Your California dream home has just come on the market, and you’re eager to make an offer. But even though the monthly mortgage payments fit into your budget, you’re concerned about coming up with enough cash for a myriad of closing costs in addition to the down payment. In this post, we’ve researched the expenses related to buying a home in California and gathered expert insights to help you understand just how much closing costs will set you back before you make the biggest purchase of your life. Closing costs are a set of fees related to buying a house that are due on the official date of purchase (also known as closing). Some of these costs, such as property taxes and insurance, apply to homeownership in general. Others, such as origination fees and interest, are directly related to obtaining a mortgage. Richie Helali, a licensed senior mortgage advisor at HomeLight Home Loans, says that closing costs are most often paid through wire transfer or certified check, along with the down payment for your home loan. Although the down payment is not part of your closing costs, it is typically due at the same time. If the total amount of your closing costs plus your down payment are financially overwhelming, sometimes lenders will allow you to add the closing costs to the total amount of your loan, thus reducing the amount of cash needed at closing. When it comes to who pays closing costs in California, both buyers and sellers are responsible for certain fees in a home sale transaction. We’ll break down these items in more detail in the next section. The major portion of closing costs for buyers are associated with a mortgage, such as the lender’s charges for processing and underwriting the loan, survey, and appraisal fees, and points to lower the interest rate. Homeowner’s insurance, property taxes, and interest from closing until the first mortgage payment add to the total due at closing. Agent commissions take the largest chunk out of the seller’s profits. Other closing costs generally incurred by California home sellers include transfer taxes, property taxes, and mortgage loan payoff. Common seller concessions include home warranty, home inspection fees, repair credits, and insurance for earthquakes and other natural disasters. Unlike buyers who need to bring sufficient cash to the closing table, sellers pay their portion of closing costs from the proceeds of the sale. So if you’ve got enough equity in your home, you won’t have to worry about coming up with cash at closing. Some closing costs in California are generally shared by buyers and sellers, such as escrow fees that are paid by both parties. Title insurance is also divided between buyers and sellers. Buyers usually pick up the cost for the lender’s policy, but sellers pay for the owner’s policy that protects the buyer from title defects. How these charges are divided may depend on your new home’s location. In southern California, sellers customarily pay for title insurance and the county transfer tax, but split escrow charges with the buyer. In some northern California counties, buyers and sellers share title insurance and escrow fees equally, while the percentages may differ in other counties. No matter how closing costs are divvied up, they will add a sizable amount to the price when you buy a home or detract from your profit when it’s time to sell: Although the percentages above are the norm in California, buyers and sellers can negotiate to determine who pays specific closing costs. In today’s real estate market, with home sales in most of the state falling by almost one-third since last year and buyer demand slowing down as interest rates fluctuate between 6% and 7%, a motivated seller might consider covering part or all of the buyer’s closing costs totaling nearly $15,000 or more to seal the deal. “We’re seeing more rate buydowns from sellers,” says Anthony Navarro, whose 18 years of experience have placed him in the top 1% of San Francisco real estate agents. When the seller pays points to lower the interest rate on a mortgage, this significantly impacts how much the buyer can afford on a monthly basis. “The rate could go from 7% to 6.5% as an example, and half a point difference could mean the difference between the buyer being able to afford that home or not,” explains Navarro. But Navarro cautions that seller concessions vary by county in California because the real estate markets differ. “In San Mateo County, the starter homes are still getting multiple offers and are going above the asking price, and so in those scenarios, there aren’t any credits from the seller,” he says, noting that the inventory is low and demand is still high. In multiple offer situations, buyers might offer to pay for a new sewer line from the house to the street if required by the city, which is usually the seller’s responsibility, as well as the entire city transfer tax. But in other markets or with slower-moving condos and multi-family properties, seller credits are becoming more commonplace. These credits can be used for non-recurring closing costs such as points, title insurance, or escrow fees. An experienced real estate agent in your local California market can help negotiate with the seller to pay a portion or even all of your closing costs. Before signing a contract to purchase a home in California, it’s critical for buyers to know how much cash they’ll need at closing. “That’s potentially $10,000 to $15,000 in closing costs that they’ll need to account for when they’re purchasing the home,” says Navarro. But it’s just as important for sellers to find out their total closing costs so they can calculate net proceeds from the sale. “For the seller, in terms of their net proceeds that they will receive it could mean the difference between them gaining another home or not and whether they really want to sell or not,” Navarro points out. In some situations, sellers may have to write a check in order to cover their closing costs, so they might be better off delaying plans to sell or considering alternatives such as renting the home. The table below shows typical or average closing costs and percentages in California — the closing costs most buyers will need to pay. Some expenses may be flat fees that vary depending on the home’s size or location. Costs calculated as a percentage of the sale are based on the statewide median home price of $735,480. Note that some items