Understanding NYC Closing Costs for Homebuyers
Understanding closing costs is a key part of budgeting for a NYC home purchase—especially when condo, co-op, and new development fees can vary widely by property and deal structure.
When buying a home in New York City, it’s important to budget for closing costs in addition to your down payment and mortgage. For most buyers, these costs typically fall in the 2%–5% range of the purchase price, though the exact amount depends on property type, price point, financing structure, and whether the purchase is a resale or new development.
NYC closing costs are made up of several distinct components, including legal fees, lender and bank charges, transfer-related taxes, and building-specific fees that can vary widely from property to property. Some costs apply only to condos or townhouses, others only to co-ops, and certain charges depend entirely on how a deal is structured.
Because no two transactions are identical, buyers should review closing costs carefully with their real estate agent, attorney, and lender early in the process. What follows is a practical overview of the most common closing costs buyers encounter when purchasing a home in New York City, along with context on when and why each applies.
1. Attorney Fees
In NYC, both buyers and sellers typically hire attorneys to represent them during the real estate transaction. For buyers, attorney fees generally range between $2,500—$3,500. While $3,000 is a firm number for a NYC real estate transaction, attorney fees can be higher depending on the attorney and firm and the complexity of the real estate deal. Your attorney will review the contract, conduct due diligence, negotiate on your behalf, and ensure your legal interests are protected throughout the transaction.
2. Bank and Mortgage Fees
When financing a home in NYC, several bank and mortgage-related fees can arise, and they often vary depending on the lender or mortgage institution. Here are some common fees to expect:
Bank Attorney Fee: Typically around $1,500, this covers the cost of the bank’s attorney, who represents the lender during the closing process. The actual amount can vary depending on the complexity of the transaction and the bank’s policies.
Appraisal Fees: Lenders require a property appraisal to determine its fair market value. Appraisal fees generally range from $500 to $1,500 depending on factors like the property’s size and complexity. High-end properties may require more specialized appraisals, driving costs higher.
Mortgage Origination Fee: This fee typically covers the administrative costs of processing your loan and ranges between 0.5% and 1% of the loan amount. Some banks offer lower fees based on the loan type or borrower profile.
Other Possible Fees: Additional fees may include underwriting, credit report pulls, or paperwork processing. These can vary widely between institutions, so discussing these upfront with your mortgage broker is essential.
Since fees differ from lender to lender, it’s crucial to shop around and compare loan estimates. Your real estate agent and mortgage broker can help you understand these costs specific to your lender and property.
3. Mortgage Recording Tax
If you're purchasing a condo or townhouse and taking out a mortgage, the mortgage recording tax applies. The tax rate is 1.8% for loan amounts under $500,000 and 1.925% for loan amounts over $500,000. This tax is calculated based on the loan amount, not the purchase price.
It’s important to note that this tax does not apply to co-ops, as co-op buyers are purchasing shares in a corporation rather than real property. The exact amount may vary slightly depending on the borough, so it’s essential to verify with your attorney or lender to ensure you're budgeting accurately.
4. Mansion Tax (priced at $1 million+)
The mansion tax is a surcharge that applies to homes priced at $1 million or more in New York City. This tax starts at 1% of the purchase price for homes just over $1 million and increases incrementally, topping out at 3.9% for homes priced above $25 million. For most properties in the $1 million to $2 million range, you can expect the tax to be 1% of the purchase price.
5. Title Insurance (For Condos, Townhouses, Single Family Homes)
Title insurance is an essential part of purchasing a condo, townhouse, or single-family home in NYC. This insurance protects against potential claims or disputes over the property’s title, such as undisclosed liens or past ownership issues. The cost of title insurance typically ranges from 0.4% to 0.6% of the purchase price, though it may vary depending on the transaction’s complexity.
6. Transfer Taxes and Sponsor Closing Costs (New Developments)
In resale transactions, New York City and New York State transfer taxes are customarily paid by the seller. In new development condo purchases, however, buyers are often contractually required to cover these taxes as part of the sponsor’s offering plan. While this structure is common, it is not mandated by law and may be negotiable depending on market conditions, pricing, and the stage of the sponsor’s sellout.
In New York City, combined transfer taxes total 1.825% for properties priced over $500,000 (1.425% NYC and 0.4% NY State). For properties priced at $500,000 or less, the combined rate is 1.4%. When passed to the buyer, these taxes are calculated based on the purchase price and can materially increase closing costs.
