Ever wonder where your money really goes on closing day in San Jose? You are not alone. In a high-cost market like Silicon Valley and the East Bay, those line items add up fast, and it can be hard to tell what is custom, what is negotiable, and what is simply required. This guide breaks down what closing costs include for buyers and sellers, how they are calculated, and the local factors that can change the bottom line. You will also get a practical budgeting checklist and a simple cash-to-close example tailored to our market. Let’s dive in.
What counts as closing costs
Closing costs are the fees and prepaids due at settlement to finalize a home purchase or sale. For buyers, this is separate from your down payment but paid at the same time, which is why you will hear the phrase “cash to close.” For sellers, costs are deducted from your sale proceeds.
As general guidance, buyers in our area often budget 2% to 5% of the purchase price for closing costs, excluding the down payment. Sellers typically see their largest cost in broker commissions, commonly about 5% to 6% of the sale price, plus other seller-side items. Actual figures depend on your loan program, city and county fees, and negotiated credits.
Who pays what in Silicon Valley
Buyer-paid items (commonly in CA)
- Lender charges such as origination, underwriting, and credit report
- Appraisal fee
- Lender’s title insurance policy
- Buyer’s share of escrow/settlement fees
- Recording fees for the mortgage
- Prepaid interest and initial escrow reserves for taxes and insurance
- First-year homeowner’s insurance premium
- HOA transfer/estoppel fees and prorated dues, where applicable
- Inspections (home, pest, roof, etc.) and any upfront mortgage insurance premium if required
Seller-paid items (commonly in CA)
- Real estate broker commissions
- Owner’s title insurance policy
- Seller’s share of escrow/settlement fees
- Documentary or transfer taxes that are customarily seller-paid in many CA cities and counties
- Recording fees to clear liens or pay off loans
- Prorated property taxes, HOA dues, and agreed credits or repairs
Many items are negotiable in California. Customs can vary between Santa Clara County and Alameda County, so your purchase contract and local practice will determine the final split.
Major line items explained
Loan and lender fees
Your lender may charge an application or origination fee, along with underwriting and credit report fees. If you choose to buy down your interest rate, discount points are calculated as a percentage of your loan amount. One point equals one percent of your loan.
Title, escrow, and recording
Two common title policies appear at closing. Buyers typically pay for the lender’s title insurance policy, which protects the lender. In many California transactions, the seller pays for the owner’s title policy, which protects the buyer’s ownership. Escrow or settlement companies charge a fee to manage the closing process, which is often split between buyer and seller in California. Counties charge recording fees for the deed and the mortgage (deed of trust), usually on a per-document or per-page basis.
Prepaids and property taxes
You will prepay interest from the day you close until your first mortgage payment due date. Lenders commonly set up an escrow (impound) account at closing and collect several months of property taxes and insurance as reserves. Property taxes are prorated by calendar day between buyer and seller so each pays for their time of ownership.
HOA and inspections
If the property is in an HOA, expect transfer or estoppel fees plus prorated dues. Buyer-ordered inspections such as home and pest inspections are typically paid before closing and are part of your overall transaction costs even if not on the final closing statement.
Mortgage insurance and points
If your down payment is below certain thresholds, you may have mortgage insurance. It can be monthly, a one-time upfront premium, or built into your rate depending on the program. Buying discount points to lower your rate is optional and priced as a percentage of the loan.
Local factors that change your total
City and county transfer taxes
Some Bay Area cities impose a real property transfer tax in addition to county documentary transfer tax. This can materially change costs in San Jose, Oakland, Berkeley, and within Santa Clara County or Alameda County jurisdictions. Who pays is negotiable by contract, but many markets customarily see sellers covering certain transfer taxes. Always verify the city’s schedule for the specific property address.
Recording and document fees
Santa Clara County and Alameda County each set their own recording fees for deeds and deeds of trust. These are modest compared to other costs but vary by county and document count.
Condos and planned communities
HOA-heavy submarkets across Silicon Valley, San Jose, and the Oakland-Berkeley corridor often include document, transfer, and move-in fees. These are typically flat charges, and dues are prorated.
Supplemental assessments
Some properties carry supplemental assessments or special district obligations that must be prorated or paid off at closing. Examples include supplemental property tax assessments and Mello-Roos in certain developments. Your escrow and title team will confirm any outstanding amounts.
Pest and repair considerations
Local practice often includes pest inspections for wood-destroying organisms. Whether repairs are performed or handled via a credit is contractual and impacts the final Closing Disclosure as a seller concession or escrow holdback.