are based on a percentage of the loan amount. *Table estimates are based on a median-priced California home of $735,480 The following table illustrates typical or average seller closing costs and percentages in California with calculations determined by the percentage of sale based on a $735,480 median-priced home. Other expenses are flat fees that may differ with the home’s location or size. *Table estimates are based on a median-priced California home of $735,480 Buyers in California generally pay closing costs that range from 2% to 5% of the home’s price. This table provides examples of closing costs for homes priced from $600,000 to $1,000,000. Buyers in California can get a preliminary estimate by using free online tools such as HomeLight’s Closing Costs Calculator. Enter the home’s location, purchase price, down payment, expected interest rate, and type of mortgage to approximate how much cash you’ll need at the closing table for lender and third-party fees. HomeLight’s Home Affordability Calculator and Down Payment Calculator help you determine the price of a home suitable for your financial situation, the amount you should put down, and which loan options would work best. These online tools from HomeLight are a great starting point for evaluating the cash requirements to purchase a home and the payments that will fit into your budget. But the best way to understand what your closing costs will be in California and the price range you can afford is to partner with a top real estate agent or mortgage advisor. An agent who is active in the local market can provide information about the closing costs you’ll be responsible for and help with negotiations that might reduce your financial burden. According to ClosingCorp’s latest Purchase Mortgage Closing Cost Report, closing costs in California rank among the highest in the nation at an average of $7,953. But if you team up with a savvy real estate agent who is well informed about local market conditions and will look out for your best interests, the seller might pick up the tab for some closing costs. “When you’re working with a top agent that is a true negotiator, they’re going to negotiate on your behalf to make sure that you’re able to get the most credit from the seller that you can possibly get and still get the house,” says Navarro. Although closing costs add up to a staggering amount of money, there are a few ways to reduce these expenses: HomeLight can connect you with some of the most experienced buyer’s agents in California. Simply answer a few questions, and our Agent Match platform will analyze over 27 million transactions and thousands of reviews to determine which agent is best for you based on your needs. With the right agent by your side, you’ll have a smoother homebuying journey and avoid unpleasant surprises when you get to the closing table. When are closing costs paid in California?Closing costs are generally paid at the close of escrow, but you will usually pay a few expenses up front, including the home inspection and appraisal. Can I add closing costs to my home financing?If you’re not able to come up with enough cash to cover closing costs, the mortgage company may allow you to roll these charges into the loan. But the biggest drawback is that you’ll pay interest on the closing costs, thus increasing your monthly payments and the total cost of your mortgage. Can someone else help pay my closing costs?Before giving up on your dream home because of mounting closing costs, you might be able to get help from a family member, friend, or other third party who can provide a gift to pay for some or all of these expenses. But first, check with the mortgage lender to make sure the terms of your loan allow for third-party funds. Will I need to pay private mortgage insurance (PMI) in California?If your down payment is less than 20% of the home’s appraised value, lenders typically require PMI to protect them from losses should you default on the loan. PMI premiums in California range from 0.2% to 1.5% of the loan. PMI automatically ends when the loan-to-value ratio reaches 78% due to a mandate by the Homeowners Protection Act. Will a builder pay closing costs on a new construction home in California?If you’re considering building a new home so you can choose all the details to meet your specifications, you’ll likely pay even higher closing costs than by purchasing an existing home. However, builders may offer financing incentives as a way to pay closing costs that could reduce your cash outlay. When you add up all your closing costs, you may need a pot of gold to pay the required fees before you’re given the keys to your new home in the Golden State. From charges related to your mortgage to huge expenses such as property taxes, homeowner’s insurance, and escrow, the sum of closing costs is mind-boggling. But before you push the panic button, evaluate various options, such as adding closing costs to your mortgage or negotiating with the seller to pay some or all of these fees. To better comprehend your closing costs and explore alternatives that could save you cash, HomeLight’s free Agent Match platform will help you find a top buyer’s agent in California to guide you through the sales process and negotiations in an effort to reduce your closing costs. “You have to work with an agent that is really in tune with what they can negotiate on your behalf and where the market is. That is really the best way to make sure your out-of-pocket expenses are the lowest when it comes to closing costs,” advises Navarro.
What are closing costs?
We’re seeing more rate buydowns from sellers. The rate could go from 7% to 6.5% as an example, and half a point difference could mean the difference between the buyer being able to afford that home or not.
Who pays for closing costs in California?
How much are closing costs in California?
Buyer closing costs in California
Closing cost item
Typical cost to buyer
% of sale
Appraisal fee (required by lender)
$300-$600
HOA feesOver 5 million California homes are in HOA communities, so there’s a good chance that two months of HOA dues will be required at closing.
$200-$300 per month
Loan origination feeThis payment covers the cost of processing the loan application.
$2,942-$5,884 (20% down payment)
0.5%-1% of the loan amount
Credit report
$25
Home inspectionCosts vary depending on house size, location, and additional services.
