Closing Costs in Pennsylvania: What Buyers and Sellers Pay

In short: In Pennsylvania, the largest closing cost is usually the realty transfer tax: 1% to the state plus a local tax (often 1% combined for the municipality and school district), customarily split between buyer and seller. On top of that, buyers often pay around 2 to 5% of the price in total closing costs, depending on the loan, while sellers pay their agent's commission, their share of the transfer tax and any agreed credits.

The realty transfer tax

Pennsylvania charges a 1% state realty transfer tax on the sale price, and most municipalities and school districts add a local transfer tax, often 1% combined, though some places charge more. By custom, buyer and seller split the total, but who pays what is negotiable.

Example: on a $300,000 home with a 2% total transfer tax, the tax is $6,000, usually $3,000 from the buyer and $3,000 from the seller.

What buyers usually pay

• Your share of the transfer tax
• Lender fees: origination, underwriting and credit report
• Appraisal fee
• Title insurance and settlement fees. Title insurance premiums in Pennsylvania follow rates filed with the state, and a lender's policy is required with a mortgage.
• Recording fees for the deed and mortgage
• Prepaid items: homeowners insurance, property taxes and interest, plus an escrow account
• POA or HOA fees, such as a capital contribution or transfer fee, where the community charges one
• Inspections, usually paid before settlement

What sellers usually pay

• The agent's commission, which is negotiable
• Your share of the transfer tax
• Mortgage payoff and the fee to release the lien
• Prorated property taxes
• Municipal certifications (such as a use and occupancy inspection) and the POA or HOA resale certificate
• Repairs or credits agreed to after the buyer's inspection

Property tax prorations

Pennsylvania property taxes come in separate bills: county and municipal taxes are usually billed in the spring, and school taxes in the summer or fall. At settlement, the taxes are prorated so buyer and seller each pay for the part of the year they own the home.

Ways to lower your closing costs

• Ask for a seller credit toward your closing costs as part of your offer.
• Use PHFA assistance if you qualify. See the First-time home buyer guide.
• Compare lenders. Fees and rates vary, and the Loan Estimate makes them easy to compare.
• Negotiate the transfer tax split in a buyer's or seller's market.

Sources

• Pennsylvania Department of Revenue: realty transfer tax
• Consumer Financial Protection Bureau: how to read a Loan Estimate
• PHFA: down payment and closing cost assistance

What clients say

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