Closing costs are the expenses paid to complete a home purchase, separate from the down payment. They can include lender charges, an appraisal, title and settlement services, recording fees, taxes, prepaid insurance, and funds placed in an escrow account.
As a starting budget, the Consumer Financial Protection Bureau says closing costs typically range from 2% to 5% of the purchase price. On a $400,000 home, that would be about $8,000 to $20,000. Your actual amount depends on your loan, property, location, closing date, and any seller credits. The state notes below identify costs to check; they are not state-specific price quotes.
Alabama
Budget for lender fees, an appraisal, title and settlement services, insurance, and recording charges. Alabama also charges a tax when a deed is recorded. Ask for an itemized estimate showing which recording and tax charges the purchase contract assigns to you.
California
California closings commonly involve an escrow company. Your estimate may include lender fees, title insurance, escrow services, recording charges, prepaid interest, property taxes, and homeowners insurance. Documentary transfer taxes and title practices can vary by city and county, so an estimate for one California market may not fit another.
Connecticut
Plan for loan and appraisal fees, title services, legal or settlement charges, recording costs, and prepaid expenses. Connecticut also has state and municipal real estate conveyance taxes associated with the transfer. Check your contract and closing statement to see which charges are assigned to you; the conveyance tax return is filed by the seller or the seller’s representative.
Florida
Florida buyers may see lender fees, title and settlement charges, recording fees, homeowners insurance, prepaid interest, and initial escrow deposits. If you finance the purchase, taxes on the mortgage documents can also affect your costs. Who pays for the owner’s title policy and selects the closing agent depends on the contract and local practice. Compare a full title quote, including third-party charges, when budgeting. Beycome Title can provide a transaction-specific estimate.
Georgia
A closing attorney is part of the process, so include legal closing charges alongside lender, appraisal, title, recording, and prepaid costs. Georgia holds the seller liable for its real estate transfer tax, although the purchase contract can assign that payment to the buyer. Read the tax allocation before relying on a closing-cost estimate.
Illinois
Expect lender and appraisal fees, title and settlement charges, recording costs, and prepaid taxes and insurance. Attorney fees may also be part of your transaction. Illinois has a state real estate transfer tax, and additional county or municipal taxes may apply. The exact property location and your contract determine which of those costs belong in your buyer estimate.
Indiana
Common buyer expenses include loan charges, an appraisal, title services, recording fees, inspections, and prepaids. Indiana transfers also require a sales disclosure process that may carry a fee. Get an estimate for the specific county and confirm how the contract divides title and closing charges.
Maryland
Budget for financing, title, recording, and prepaid expenses. Maryland transactions can also involve state and local transfer taxes and recordation taxes, which can materially change the cash needed at closing. Certain qualifying first-time Maryland homebuyers receive a reduced state transfer tax. Have the settlement company calculate the charges for the property’s county and your eligibility before setting your budget.
Michigan
A Michigan buyer’s estimate may include lender fees, an appraisal, title and settlement services, recording charges, and prepaid expenses. State and county real estate transfer taxes apply to many sales, although exemptions may be available. Confirm the tax allocation and title charges in your purchase agreement.
Minnesota
In addition to lender, title, recording, and prepaid expenses, Minnesota charges a deed tax on applicable transfers. A financed purchase may also incur mortgage registry tax based on the debt secured by the property. Hennepin and Ramsey counties have an additional charge, making the property’s county important to an accurate estimate.
New Jersey
Buyers should plan for financing, appraisal, inspection, title, recording, legal or settlement, and prepaid expenses. New Jersey’s Realty Transfer Fee is imposed on the seller, as is its additional Graduated Percent Fee on certain transfers above $1 million. Those seller charges should not automatically be counted as buyer closing costs.
New York
Loan, title, legal, recording, and prepaid charges can make New York purchases expensive to close, particularly in New York City. A financed purchase generally involves mortgage recording tax. Qualifying residential purchases of $1 million or more also carry a buyer-paid mansion tax, with further rules for certain higher-priced New York City transactions. Request an estimate for the exact property and purchase price.
North Carolina
Buyers commonly budget for inspections, financing, title work, a closing attorney, recording, and prepaid expenses. North Carolina also charges an excise tax on conveyances, but state law requires the transferor to pay that tax before recording. Avoid adding it to the buyer’s budget unless your transaction calls for a different economic arrangement.
Ohio
Include lender and appraisal fees, title and settlement services, inspections, recording fees, and prepaid expenses. Ohio also collects a real property conveyance fee, with a county component that can vary. Check the purchase agreement to see how conveyance and title charges are allocated.
Pennsylvania
Pennsylvania’s transfer taxes deserve special attention. The state realty transfer tax is 1% of the property’s value, and a local tax is often collected as well. State law holds buyer and seller jointly and severally liable, while the purchase contract determines how they divide the expense between themselves. Add your share to lender, title, recording, and prepaid costs.
Rhode Island
A buyer’s estimate may include lender fees, title services, legal or settlement charges, recording fees, and prepaid expenses. Rhode Island’s real estate conveyance tax is generally paid by the seller unless the parties agree otherwise. Make sure a buyer estimate does not include the seller’s tax without a reason stated in the contract.
South Carolina
Budget for lender, appraisal, inspection, attorney, title, recording, and prepaid expenses. South Carolina also imposes a deed recording fee, for which the grantor is generally liable. The closing statement should show that fee separately so you can see how the transaction allocates it.
Tennessee
Typical buyer expenses include financing, title and settlement services, recording charges, insurance, and prepaids. Tennessee imposes a realty transfer tax for recording a deed; state guidance identifies the transferee as responsible for it. A financed purchase may also involve a separate mortgage recordation tax.
Texas
Budget for lender fees, an appraisal, inspections, title and escrow services, recording charges, insurance, and property tax adjustments. The owner’s title policy, survey, and escrow fee should be reviewed against your contract because their allocation can be negotiated. Ask for an estimate based on the property’s county, your loan, and the agreed closing date.
Virginia
A Virginia estimate commonly includes loan and appraisal fees, title and settlement services, recording charges, and prepaid taxes and insurance. The state has separate recordation taxes associated with the grantee and grantor, and local charges may apply. Check each tax line on the estimate rather than treating all recording taxes as buyer costs.
Get a more useful estimate
The 2% to 5% range is a planning tool, not a quote. Once you have a property and loan offer, compare the lender’s Loan Estimate with a detailed title or settlement estimate. Check the purchase contract for seller credits and for who pays transfer taxes and the owner’s title policy. Before signing, compare those figures with your final Closing Disclosure so you know both your closing costs and your total cash needed to close.
Read more: Who pays the closing costs on a home?
Read more:
Who pays the closing costs on a home?