Closing costs are the fees paid when finalizing a home purchase. They’re often the most surprising expense for first-time buyers. Here’s what to expect and how to minimize them.
Table of Contents
What’s Included in Closing Costs
Buyer’s Closing Costs
| Fee | Typical Amount | Paid To |
|---|---|---|
| Loan origination fee | 0.5–1.0% of loan | Lender |
| Appraisal | $350–$750 | Appraiser |
| Home inspection | $300–$500 | Inspector |
| Credit report | $30–$50 | Credit bureau |
| Title search | $200–$400 | Title company |
| Title insurance (lender’s) | $500–$2,000 | Title company |
| Title insurance (owner’s) | $500–$2,000 | Title company (optional but recommended) |
| Attorney fees | $500–$2,000 | Attorney (required in some states) |
| Recording fees | $100–$300 | County |
| Transfer taxes | $0–$15,000+ | State/county |
| Prepaid interest | Varies | Lender |
| Property tax escrow | 2–6 months upfront | Escrow |
| Homeowners insurance | $800–$3,000 (first year) | Insurance company |
| Mortgage insurance (PMI) | 0–2% upfront (FHA) | Insurer |
| HOA transfer fees | $200–$500 | HOA (if applicable) |
Average Closing Costs by State (Including Taxes)
| State | Avg. Closing Costs (Taxes Incl.) | Avg. Closing Costs (No Taxes) | Transfer Tax Rate |
|---|---|---|---|
| New York | $16,800 | $6,800 | 0.40–2.075% |
| Connecticut | $12,200 | $5,400 | 0.75–2.25% |
| New Jersey | $11,400 | $5,200 | 0.4–1.21% |
| Delaware | $10,800 | $4,800 | 4.0% (split buyer/seller) |
| Washington DC | $10,200 | $5,600 | 1.1–1.45% |
| Maryland | $9,800 | $5,000 | 0.25–0.50% |
| Pennsylvania | $9,200 | $5,400 | 1.0% (split) |
| Massachusetts | $8,900 | $5,200 | 0.456% |
| Vermont | $8,600 | $4,600 | 0.50–1.25% |
| Florida | $8,400 | $4,800 | 0.60–0.70% |
| Virginia | $7,800 | $4,600 | 0.10% |
| California | $7,600 | $5,200 | 0.11% + local |
| Washington | $7,400 | $4,400 | 1.1–3.0% |
| Hawaii | $7,200 | $4,800 | 0.10–1.25% |
| Illinois | $7,000 | $4,600 | 0.10% + local |
| Minnesota | $6,800 | $4,200 | 0.33% |
| Colorado | $6,600 | $4,200 | 0.01% |
| Oregon | $6,400 | $4,200 | $1/$1,000 + local |
| Texas | $6,200 | $6,000 | No transfer tax |
| Georgia | $6,000 | $4,200 | 0.10% |
| North Carolina | $5,800 | $4,000 | 0.20% |
| Ohio | $5,600 | $4,000 | 0.10% + local |
| Michigan | $5,400 | $3,800 | 0.75% (state) |
| Tennessee | $5,200 | $3,600 | 0.37% |
| Arizona | $5,000 | $4,200 | No transfer tax |
| Wisconsin | $4,800 | $3,600 | 0.30% |
| South Carolina | $4,600 | $3,400 | 0.37% |
| Utah | $4,400 | $4,200 | No transfer tax |
| Kansas | $4,200 | $3,600 | No transfer tax |
| Oklahoma | $4,000 | $3,400 | 0.075% |
| Iowa | $3,800 | $3,400 | 0.16% |
| Indiana | $3,800 | $3,400 | No transfer tax |
On a median-priced home in each state. Actual costs vary by home price and specifics.
Closing Costs by Home Price
| Home Price | Low Estimate (2%) | Average (3%) | High Estimate (5%) |
|---|---|---|---|
| $200,000 | $4,000 | $6,000 | $10,000 |
| $300,000 | $6,000 | $9,000 | $15,000 |
| $400,000 | $8,000 | $12,000 | $20,000 |
| $500,000 | $10,000 | $15,000 | $25,000 |
| $750,000 | $15,000 | $22,500 | $37,500 |
How to Reduce Closing Costs
1. Negotiate Seller Concessions
Ask the seller to pay some or all of your closing costs:
| Loan Type | Max Seller Concession |
|---|---|
| Conventional (< 10% down) | 3% of price |
| Conventional (10-25% down) | 6% of price |
| Conventional (> 25% down) | 9% of price |
| FHA | 6% of price |
| VA | 4% of price |
| USDA | 6% of price |
2. Shop for Lenders
Closing costs vary significantly between lenders. Get Loan Estimates from at least 3 lenders and compare:
- Origination fees
- Discount points
- Third-party fees they require
3. Negotiate with Your Lender
- Ask about lender credits (higher rate in exchange for lower closing costs)
- Ask for fee waivers on origination fees
- Compare “no closing cost” loan options (costs built into rate)
4. Shop for Title and Insurance
- Title insurance is the most negotiable third-party fee
- Get quotes from 2-3 title companies
- Shop for homeowner’s insurance before closing
5. Close at the End of the Month
Closing later in the month reduces prepaid interest charges.
6. Closing Cost Assistance Programs
Many first-time buyer programs include closing cost assistance in addition to down payment help.
Total Cash Needed to Buy a Home
| Home Price | Down Payment (5%) | Closing Costs (3%) | Total Cash |
|---|---|---|---|
| $250,000 | $12,500 | $7,500 | $20,000 |
| $350,000 | $17,500 | $10,500 | $28,000 |
| $450,000 | $22,500 | $13,500 | $36,000 |
With seller concessions and DPA:
| Home Price | Down Payment (3.5% FHA) | Closing (Seller Pays) | DPA Grant | Out of Pocket |
|---|---|---|---|---|
| $250,000 | $8,750 | $0 | -$7,500 | $1,250 |
| $350,000 | $12,250 | $0 | -$10,000 | $2,250 |
Related: First-Time Home Buyer Programs | Average Down Payment | Mortgage Payment Calculator | Mortgage Affordability Calculator