How estimates become final numbers
Your lender must deliver a Loan Estimate within three business days of application. It outlines your projected closing costs, interest rate, and payment. Closer to closing, you will receive a Closing Disclosure at least three business days before you sign. This shows your final numbers, including credits, prorations, and wire instructions from escrow. Use this window to review figures and coordinate funds.
Cash-to-close example for a $1.5M home
Below is an illustrative example for a San Jose-area purchase. Your numbers will vary based on loan terms, escrow requirements, and negotiated credits.
- Purchase price: $1,500,000
- Down payment at 20%: $300,000
- Buyer closing costs at 2% to 4%: $30,000 to $60,000
- Estimated cash to close: about $330,000 to $360,000 before applying any earnest money or seller credits
On the seller side, a combined commission of about 5% on a $1,500,000 sale is $75,000, plus the seller’s title, escrow, transfer tax, prorations, and any agreed credits or lien payoffs.
Buyer budgeting checklist
Use this checklist to plan funds for closing. Your Loan Estimate gives the early breakdown. Your Closing Disclosure shows the final amount with instructions for how to pay.
- Earnest money deposit already paid (applied to cash to close)
- Remainder of down payment
- Lender fees: origination, underwriting, credit report
- Appraisal fee
- Lender’s title insurance
- Escrow fee (buyer portion)
- Recording fees for the mortgage
- Prepaid interest from closing to first payment
- First-year homeowner’s insurance premium
- Property tax and insurance reserves for escrow (several months)
- HOA transfer/estoppel and prorated dues, if applicable
- Inspections: home, pest, roof, septic as needed
- Any upfront mortgage insurance premium
- Acceptable payment method: cashier’s check or wire per escrow instructions
Seller net sheet reminders
Sellers should expect the following items to affect net proceeds:
- Real estate commissions
- Owner’s title policy
- Seller’s escrow fee share
- Documentary or city transfer taxes where applicable
- Payoff of existing loans and lien release fees
- Prorated property taxes and HOA dues
- Credits to buyer for repairs or concessions
- Any outstanding assessments or special district obligations
Can you negotiate closing costs?
Yes. Many fees are negotiable and can be shifted with seller concessions. Loan programs limit how much the seller can contribute. For example, certain programs like FHA often allow up to 6% in seller-paid closing costs, while conventional and VA limits differ. Your lender will confirm the cap for your specific loan.
Wire safety: prevent fraud
Wire-fraud attempts are common in real estate transactions. Protect your funds with a few simple steps:
- Call your escrow officer using a verified phone number to confirm wire instructions before sending money.
- Never rely on email-only instructions or last-minute changes.
- Use secure methods for transmitting any sensitive information.
- If anything looks off, stop and verify by phone.
Timing: what to expect at closing
- Receive your Closing Disclosure at least three business days before signing.
- Review every line item, confirm any credits, and ask questions right away.
- Arrange your cashier’s check or wire per escrow’s written instructions.
- On closing day, your funds are verified, documents are signed, and the deed is recorded with the county.
Ready for a smooth close?
You deserve clear numbers, smart negotiation, and a calm path to the finish line. If you want local guidance on what to expect in San Jose, Santa Clara County, or the Oakland–Berkeley corridor, reach out to a trusted local advisor who handles these details every week. For tailored estimates and a closing plan that fits your goals, connect with Megan DeVivo.
FAQs
How much should a San Jose buyer budget for closing costs?
- Buyers commonly budget 2% to 5% of the purchase price for closing costs, separate from the down payment; exact amounts depend on loan program, reserves, and negotiated credits.
What are typical seller costs in Silicon Valley and the East Bay?
- The largest seller cost is usually broker commissions, commonly about 5% to 6% of the sale price, plus title, escrow, transfer taxes where applicable, prorations, and any agreed credits.
Who usually pays transfer taxes in San Jose or Oakland/Berkeley?
- It is negotiable by contract, but many California markets customarily see sellers pay certain transfer taxes; verify city rules for the specific property address.
What does “cash to close” include for a buyer?
- Cash to close equals your down payment plus closing costs minus credits like earnest money and any seller concessions; your Closing Disclosure shows the final amount.
When do my closing numbers become final?
- Your lender must deliver a Closing Disclosure at least three business days before closing; use this time to review and confirm funds and wire instructions.
How are property taxes handled at closing?
- Taxes are prorated by calendar day between buyer and seller, and lenders often collect several months of tax and insurance reserves to fund your escrow account.
Are HOA fees part of closing costs?
- Yes; if the property is in an HOA, expect transfer or estoppel fees and prorated dues, which will appear in your settlement figures.
Can a seller pay some of my closing costs?
- Yes; seller concessions are negotiable, but the maximum allowed depends on your loan program, so confirm limits with your lender.
