisions and feel more confident at every step. That's the whole point.