Closing Costs in California
Closing costs in California are the fees and prepaid items you pay to finalize a home purchase and loan. They often run roughly 2% to 4% of the purchase price, on top of your down payment. Use the worked example below, then try our calculators with your own numbers. Read on to see what each cost is and how to reduce it.
Key Takeaways
- Plan for closing costs of roughly 2% to 4% of the price, depending on county, loan type, points and seller credits.
- Costs fall into lender fees, third-party services (appraisal, title, escrow), government charges and prepaid items such as insurance, taxes and interest.
- County transfer tax is customarily paid by the seller, but who pays what varies by county custom and by your contract.
- Seller credits, lender credits and assistance programs can reduce your cash to close, within program limits.
- Your Loan Estimate and Closing Disclosure show actual figures; calculators show estimates only.
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What are closing costs in California?
Closing costs are everything you pay at the end of a purchase that is not the down payment or the price itself. Some are fees to the lender or broker. Others pay for third-party services like appraisal, title and escrow. The rest are government charges and prepaid items that fund your first months of ownership. Your lender must give you a Loan Estimate within three business days of your application, and a Closing Disclosure at least three business days before you close. Our TRID guide walks through both forms.
What is included in California closing costs?
| Category | Examples | Typical size |
|---|---|---|
| Lender and broker fees | Origination, underwriting, processing, discount points if chosen | Varies by lender and by how many points you buy; these fees cannot increase from the Loan Estimate |
| Appraisal and credit | Appraisal, credit report, flood certification | Appraisal is a separate cost, often several hundred dollars and more for complex properties |
| Title and escrow | Lender’s title policy, owner’s title policy, escrow and settlement fees, notary, courier | Scales with price; who pays which portion varies by county custom |
| Government charges | Recording fees; county transfer tax of $1.10 per $1,000 of price; some cities add their own | Transfer tax is customarily paid by the seller |
| Prepaid interest | Interest from closing to the end of that month | Depends on closing date and loan amount |
| Prepaid insurance and taxes | First year of homeowners insurance, plus initial escrow (impound) reserves for taxes and insurance | Depends on insurance quote and property tax; Prop 13 base is 1% plus local charges, commonly about 1.1% to 1.25% total |
| Other buyer costs | Home inspection, pest inspection, HOA transfer fees, survey | Often paid outside of closing |
Some areas have Mello-Roos or special assessments, which can raise your property tax bill. Ask your agent for the tax bill and any special assessments before you offer.
Who pays for what in California?
Customs differ from county to county, and the purchase contract controls. These are general patterns, not rules.
- Buyer typically pays: loan costs, lender’s title policy in many areas, the buyer’s share of escrow fees, appraisal, inspections, prepaid items and recording of the new loan.
- Seller typically pays: county transfer tax, the owner’s title policy in many Southern California counties, and agent compensation as negotiated, though practices vary.
- Often split or negotiated: escrow fees, HOA documents, natural hazard disclosure reports and pest-related repairs.
Ask your agent and escrow officer what is customary in your county, then confirm in your offer. For tax or legal questions about a transaction, consult a qualified professional.
Down payment: $850,000 x 5% = $42,500. Loan: $850,000 – $42,500 = $807,500.
Closing costs: $850,000 x 2.5% = $21,250, illustrated as lender and broker fees $6,000, appraisal and credit $900, title and escrow $5,200, recording and miscellaneous $600, prepaid interest $1,800, 12 months of homeowners insurance $2,700, and initial tax and insurance reserves $4,050. Check: $6,000 + $900 + $5,200 + $600 + $1,800 + $2,700 + $4,050 = $21,250.
Reserves: 3 months x $5,200 = $15,600.
Total cash: $42,500 + $21,250 + $15,600 = $79,350. County transfer tax here is about $935 ($850,000 / $1,000 x $1.10); it is customarily paid by the seller and is not part of the buyer figure above. Illustration only, not a quote or Loan Estimate.
How can I reduce my closing costs?
- Compare Loan Estimates. Ask at least two or three lenders for the same loan scenario. See choosing a lender.
- Shop for the services you are allowed to shop for. Your Loan Estimate marks which providers you can choose.
- Negotiate seller credits. Many offers ask the seller to contribute toward buyer costs. For conventional primary-residence loans, the limit is 3% of the price if you put down less than 10%, 6% for 10% to 25% down, and 9% above 25% down. FHA allows up to 6%. VA limits certain other seller concessions to 4%, and the seller may pay normal closing costs and points. Credits generally cannot exceed actual costs.
- Consider a lender credit. A higher rate can come with a credit toward costs. That reduces cash now but can raise your payment, so compare the trade-off.
- Time your closing. Closing near the end of the month can reduce prepaid interest, though it may not fit your contract.
- Use assistance programs. See first-time home buyer help in California.
- Ask about gift funds. See gift funds on a conventional loan.
For more on seller-paid costs, see seller concessions on a conventional loan and FHA seller concessions.
Do loan type and mortgage insurance change my cash needs?
Yes. FHA charges an upfront mortgage insurance premium of 1.75% of the base loan, which can be financed, so it increases your balance rather than your cash. VA loans charge a funding fee that can also be financed, and some veterans are exempt. Conventional loans with less than 20% down require private mortgage insurance, usually paid monthly. See FHA mortgage insurance, the VA funding fee and conventional PMI.
What about the rest of the budget?
Closing costs are just one part of saving for a down payment and closing costs. Also plan for moving costs, immediate repairs and furnishing. Then check affordability in how much home you can afford.
At Lendia, we explain every line on your Loan Estimate
At Lendia, we compare options from multiple lenders and walk you through your costs before you commit. A Licensed Lendia California Loan Officer can estimate your cash to close for your price, county and loan type. Contact us or get a rate quote now.
Frequently Asked Questions
How much are closing costs in California?
Buyer closing costs often run roughly 2% to 4% of the purchase price, though your actual figure depends on county, loan type, points and credits.
Does the buyer or seller pay closing costs in California?
Both pay some. Buyers typically pay loan-related costs and prepaid items; sellers typically pay county transfer tax. Your contract decides, and custom varies by county.
Can I roll closing costs into my loan?
Generally not on a purchase, aside from items such as the FHA upfront premium and the VA funding fee. Credits can offset costs.
Are inspection and appraisal part of closing costs?
They are costs of buying, though you usually pay them separately during escrow. They are listed here so your cash plan is complete. See getting a home inspection and the appraisal.
Is earnest money extra?
No. It is credited toward your down payment or closing costs at closing, subject to your contract.
Can the numbers change before closing?
Some can. Lender and broker fees generally cannot increase, and certain third-party fees can rise up to 10% in total. Prepaids and per-diem interest depend on your final closing date.
Rates and terms depend on your situation; approval requires qualification.
Talk to a Licensed Lendia California Loan Officer
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