Closing Costs in Virginia: What Homebuyers Need to Know

Posted on Jun 15, 2022


First-time homebuyers are often shocked to hear that after all the saving they did for the down payment, what they really need money for is closing costs - and the fees typically run into the thousands of dollars.

Planning for closing costs is essential for having a successful home buying experience, because these costs and fees need to be paid upfront (unlike a down payment, you typically can't roll closing costs into your home loan).

Closing costs can vary widely depending on the home, the neighborhood, and even the state. Are you planning to buy a home in Virginia? Here’s what you need to know about closing costs. 

What are Closing Costs?

Closing costs are all the services you need to pay for as you’re going through the homebuying process, such as home inspections and credit reports. These costs are paid to vendors or used for escrow and are usually non-refundable - if you pay for the home inspection and then decide not to buy the home, you won’t be getting that money back. This is because most services are conducted by a third party independent from you and the brokerages handling the transaction. 

"One mistake buyers make is that they don't budget for closing costs," notes Virginia-based buyer agent Muoki Musau. "They assume that the down payment is the only closing cost they’ll have to pay, and then when they learn about closing costs it’s an additional expense that sets them back - because they just didn't budget for it."

If you haven't accounted for closing costs and are ready to buy your home, don't panic yet. Depending on your loan type, you can put down as little as 3.5% on your home - which can free up some cash for closing costs if you were originally aiming for closer to the traditionally recommended 20% (read more about why 20% down isn't necessarily worth waiting for).

"Be flexible and creative. If you don't have money for closing costs but you have money for the down payment, you can probably split that up," recommends Musau.

Can closing costs be included in a conventional loan?

Plan on paying for closing costs out of pocket, because a conventional loan doesn't allow you to roll in closing costs. Typically your only options would be to ask for a seller credit as a contingency (and contingencies are hard to ask for in competitive markets), or receive a lender credit from your lender (this means you ask for a higher interest rate in exchange for cash to close).

Who Pays Closing Costs in Virginia?

Both the buyer and seller pay closing costs in VA, but each party pays for different services and fees. Home sellers pay for the agent commission fees and transfer taxes, while the buyer pays for most other closing costs.

How Much are Closing Costs in Virginia?

According to ClosingCorp data, buyer closing costs in Virginia come to approximately 1.55% to 2.06% of the final home sale price.

  • The median sale price in Virginia is currently $435,000 according to Redfin
  • Based on this estimate, buyers can expect to pay $6,740 - $8,961 in closing costs (after taxes)

This is the median price for the entire state, however. More expensive cities, like Arlington, may experience closing costs far higher - because homes cost more there on average.

Virginia-based buyer agent Muoki Musau notes that in his experience, "The average percentage would be closer to 3%."

So how much should you save? 

Of course, it's a good idea to budget high for closing costs so that you know for sure that you can cover everything. So how much, exactly, should you save?

"A conservative estimate where you’re comfortably able to pay for it would be 4-7% of the sale price," explains Musau.

The exact amount you’ll pay is dependent on a wide range of factors. If your home has an HOA, for example, then you might have to pay upfront for HOA fees for the year. If you opt to pay for your home in cash, on the other hand, you’ll be able to bypass a lot of the associated lender and loan origination fees. 

Meeting with a mortgage advisor is essential for getting a more exact closing cost estimate so that you can ensure you have enough cash on hand. Your Realtor can also be an important asset - they have access to the MLS, which provides a calculator for approximating closing costs of specific properties. To find out more, get in touch with our Virginia team.

To give you an idea of your high-end estimate for closing costs:

  • 7% on a $400,000 home in VA: $28,000
  • 7% on a $500,000 home in VA: $35,000
  • 7% on a $600,000 home in VA: $42,000

Typical Buyer Closing Costs in Virginia

  • Home appraisal ($300 - $365)
  • Home inspection ($300-$450)
  • Lender fees ($900-$1,300)
  • Owner’s title insurance (average of $190)
  • Recording/real estate transfer tax ($.25 per $100 of property value)
  • Credit report ($25)
  • Title service and closing fees (.3%)
  • Loan origination fee (.5-1% of total loan amount)
  • Escrow account/prepaid interest (.7%)
  • Recording fees ($50)
  • Flood certification ($20)
  • Survey fee ($350)

Note: this list is approximate, both for services listed and for estimated prices. Some companies may charge more for their services, and there may be unique or optional fees associated with your home (like a radon test or WDO test) that may be recommended or might be required by a lender but unnecessary for a cash purchase.

"I say right now you probably want to do as many inspections as you can. Right now people tend to waive inspections to get their offers accepted - so if you can do inspections, just do them all. Wood, lead, etc.," says Musau. 

"And consider a home warranty. Most people don’t, but it really does help with the maintenance for the first year. It will cover any repair or replacement of appliances and systems that are covered in the policy. But you want to get one where the company has a good reputation for handling claims."

According to This Old House, $300-600 per year is typical for a home warranty in Virginia.

Typical Seller Closing Costs in Virginia

  • State transfer tax (.$50 for every $500 of property value)
  • County/city transfer tax (varies)
  • Grantor tax ($1 for every $1,000, or .1%)
  • Realtor fees (3% to each agent, for a total of 6%, unless you work with a flat fee listing brokerage like Houwzer*)
  • Title insurance ($3.70 per $1,000 for homes $250,000 to $500,000; $3.40 for homes $500,000 to $1,000,000 - etc).
  • Title fees ($700-$1100)
  • Attorney fees ($500)

A useful tool: AnyTimeEstimate’s seller closing costs calculator for Virginia.

*Note: home sellers in VA can benefit from Houwzer’s $5,000 flat fee, plus 2.5% to the agent representing the buyer (rather than the typical 6% agent split). 

Can I Use a Mortgage Calculator to Determine Closing Costs?

Although you can use a mortgage calculator to get a general idea of how much cash you’ll need to bring to the closing table, note that online calculators use averages to estimate costs - so they will never be completely accurate.

“The only mortgage calculators that I trust are where you plug in an interest rate and it shows you the payment. But even that can be wrong, because for a borrower who’s putting less than 20% down and is going to be paying PMI, mortgage insurance is not the same for every lender,” explains mortgage advisor Robert Wagner. “The lenders we use may have slightly lower charges for the PMI than another lender. So it’s hard to trust any of the mortgage calculators out there because they default to 20% and industry averages rather than specific rates.”

SmartAsset has a fairly nuanced online calculator for closing costs, as it allows you to specify by your city, down payment, type of loan (FHA or VA), etc. - all things that can impact your closing cost estimate.

Talk to a local agent about this today

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