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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.
| State | Average closing costs with taxes | Average closing costs without taxes |
| Alabama | $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.
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 amount
- VA: Between 1.4% and 3.6% of the loan amount
- USDA: 1% of the loan amount
- Homeowners 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.