Closing costs when buying a home in California: the full breakdown

Between 2% and 5% of the price, on top of the down payment. What each item includes, who pays it and which ones can be negotiated.

It is the line item that causes the most surprises on closing day. Closing costs run from 2% to 5% of the purchase price and are paid on top of the down payment. On a $900,000 home that means an additional $18,000 to $45,000.

What they include

Loan costs

• Origination fee: what the lender charges for processing the loan
• Appraisal: mandatory if you finance; the lender needs to confirm the value
• Credit report and verification of documentation
• Discount points: optional; you pay up front to lower the rate

Property costs

• Title insurance: protects against claims on the property
• Escrow: the neutral third party that holds funds and documents during the transaction
• Inspection: not mandatory, but skipping it is a risk we never recommend
• Termite inspection: customary in California
• Recording: registration of the deed

Prepaid items

• Property-tax proration: the part of the year that falls to you from closing onward
• The first year of homeowner’s insurance
• Initial HOA dues, if applicable

Who pays what

In California the custom varies by county, and in San Diego the seller usually covers the agents’ commission and a good part of the title insurance, while the buyer takes on the loan costs and escrow. But everything is negotiable: in a market with less competition, the seller can be asked to cover part of the buyer’s costs.

What can be negotiated and what can’t

• Negotiable: who pays escrow and title, the seller’s contribution to the buyer’s costs, some lender fees
• Not negotiable: taxes, recording and the appraisal

The document you have to read

Three business days before closing you will receive the Closing Disclosure, with the final breakdown. Compare it with the Loan Estimate you were given at the beginning: if there are significant differences, that is the moment to ask, not after signing.

When you prepare your budget, add them to the down payment. You can estimate the monthly payment in the mortgage calculator and review the full process in the buyer’s guide.

Closing costs are proportional to the price, so they weigh differently depending on the area: closing in Chula Vista is not the same as closing in La Jolla.

We give you the estimated breakdown for your case before you make any offer.