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Closing costs are the amount you’ll need on top of your down payment to buy a house.
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The average closing costs in 2021 were $3,860 without transfer taxes, according to ClosingCorp data.
When including transfer taxes, that amount increased to $6,905.
These costs cover underwriting, title search, and loan fees, and are on top of the down payment.
The average closing costs required to buy a home in the US in 2021 were $6,905 including transfer taxes, and $3,860 excluding transfer taxes, according to data from mortgage technology company ClosingCorp.
Transfer taxes are a tax that some state or local governments charge when ownership of a property is transferred from one person to another. The buyer or the seller may pay this cost, depending on where you live.
What are closing costs?
Closing costs consist of the charges you incur during the process of getting a mortgage. They can include things like your mortgage lender’s origination fees, the appraisal you got on the home, or the cost of getting a title search. Closing costs are so-named because you’ll pay these costs at the closing of your loan.
Closing costs are a major expense to consider when shopping for a mortgage or considering buying a house. Your closing costs can add significantly to the amount you need to buy a home, and are an expense that’s separate from your down payment.
It is possible to get a loan without closing costs, but often, the costs roll into the life of the loan. You may find that a loan with lower or no closing costs has a higher interest rate, which could make costs higher than simply paying up front. A lender could also add closing costs to the loan’s principal, which increases the total amount you’ll pay interest on.
Average closing costs by state
ClosingCorp averaged data from 4.4 million single-family home purchase transactions in 2021 and calculated the average amount buyers paid in closing costs.
Where you live will have a significant impact on what you’ll owe to close on your house. According to the data, buyers in Washington, DC paid about $29,888 in closing costs with transfer taxes, while the average Missouri buyer spent $2,061 with transfer taxes.
Here are the average closing costs by state, both with and without transfer taxes owed at closing.
StateAverage closing costs with taxesAverage closing costs without taxesAlabama
$2,986
$2,623
Alaska
$3,581
$3,581
Arizona
$4,701
$4,701
Arkansas
$3,115
$2,281
California
$7,953
$5,665
Colorado
$3,881
$3,806
Connecticut
$8,821
$4,108
Delaware
$17,859
$3,888
Florida
$8,554
$4,498
Georgia
$3,762
$2,863
Hawaii
$7,463
$5,879
Idaho
$4,082
$4,082
Illinois
$5,929
$4,733
Indiana
$2,200
$2,200
Iowa
$3,146
$2,741
Kansas
$2,793
$2,793
Kentucky
$2,802
$2,546
Louisiana
$3,711
$3,386
Maine
$4,420
$2,864
Maryland
$14,721
$4,459
Massachusetts
$7,964
$4,904
Michigan
$5,714
$3,511
Minnesota
$4,011
$2,592
Mississippi
$2,756
$2,756
Missouri
$2,061
$2,061
Montana
$3,337
$3,337
Nebraska
$2,781
$2,210
Nevada
$6,383
$4,222
New Hampshire
$8,183
$2,804
New Jersey
$7,915
$4,158
New Mexico
$3,513
$3,513
New York
$16,849
$6,168
North Carolina
$3,406
$2,642
North Dakota
$2,501
$2,501
Ohio
$4,223
$3,346
Oklahoma
$2,893
$2,507
Oregon
$4,327
$3,862
Pennsylvania
$10,634
$4,221
Rhode Island
$5,568
$3,419
South Carolina
$3,447
$2,501
South Dakota
$3,105
$2,843
Tennessee
$3,911
$2,694
Texas
$4,548
$4,548
Utah
$4,837
$4,837
Vermont
$7,906
$3,500
Virginia
$6,346
$3,461
Washington
$13,927
$4,862
Washington, DC
$29,888
$6,502
West Virginia
$3,406
$2,465
Wisconsin
$3,459
$2,692
Wyoming
$2,589
$2,589
Closing costs vary between states. Transfer taxes are a big factor, especially in states with high transfer taxes. The amount you’ll pay at closing will largely depend on your state’s real estate transfer tax rate.
Metro areas and counties with the highest closing costs
CoreLogic also revealed which housing markets around the country have the highest closing costs with and without taxes.
