Closing costs on purchase mortgages continue to average about 1% of a home’s sales price nationwide, but vary significantly by state due primarily to differences in transfer taxes and local recording fees, according to a new report from LodeStar Software Solutions.
The firm’s 2026 Purchase Mortgage Closing Cost Data Report finds that transfer taxes remain the single largest driver of variation, often making up the biggest portion of total closing costs in higher-cost jurisdictions.
Taxes Dominate Cost Differences
LodeStar’s data show that in many states, government-imposed charges, including transfer taxes and recording fees, account for the majority of closing costs and outweigh lender-related or third-party service fees.
For example, states such as New York and Pennsylvania, where transfer taxes are imposed at multiple levels, tend to generate higher closing costs, while states like Texas, which do not levy a transfer tax, generally fall on the lower end. That gap reflects how government-imposed charges, rather than lender fees, continue to drive the largest differences in total cash-to-close.
Because those charges are set at the state and local level, they create a wide dispersion in total costs:
- High-tax states can see closing costs well above the national average, driven largely by transfer tax structures
- Low- or no-tax states consistently fall below the average, with fewer government-imposed fees built into the transaction
By contrast, lender fees and third-party costs such as title services and settlement charges tend to be more consistent across markets, reinforcing that geography — not lender pricing — is the dominant factor.
Stable Share Of The Transaction
Despite that variability, the report shows that total closing costs as a percentage of the home price have remained relatively stable, continuing to cluster around the 1% range nationally.
That stability suggests that while home prices and rates have fluctuated, the overall cost structure of closing a purchase transaction has not materially shifted in proportion to the sale price.
What It Means
The data underscores a persistent reality: closing costs remain a localized variable that can significantly impact borrower cash-to-close, particularly in higher-tax markets.
Because many of the largest cost components are outside lender control, they can create friction late in the transaction, especially for borrowers focused primarily on rate and monthly payment.
In that environment, tools like seller concessions and lender credits remain key levers to help manage affordability and keep deals on track.
LodeStar’s findings reinforce that closing costs are not a standardized national expense, but a market-by-market consideration shaped largely by policy decisions at the state and local level.
For mortgage professionals, that means understanding local fee structures isn’t just helpful — it’s essential to setting borrower expectations and structuring competitive deals.
