Typical Closing Costs in New York City

When purchasing property in New York City, understanding closing costs is essential for budgeting and avoiding surprises at the closing table. These expenses vary depending on transaction specifics, so working closely with your attorney, real estate agent, and lender is crucial.

Closing costs in NYC typically range from 2% to 5% of the purchase price, though this can vary significantly based on the property price, financing terms, and specific circumstances of your transaction.

Mortgage Recording Tax

New York City requires a mortgage recording tax (NYC Department of Finance) when obtaining a mortgage. This is one of the largest closing costs for buyers in NYC.

The tax is calculated as follows:

• Loans under $500,000: 1.8% of mortgage amount
• Loans $500,000 and above: 1.925% of mortgage amount

Example: On a $1,000,000 mortgage, you'll pay $19,250 in mortgage recording tax alone. Learn more about NYC mortgage recording tax.

Important Notes:

• This tax is NOT required for cash purchases
• It's based on the loan amount, not the purchase price
• New construction sometimes offers mortgage recording tax exemptions
• Co-op purchases are exempt from this tax (one advantage of co-ops)

Title Insurance

"Title insurance protects the buyer and lender against any potential legal issues related to the property's ownership history."

Costs typically range from:

• 0.4% to 0.6% of purchase price for owner's policy
• Approximately $5,000-$10,000 on a $1,000,000 property

What you're paying for:

• Title search going back 50+ years
• Protection against unknown liens, defects, or ownership issues
• Legal defense if title problems arise
• Peace of mind for your investment

Two policies are typically purchased:

• Owner's Policy: Protects you (one-time cost, lasts as long as you own the property)
• Lender's Policy: Protects your lender (required for financing)

Note that the lender's policy does NOT protect you—you need your own owner's policy. Understand title insurance and why you need it.

Attorney Fees

Both buyer and seller retain separate attorneys for closing. If financing is involved, the lender's attorney is also involved, paid by the buyer.

Typical fees in NYC:

• Buyer's attorney: $2,000-$5,000
• Seller's attorney: $2,000-$5,000
• Lender's attorney: $500-$1,500 (paid by buyer)

What your attorney does:

• Reviews and negotiates the contract
• Conducts title search
• Reviews title commitment
• Coordinates with all parties
• Attends closing with you
• Reviews closing documents
• Ensures proper recording of deed
• Handles post-closing matters

Experienced NYC attorneys typically charge more, but their expertise can save you far more than the additional fee by identifying and resolving problems. See typical attorney fee structures.

Appraisals and Inspections

Appraisal

Property appraisals cost $400-$800 in New York City, sometimes more for luxury properties or complex situations.

Your lender requires the appraisal to ensure the property is worth the loan amount. Learn what happens if the appraisal comes in low. If the appraisal comes in low, you may need to:

• Renegotiate the price
• Bring additional cash to closing
• Challenge the appraisal

Home Inspection

Home inspections, typically recommended for buyers, range from $500-$1,000 for standard inspections.

Additional specialized inspections may include:

• Pest/termite inspection: $100-$300
• Mold inspection: $300-$1,000
• Structural engineer: $500-$1,500
• Chimney inspection: $200-$500
• Sewer scope: $200-$400

While these add to your costs, they're much cheaper than discovering major problems after you own the property.

Mansion Tax

Properties priced at $1 million or more face mansion tax (NYS Department of Taxation) on a sliding scale:

• $1M to under $2M: 1%
• $2M to under $3M: 1.25%
• $3M to under $4M: 1.5%
• $4M to under $5M: 2.25%
• $5M to under $10M: 2.5%
• $10M to under $15M: 3.25%
• $15M to under $20M: 3.5%
• $20M to under $25M: 3.75%
• $25M and above: 3.9%

Example: On a $1.5M purchase, mansion tax is $15,000 (1% of $1,500,000)

This tax is paid by the buyer and is due at closing.

Transfer Taxes

Sellers typically pay transfer taxes, though this may be negotiated in the contract.

New York State Transfer Tax

• 0.4% of purchase price

NYC Transfer Tax

For properties $500,000 or less:

• 1% of purchase price

For properties over $500,000:

• 1.425% for condos and 1-3 family homes
• 2.625% for other properties

Example on $1M condo purchase:

• NYS Transfer Tax: $4,000
• NYC Transfer Tax: $14,250
• Total: $18,250

While typically paid by sellers, buyers should be aware as these costs may be negotiated.

Additional Fees

Various other costs you should budget for:

Homeowners Insurance

• First year premium due at closing
• Typically $1,000-$3,000 annually for condos/co-ops
• Higher for houses (depends on property value and coverage)

Property Taxes

• Prorated at closing
• You'll pay from closing date to the next tax payment date

Recording Fees

• $150-$500 for recording the deed and mortgage

Bank Fees

• Origination fees: 0.5-1% of loan amount
• Application fee: $250-$500
• Credit report: $25-$75
• Processing fee: $300-$900
• Underwriting fee: $400-$900

Title Search Fee

• Often included in title insurance cost
• If separate: $200-$500

Escrow Account Setup

• Lenders often require initial deposits for property taxes and insurance
• Typically 2-6 months of taxes and insurance

Move-in Fees (for condos/co-ops)

• Move-in deposit: $500-$2,000 (often refundable)
• Move-in fee: $250-$1,000 (non-refundable)

Post-Closing Costs to Budget For

• Key changes/lock installation: $200-$500
• Utility connection fees: $100-$300
• Moving costs: $500-$5,000+
• Immediate repairs or improvements

Sample Cost Breakdown

Example: $1,000,000 condo purchase with $800,000 mortgage

• Mortgage Recording Tax (1.925%): $15,400
• Title Insurance: $5,500
• Attorney Fees: $3,500
• Lender's Attorney: $1,000
• Appraisal: $600
• Home Inspection: $750
• Mansion Tax (1%): $10,000
• Bank Fees (1%): $8,000
• Recording Fees: $300
• Homeowners Insurance: $2,000
• Property Tax Escrow: $3,000
• Misc. Fees: $500

Total Closing Costs: Approximately $50,550 (about 5% of purchase price)

Plus your down payment of $200,000, you'd need about $250,550 in cash to close.

Tips to Reduce Closing Costs

Shop for Services: Compare rates for homeowners insurance, inspections, and other services where you have a choice

Negotiate: Some fees are negotiable, especially if you're bringing significant business to a lender

Review Your Loan Estimate: Lenders must provide this within 3 days of application—review it carefully

Ask About Lender Credits: Some lenders offer credits toward closing costs in exchange for a slightly higher interest rate

Closing Date Timing: Closing late in the month means less prepaid interest

Get Recommendations: Your attorney can often recommend cost-effective, quality service providers

Review Your Closing Disclosure

Lenders must provide a Closing Disclosure at least 3 business days before closing. Review it carefully and compare to your Loan Estimate.

Look for:

• Unexpected fees
• Incorrect amounts
• Services you didn't authorize
• Math errors
• Difference from Loan Estimate

Don't hesitate to question anything you don't understand or that seems incorrect.

Conclusion

Closing costs in New York City are substantial, but understanding them helps you budget appropriately and avoid surprises. Work with experienced professionals—particularly a knowledgeable real estate attorney—to navigate the process and ensure you're not paying unnecessary fees.

Remember: these costs are in addition to your down payment. Plan accordingly and maintain a cash reserve for unexpected expenses.

Contact Pete Weinman, Staten Island Real Estate Attorney, for guidance on your New York property purchase and closing cost questions.