One of the most common surprises in the homebuying process isn’t the down payment — it’s closing costs. Many buyers focus entirely on saving for their down payment, only to discover they need an additional 2–5% of the purchase price to actually close the deal. In Pennsylvania, a combination of state-specific fees and standard lender costs makes this a number worth understanding well before closing day arrives.
Here’s a complete breakdown of what PA homebuyers pay at closing, who pays what, and how to reduce the total.
Pennsylvania Transfer Tax
Pennsylvania imposes a real estate transfer tax at the state level: 1% of the purchase price. On top of that, each municipality assesses its own local transfer tax — typically ranging from 0.5% to 2%, with most in the Philadelphia suburbs landing at 1%. This means total transfer tax in many PA transactions is approximately 2% of the purchase price.
Transfer tax is typically split 50/50 between buyer and seller — but this is negotiable and varies by municipality. In some markets, buyers pay the full local portion. Always confirm the local rate and customary split with your realtor and title company before signing an Agreement of Sale.
On a $350,000 home, 2% transfer tax = $7,000 total, typically $3,500 each.
Lender Origination Fee
Lenders charge an origination fee to process and underwrite your loan. This ranges from 0% (some lenders waive it) to 1% of the loan amount. On a $300,000 loan, 1% = $3,000. Brokers are required by law to disclose all compensation — what you see on the Loan Estimate is what you pay.
Appraisal Fee
An independent appraisal is required for virtually all purchase loans. In Pennsylvania, appraisal fees typically run $500–$800 for a standard single-family home. This is paid upfront, before closing, when the appraisal is ordered. It is non-refundable if the deal falls through after the appraisal is completed.
Title Insurance
Two types of title insurance are relevant at closing:
- Lender’s title insurance: Required on virtually all financed purchases. Protects the lender against title defects (liens, ownership disputes, errors in public records). Cost varies by purchase price and county but typically runs $500–$1,500 in Pennsylvania.
- Owner’s title insurance: Optional but strongly recommended. Protects you — the buyer — from title issues that surface after closing. Without it, you bear the legal and financial cost of defending your ownership. Owner’s policy cost is often similar to or slightly more than the lender’s policy.
Title Search
Pennsylvania title searches examine the property’s ownership history — typically going back 60 years — to verify clear title and identify any encumbrances, judgments, or unpaid taxes. This is separate from title insurance and typically costs $150–$350.
Attorney Fees
Pennsylvania is an attorney-optional closing state, meaning a title company can handle the closing without an attorney present. However, in some counties and with certain lenders, attorneys are involved. If an attorney conducts the closing, expect fees of $500–$1,500 depending on the scope of services.
Recording Fees
The deed and mortgage must be recorded with the county recorder of deeds. Recording fees vary by county but typically run $100–$300 for a standard purchase transaction.
Prepaid Items (Not Fees, But Still Cash at Closing)
Prepaids are not lender fees — they’re deposits and first payments on items you’ll owe regardless of which lender you use:
- First year homeowner’s insurance: Paid in full at closing, typically $800–$2,000+ depending on coverage and property.
- Escrow setup: Lenders typically require 2–6 months of property taxes and homeowner’s insurance deposited into your escrow account at closing to create an initial cushion.
- Per diem interest: Interest from closing day through the end of the month. If you close on the 28th, you owe 2–3 days of interest. Closing earlier in the month means more prepaid interest at closing but a longer window before your first payment.
- HOA transfer fee: If applicable, the HOA may charge a transfer fee ($200–$500 is common).
Total Closing Costs: What to Expect
For a typical Pennsylvania home purchase, total closing costs — including transfer tax, lender fees, title, prepaids, and miscellaneous items — run approximately 2–5% of the purchase price. On a $300,000 purchase, that’s $6,000–$15,000. The wide range reflects variability in transfer tax rates, origination fees, and escrow amounts.
Who Pays What: Seller Concessions
Sellers can agree to pay a portion of the buyer’s closing costs — called seller concessions. Limits depend on loan type and down payment:
- FHA loans: Seller can contribute up to 6% of the purchase price toward buyer closing costs.
- Conventional loans: 3% with less than 10% down; up to 6% with 10% or more down.
- VA loans: 4% cap on concessions, but VA also restricts certain fees the buyer can pay.
In a buyer’s market, asking for concessions is reasonable. In a competitive market, it reduces the attractiveness of your offer.
No-Closing-Cost Loans
Some lenders offer “no-closing-cost” mortgages, where closing costs are rolled into a slightly higher interest rate. This reduces cash needed at closing but increases your monthly payment and total interest paid over the life of the loan. It can make sense if you plan to sell or refinance within a few years before the higher rate cost exceeds the upfront savings.
First-Time Buyer Assistance for Closing Costs
Pennsylvania offers several programs that can help cover closing costs for eligible buyers. The Pennsylvania Housing Finance Agency (PHFA) Keystone Advantage Assistance Loan Program provides a second mortgage of up to 4% of the purchase price to cover down payment and closing costs. Some programs are forgivable over time. Eligibility requirements apply. A broker familiar with PA assistance programs can help you determine what you qualify for.
[ew2603]
Helpful Resources
Frequently Asked Questions
How much are closing costs in Pennsylvania?
Total closing costs in Pennsylvania typically run 2–5% of the purchase price, including transfer tax, lender fees, title services, and prepaid items. On a $300,000 home, expect $6,000–$15,000 at closing.
Who pays transfer tax in Pennsylvania?
Transfer tax in PA is typically split 50/50 between buyer and seller, but this is negotiable and varies by municipality. Total transfer tax is generally 2% of the purchase price (1% state + local portion), though local rates vary.
Can closing costs be included in the loan in Pennsylvania?
Not directly — closing costs cannot be added to a standard purchase mortgage. However, seller concessions, no-closing-cost loan options (via a slightly higher rate), and down payment assistance programs like PHFA can all reduce the cash you need to bring to closing.
Want a complete cost breakdown for your specific purchase scenario? Call (215) 364-7171 or visit dynamicfunding.net to connect with Lena Polnet and get numbers you can actually plan around.
Lena Polnet, NMLS #17225 | Dynamic Funding Solutions, NMLS #17144. This content is for informational purposes only and does not constitute a commitment to lend. Loan programs, rates, and terms are subject to change without notice. Not all borrowers will qualify.