Most expensive metro areas
Highest closing costs with taxesHighest closing costs without taxes
1. Vineyard Haven, Massachusetts ($28,724)
1. Santa Maria-Santa Barbara, California
($7,063)
2. Bremerton-Silverdale-Port
Charlotte, Washington ($16,003)
2. Kahului-Wailuku-Lahaina, Hawaii ($7,016)
3. Salisbury, Maryland-Delaware ($15,723)
3. San Jose-Sunnyvale-Santa Clara, California
($6,412)
4. Dover, Delaware ($13,799)
4. Santa-Cruz-Watsonville, California ($6,363)
5. New York-Newark-Jersey City ($13,596)
5. Stockton, California ($6,137)
Most expensive counties
Highest closing costs with taxesHighest closing costs without taxes
1. New York County, New York ($58,619)
1. New York County, New York ($8,973)
2. Dukes County, Massachusetts ($28,724)
2. Norfolk County, Massachusetts ($7,433)
3. Kings County, New York ($28,239)
3. Nassau County, New York ($7,300)
4. Queens County, New York ($25,848)
4. Santa Barbara County, California ($7,063)
5. Richmond County, New York ($24,579)
5. Maui County, Hawaii ($7,016)
What fees are included in closing costs?
Closing costs are paid to some of the entities that help you complete the homebuying process and close on your home. Here are some of the typical costs you can expect to pay, according to the Federal Reserve.
Application fee
Typical cost: $75 to $300
Lenders charge this fee to cover the costs of processing a loan application and checking your credit.
Loan origination fee
Typical cost: 0% to 1.5% of the loan amount
This fee covers the lender’s costs of underwriting and preparing your mortgage.
Prepaid interest
Typical cost: Varies based on the number of days between your closing and when your loan starts, as well as the loan amount and your interest rate.
You’ll have to pay interest for the time between when you close on the mortgage and your first mortgage payment.
Title search and insurance
Typical cost: $700 to $900
Lenders have a title company run a search on the home’s title in order to verify that the seller is the property owner and that the title doesn’t have any liens on it. Lenders typically require borrowers to purchase a lender’s title insurance policy as well, which protects the lender in the event that title issues come up later on. If you want this protection for yourself, you’ll also need to purchase an owner’s title insurance policy.
Appraisal fee
Typical cost: $300 to $700
An appraisal helps to assure the bank that the home is worth at least the amount of the loan.
Settlement or closing fees, recording fees, or lawyer’s fees
Typical cost: $500 to $1,000
These fees are paid to the lawyer who manages the closing for the lender.
Land surveys
Typical cost: $150 to $400
Surveys make sure that all buildings are where they’re supposed to be, and to record any locations of changes or improvements. This may not be required if a recent survey is available.
Property taxes
Typical cost: Varies
Property taxes for the home you’re buying may also be due at closing. The amount you’ll owe will be prorated to cover the taxes you’re responsible for that the seller has already paid for the year.
Additional fees paid for specific loan types
Private mortgage insurance: If you’re getting a conventional loan with a down payment that’s less than 20% of the home’s purchase price, you’ll owe private mortgage insurance, or PMI. The first payment is typically due at closing, and is generally between 0.5% to 1.5% of the loan amount.Fees for FHA, VA and USDA loans: If you’re planning to get a government-backed loan such as an FHA loan, you may have to to pay a fee at closing.FHA: 1.75% of the loan amountVA: Between 1.4% and 3.6% of the loan amountUSDA: 1% of the loan amountHomeowners insurance: If your mortgage includes an escrow account, you could be required to pay for the costs of homeowners insurance to your lender at closing.
See Insider’s picks for the best FHA lenders>>
How to reduce closing costs
To reduce how much you pay at closing, you can try to negotiate with your lender on some of the fees it charges. You can also shop around for a number of different services you’ll utilize when you get a mortgage, including your title insurance company.
You may also be able to roll some or all of your closing costs into your mortgage principal. However, while this strategy will keep some money in your pocket at the outset, it will cost you more in the long run because you’ll pay interest on costs rolled into your mortgage principal. Be sure you’re willing to make higher monthly payments for years in exchange for lower closing costs.
Average closing costs frequently asked questions
Who pays the most in closing costs?
Typically, the buyer pays the bulk of the closing costs. Sellers pay their agent’s commission out of the proceeds from the sale and any other costs they owe. In some cases, the seller may agree to pay some of the buyer’s closing costs.
Why does my closing cost keep going up?
If you noticed on your closing disclosure form that your closing costs have changed from your initial loan estimate, you can ask your lender why. It’s not uncommon for certain costs to increase a bit between when you first apply for the mortgage and your closing. But some costs, including fees you pay to the lender, fees you’re not allowed to shop for (such as the appraisal fee), and transfer taxes should not increase at all unless you’ve had a substantial change in circumstances.
Is it ok to ask seller to pay closing costs?
Sometimes, sellers will agree to pay a portion of the buyer’s closing costs. This is known as a seller concession, and it can help the seller close a deal in a weaker market.
What is the 3-day closing disclosure rule?
Mortgage lenders are required to issue a closing disclosure to borrowers at least three days before closing. This document shows all the important details of your mortgage, including your interest rate, monthly payment amount, and an itemized list of all your closing costs.