Closing costs and transfer taxes: who pays what, state by state

Short answer

Closing costs are the fees and taxes due when a home sale closes — usually 2% to 5% of the price. Most of that is lender and title costs, which look similar everywhere. The part that changes most by state is the real estate transfer tax (also called a deed, stamp, conveyance or recordation tax): nothing in Texas, $40 in Colorado, and $16,000 on a $400,000 home in Delaware. Use the closing cost & transfer tax calculator to see your state's taxes at your price.

What closing costs include

• Lender costs (buyer): origination fee, any points you buy, credit report, underwriting.
• Third-party services (mostly buyer): appraisal, inspection, survey, title search, lender's title insurance, settlement or attorney fee.
• Prepaid items (buyer): interest from closing to month-end and the first deposits into escrow for property tax and homeowners insurance.
• Government taxes and fees (buyer, seller or both): recording fees, transfer taxes, and in a few states a tax on the mortgage.
• Seller costs: the real estate commission (the biggest item for most sellers), often the owner's title policy, payoff of the old loan and the seller's share of transfer tax.

The states with the highest transfer taxes

Transfer and recording taxes on a $400,000 home with 10% down, including common local add-ons:

Full list for all 50 states and DC, with a CSV: real estate transfer tax by state.

No state transfer tax: Alaska, Arizona, Idaho, Indiana, Kansas, Louisiana, Mississippi, Missouri, Montana, New Mexico, North Dakota, Oregon, Texas, Utah, Wyoming. Some cities and counties there still charge recording fees or their own tax.

Who pays: buyer, seller or both?

There's no national rule. Each state's law or local custom decides, and the purchase contract can override it. The common patterns:

• Seller pays — New Jersey (its realty transfer fee is $3,215 on a $400,000 home), Connecticut, Washington, Michigan, Georgia's transfer tax. Sellers there often price it into the asking price.
• Buyer pays — New York's 1% "mansion tax" on homes of $1 million or more ($12,000 on $1.2 million), DC's recordation tax, and taxes on the mortgage in Florida, Georgia and Tennessee.
• Split by law or custom — Delaware and Pennsylvania (each side usually pays half of the state and local tax), Maine, Arkansas.
• Set by the contract — Maryland, Florida's deed stamps, and local taxes in many states follow local practice; ask your agent what's normal where you're buying.

Three quirks that change your bill

• Price cliffs. Some taxes jump on the whole price at a threshold. In DC a $399,000 home pays $8,778 in taxes, but a $400,000 home pays $11,600 — $2,822 more for $1,000 of price. Just under a threshold is worth checking when you negotiate.
• Taxes on the loan. In Florida the documentary stamp tax on the note and the intangible tax are charged on the mortgage, so a bigger down payment lowers them: $4,780 with 10% down vs $4,560 with 20% down on a $400,000 home.
• Discounts for your main home or first purchase. Vermont and Hawaii charge less for a principal residence; Delaware and Maryland reduce the tax for qualifying first-time buyers. The calculator doesn't apply first-time-buyer exemptions, so check whether you qualify.

How to estimate — and lower — your closing costs

1. Run your state and price in the closing cost calculator for the taxes, and keep the 2% estimate for everything else until you have a quote.
2. Get Loan Estimates from two or three lenders on the same day. Lenders must send one within 3 business days of your application (CFPB); compare section A (origination charges) and the rate, not just the total.
3. Shop the services you're allowed to shop — title insurance and settlement are often listed in section C of the Loan Estimate.
4. Ask for seller concessions, especially on a home that's been listed a while. A credit toward your closing costs saves cash now.
5. Compare the Closing Disclosure with your Loan Estimate when it arrives 3 business days before closing (CFPB) and ask about anything that went up.

Then make sure the whole purchase fits: the home affordability calculator shows the price your income supports, and the mortgage calculator shows the monthly payment with taxes and insurance.