Closing Costs
Closing Costs by State: What to Expect
Closing costs run from about 2% of purchase price in low-cost states to 5%+ in DC, New York, and a handful of others. Transfer taxes, mortgage recording taxes, and title insurance pricing drive most of the variation.
Quick answer
Plan for 2% to 5% of purchase price in closing costs depending on state. Lender fees are relatively consistent. The big swings come from transfer taxes, mortgage recording taxes (NY, FL, GA), title insurance pricing, and attorney fees in attorney-required states.
The Big Drivers
Transfer and recording taxes
Transfer tax is a state and county tax levied on the deed transfer. Ranges from $0 (a handful of states) to 1.45% or more in high-tax jurisdictions. Recording fees are paid to the county to record the deed and mortgage.
Mortgage recording tax
Separate from transfer tax. New York is the most notable: roughly 1.8% to 1.925% of the loan amount in NYC, slightly less in other counties. Florida and Georgia have intangible taxes on the mortgage. Many states have none at all.
Title insurance
Pricing varies materially by state. Many states have promulgated rates set by regulators (Florida, Texas, New Mexico). Iowa runs a unique system where the state itself issues title coverage at very low cost. In open-market states, shopping among 3 to 5 title companies can save $500 to $1,500.
Attorney fees (attorney states)
In attorney-required closing states (NY, NJ, MA, CT, SC, GA, DE, parts of IL), an attorney must handle or supervise the closing. Fees typically $500 to $2,000+ depending on complexity and region.
Property tax prorations and escrow
Not really a fee, but lender escrow requires 2 to 6 months of property tax reserves at closing plus prorations to the next due date. High-tax states (NJ, IL, TX, NH) inflate "cash to close" through prepaids, even though the money is yours and goes toward your future tax bills.
Lender and third-party fees
Relatively consistent across states. Origination, appraisal ($500 to $800), credit report, flood certification, tax service, and a few small lender administrative fees. Total typically $1,500 to $3,500 across lender and third-party fees.
State Cost Tiers (Approximate)
| Tier | % of purchase | Example states |
|---|---|---|
| Low | ~2.0% to 2.5% | Wyoming, Indiana, Missouri, Iowa, South Dakota, North Dakota, Kentucky |
| Medium | ~2.5% to 3.5% | Most states (Ohio, Arizona, Colorado, Texas, Tennessee, North Carolina, Virginia) |
| Above average | ~3.5% to 4.5% | Florida, Pennsylvania, Maryland, California, Connecticut, Vermont |
| High | ~4.5%+ | District of Columbia, New York (especially NYC), Delaware |
Ranges are typical for a 30-year fixed purchase loan including prepaids and lender escrows. Your specific quote will vary by loan size, county, and program.
Strategies to Reduce Closing Costs
Seller credits
Negotiate the seller to pay a portion of your closing costs as part of the offer. Program limits: conventional caps seller credits at 3% (less than 10% down) to 9% (25%+ down). FHA caps at 6%. VA has special handling. Most useful in buyer-friendly markets.
Lender credits
Accept a slightly higher rate in exchange for the lender paying closing costs. Useful when you do not have the cash on hand or when you expect to refinance soon. Run the breakeven: a $5,000 lender credit at the cost of 0.25% higher rate breaks even at roughly year 4 on a $400k loan.
Shop title and settlement
In most states (not the promulgated-rate states like FL and TX), the buyer can choose the title company. Get 3 quotes. The difference can be $500 to $1,500. The Loan Estimate Page 2 lists "Services You Can Shop For."
Frequently Asked Questions
What is the average closing cost in the US?+
Closing costs typically run 2% to 5% of the purchase price for buyers, with significant state-by-state variation. The national average is around 3% to 3.5% of purchase price including prepaids (taxes and insurance escrows). Lender fees and third-party fees (appraisal, title, recording) are relatively consistent. The state variation comes mostly from transfer taxes, mortgage recording taxes, and title insurance pricing.
Which states have the highest closing costs?+
DC, New York, Delaware, Pennsylvania, Maryland, and Florida tend to top the list. Drivers vary: New York has mortgage recording tax (around 1.8% to 1.925% on the loan amount in NYC). Florida has intangible tax and documentary stamp tax. DC and Maryland have high transfer and recordation taxes. Pennsylvania and Delaware both have meaningful transfer taxes. Connecticut and Vermont are also above average.
Which states have the lowest closing costs?+
Wyoming, Indiana, Missouri, Iowa, and the Dakotas tend to be the lowest, typically around 2% to 2.5%. These states have low or no transfer tax, modest recording fees, and competitive title insurance markets. Mortgage recording taxes are also absent.
What is the difference between attorney states and escrow states?+
In attorney states (mostly the Northeast and parts of the South: New York, New Jersey, Massachusetts, Connecticut, Georgia, South Carolina, Delaware, parts of Illinois), an attorney must conduct or supervise the closing. Attorney fees add $500 to $2,000+ to closing costs. In escrow states (West, Southwest, and Texas), an escrow or title company handles closing without requiring an attorney. The closing fee is usually lower but you do not have an attorney advising you.
Are property taxes part of closing costs?+
Property tax prorations and escrow deposits are part of "cash to close" but are not strictly lender or third-party fees. The lender typically requires 2 to 6 months of property tax escrow at closing, plus the proration to cover taxes from your closing date through the next tax payment date. High-property-tax states (New Jersey, Illinois, Texas) will have a much larger prepaid line, but that money goes toward your future tax bills, not into anyone's pocket.
Can I roll closing costs into the loan?+
On a refinance, yes. On a purchase, generally no, except via seller credits (which the seller agrees to as part of the contract, subject to program-specific limits) or lender credits (where you accept a slightly higher rate in exchange for the lender paying some of your closing costs). Both are common and useful. The right balance depends on how long you plan to keep the loan.
How do I reduce closing costs?+
Three legitimate strategies. First, seller credits: negotiate them as part of the offer (most programs cap at 3% to 9% of purchase price). Second, lender credits: accept a slightly higher rate in exchange for the lender paying fees up front. Third, shop title and settlement services: in most states the buyer can choose the title company, and pricing varies materially between providers.
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Eligibility, rates, and program guidelines vary by lender and are subject to change. State and county tax rates, recording fees, and title insurance rates are updated periodically and should be confirmed with current county records. This page is general educational information and is not a commitment to lend, an offer of credit, or tax or legal advice. Consult a CPA or attorney for your specific situation. Equal Housing Opportunity.