In addition to transfer taxes, buyers in new development transactions are typically responsible for paying the sponsor’s attorney fee, which is separate from their own legal representation. This fee is outlined in the offering plan and commonly ranges from a few thousand dollars upward, depending on the project. While sponsor attorney fees are standard and less frequently negotiated, both transfer taxes and legal fees should be reviewed carefully with your real estate agent and attorney before signing a contract.
7. Miscellaneous Fees
In addition to the standard closing costs, buyers in NYC may face additional fees, especially when purchasing condos or co-ops. These building-specific fees buyers might encounter from move-in costs to administrative and application fees. These fees vary depending on the property. Below is a sample list of fees from a condominium building in Murray Hill, Manhattan:
Administrative Fee: $450 (Non-refundable)
Application Processing Fee: $600 (Non-refundable)
Credit Check Fee: $150 per adult occupant (Non-refundable)
Move-In Fee: $1,000 (Non-refundable)
Move-In Deposit: $2,000 (Refundable)
Key Fob Fee: $30 (Non-refundable)
Working Capital Contribution: Two months' common charges (Non-refundable)
These sample fees illustrate the types of charges that can add up quickly. It's important to be aware of these costs ahead of time and factor them into your overall budget. Your real estate agent will guide you through these potential expenses and ensure you're fully prepared for any building-specific fees that may arise during the closing process.
While the sample above reflects a Manhattan condominium, many of these fees—both refundable and non-refundable—tend to be lower in other boroughs like Brooklyn and Queens, particularly in smaller condo and co-op buildings. Fee structures vary widely, so it’s helpful to review building documents early and ask your agent about typical costs based on location and building type.
8. A Note About Flip Tax (For Co-op Resale Most Often Paid By the Seller)
Many co-ops charge a flip tax, typically ranging from 1% to 2% (sometimes 3%) of the sale price. While the seller traditionally pays the flip tax, in some cases the cost might be split between both parties. The flip tax can be calculated as a flat fee per share or as a percentage of the sale price. It's critical to discuss this with your agent and attorney before making an offer to ensure clarity around how it will impact your closing costs.
9. A Note About Maintenance Common Charges
Monthly maintenance fees (for co-ops) and common charges (for condos) are ongoing costs. Co-op fees typically include building staff, utilities, property taxes, and sometimes a share of the building’s underlying mortgage. Condo fees cover maintenance, shared amenities, and common area utilities, while property taxes are paid directly by owners. Some co-ops may require two months’ fees upfront, and new development condos often charge a one-time working capital fund contribution to establish reserves. Always check with your real estate agent to verify.
10. Recent Changes to Commission Structures
Recent changes to how buyer-agent commissions may be structured mean that, in some transactions, buyers could be responsible for covering a portion of their agent’s compensation. Historically, this cost was typically paid by the seller, and in New York City that arrangement has largely remained unchanged in practice, even after the rule changes took effect.
That said, commission structures are no longer guaranteed to follow a single model. Because arrangements can vary by listing, price point, and negotiation—and because these changes formally went into effect over a year ago—it’s important for buyers to have a clear conversation with their agent early in the process. Doing so helps clarify how compensation will be handled and whether it may affect overall cash requirements at closing.
This is not a universal shift, but it is a relevant budgeting consideration in today’s NYC market. For a detailed overview of how these changes apply locally, see StreetEasy’s breakdown of the NAR settlement and its implications for New York City.
11. The Role of Your Real Estate Agent
Closing costs vary by transaction, building, and financing structure. An experienced real estate agent plays a crucial role in guiding you through the complexities of NYC’s closing costs. They will help you understand what fees to expect, coordinate with your attorney and lender, and ensure that all necessary paperwork is handled correctly. Remember, each deal is unique, and your agent's insights—coupled with advice from your attorney and lender—will ensure you're fully prepared for closing day and that nothing is overlooked. Always consult with these professionals to get the most accurate and up-to-date information for your specific situation.
Related Resources and Insights
Understanding NYC’s unique closing costs is a crucial part of preparing for your home purchase. Whether you're buying a co-op, condo, or townhouse, having a knowledgeable real estate agent by your side will help you navigate these expenses and make informed decisions.