$602 (1,500 sq. ft.)
Radon testingRadon is found throughout California. Although testing is not mandatory in most cases, the EPA recommends testing if the seller has not disclosed radon test results.
$221
Survey fees (lender may require)
$500
Recording fees
$8.50-$10 per page
Prepaid points (optional)Paying discount points up front can lower the interest rate on your mortgage.
$5,884 (20% down payment)
1% of loan amount
Attorney feesAlthough an attorney is not required at closing in California, you’ll likely want a real estate attorney to review the contract and protect your interests before making such a major financial commitment.
$390 per hour
Escrow feeA third-party escrow account holds funds and important paperwork related to the sale until disbursement at closing. Fees for this service are generally shared equally by buyers and sellers.
$1,721
0.20% plus $250
Property taxesYou’ll pay property taxes due before the next mortgage payment as well as a few months of property taxes that your mortgage company may require in escrow.
$435 per month
0.71%
Annual homeowner’s insurance premium
$1,380
Mortgage interestBuyers pay interest accrued between closing and the first monthly mortgage payment. Closing scheduled at the end of the month reduces prepaid interest due at closing.
Varies
Title insuranceBuyers typically pay for the lender’s policy that covers the amount of the loan to protect the mortgage company from title issues.
$110 (when purchased with owner’s title policy)
Notary fees
$15
Mello-Roos taxThis tax funds public improvements and services, but applies only to homes located within a Mello-Roos Community Facilities District.
Varies
Typical buyer closing cost total
$14,710-$36,774
2%-5%
Seller closing costs in California
Closing cost item
Typical cost to seller
% of sale
Real estate commissionCommission is generally negotiated between seller and agent before signing the listing agreement.
$36,774-$44,129
5%-6% (4%-5% for higher priced homes)
California documentary transfer taxPayment of this tax is required to transfer property ownership. All counties have the same tax rate. Cities may impose additional transfer taxes that vary by location and may be calculated on a tiered level. Transfer taxes are usually paid by the seller, but both parties may pay an equal share of the city tax in some counties.
$809
0.11%
Title search feeThe title search investigates the property’s ownership to uncover liens, errors, fraud, and other title issues.
$150-$250
Title insuranceThe seller usually pays for the owner’s title insurance policy that protects the buyer in case someone makes a claim against the home after the sale goes through.
$552
0.075%
Attorney feesAn attorney is not required at closing in California, but you might choose to hire a real estate attorney if you’re going through a divorce or have a complicated title issue.
$390 per hour
Property taxesThe seller pays prorated taxes for the time lived in the home since the new tax year began until the closing date.
$435 per month
0.71%
ConcessionsSince earthquakes, wildfires, and other natural disasters commonly occur in California, sellers may pay for buyer’s insurance policies that cover these events. Other concessions may include closing credits for repairs and mortgage discount points.
$7,355-$22,064
1%-3%
Outstanding amounts (utility bills, HOA fees)
Varies
Escrow fee
$1,721
0.20% plus $250
HOA transfer feesWith more than one-third of Californians living in HOA communities, if your development has an HOA, you’ll be required to pay for paperwork preparation and to register the new buyer as the property owner.
$1000 or less
Reconveyance feesThe deed of reconveyance transfers the title from the mortgage lender to the borrower upon payment of the loan, thus removing the lender’s lien on the property.
$150
Loan balance payoffThe balance left on your mortgage to be paid to the lender depends on how long you’ve lived in the home and how many payments remain. The terms of your loan may also include a payoff fee or prepayment penalty.
Varies
Home warrantyA one-year home warranty covering major appliances and systems is a typical seller concession in California.
$540
Termite inspectionAlthough not mandatory in California, sellers usually pay for termite inspections if required by the lender.
$100-$150
Natural hazard disclosure reportThis report is required to sell a home in a natural hazard zone that is prone to earthquakes, wildfires, and other natural disasters.
$99
Courier and wire transfer fees
$50-$150
Typical seller closing cost total
$44,129-$58,838
6%-8%
How can I estimate my closing costs in California?
Home price
2% closing costs
3% closing costs
4% closing costs
5% closing costs
$600,000
$12,000
$18,000
$24,000
$30,000
$650,000
$13,000
$19,500
$26,000
$32,500
$700,000
$14,000
$21,000
$28,000
$35,000
$750,000
$15,000
$22,500
$30,000
$37,500
$800,000
$16,000
$24,000
$32,000
$40,000
$850,000
$17,000
$25,500
$34,000
$42,500
$900,000
$18,000
$27,000
$36,000
$45,000
$1,000,000
$20,000
$30,000
$40,000
$50,000
How can I lower my closing costs in California?
How can I find a top real estate agent in California?
Additional expert insights about closing costs in California
Conquer the closing cost hurdle in the Golden State
