Buying a home in San Diego is exciting, but the closing statement can feel like a puzzle. You want to know what you will actually pay on top of your down payment, and how to plan for it without surprises. This guide breaks down closing costs in clear steps, with San Diego norms, typical ranges, and examples you can use before you get pre-approved. Let’s dive in.
What are closing costs?
Closing costs are the fees and prepaids you pay to finalize a home purchase. They include lender charges, title and escrow services, recording fees, insurance, taxes, and optional inspections. For many buyers, total costs run about 2% to 5% of the purchase price. Your final number depends on your loan program, the property type, and what you and the seller agree to pay.
Who pays what in San Diego
Local custom matters in California. In much of Southern California, sellers often pay the owner’s title insurance premium and buyers pay the lender’s policy. Escrow fees are frequently split, and transfer taxes depend on local rules and your contract. These are customs, not hard rules, so confirm the specifics with your escrow officer and your agent.
Main cost categories
Lender costs
- Origination, application, and processing: often 0.5% to 1% of the loan amount. Discount points are optional. One point equals 1% of the loan and lowers your rate.
- Appraisal: typically $500 to $900 in San Diego, higher for complex or luxury properties.
- Credit report, flood certification, underwriting: combined smaller items, often $25 to $500.
- Mortgage insurance and program fees: FHA, VA, and conventional loans handle these differently. Private mortgage insurance for conventional loans depends on your down payment and credit. FHA and VA loans have program-specific upfront charges.
- Prepaid interest and escrow cushion: a partial month of interest plus reserves for property taxes and homeowner’s insurance, often 1 to 3 months of each.
Title and escrow
- Escrow (settlement) fee: the escrow company coordinates the closing. Typical combined charges are $500 to $2,000, with splits based on local custom and your contract.
- Title insurance: lender’s policy is required with a mortgage; an owner’s policy is optional but strongly recommended. Premiums are tiered by price, so higher-priced San Diego homes carry higher dollar amounts.
- Recording and transfer taxes: county recording runs roughly $50 to $500+. Documentary transfer taxes vary by jurisdiction and contract terms on who pays.
Prepaids and prorations
- Property taxes: California uses a Prop 13 base near 1% of assessed value, plus local assessments. At closing, taxes are prorated and you may fund an initial escrow deposit.
- Homeowner’s insurance: first-year premium is usually collected at closing, commonly $800 to $2,000+ depending on coverage.
- HOA-related items: condo and planned community purchases often include HOA estoppel or transfer documentation. Estoppel fees are typically $150 to $500. Monthly dues vary by building and amenities.
Optional services
- Home inspection: general inspection commonly $300 to $800. Specialized inspections (pest, roof, sewer) add $100 to $800 each.
- Survey: sometimes requested, often $300 to $1,000+.
- Title endorsements, notary, courier: smaller line items, usually $10 to $200 each.
- Rate buy-down points: optional, with 1 point = 1% of the loan amount.
San Diego factors that change costs
- Local custom on title and escrow: sellers often cover the owner’s title policy, but it is negotiable and should be confirmed in writing.
- Transfer taxes: amounts and who pays depend on local rules and the purchase agreement.
- HOA prevalence: many San Diego condos and communities have HOA documentation and estoppel fees.
- Service pricing: appraisals, inspections, and some title/escrow fees can run higher than rural markets.
- Loan program rules: FHA, VA, and USDA loans handle fees and seller credits differently, which affects your out-of-pocket cost.
Estimate your costs step by step
Pick a target purchase price.
Estimate buyer closing costs at 2% to 5% of that price for a typical conventional loan.
Add loan-specific items: origination (0.5% to 1%), appraisal ($500 to $900), credit and underwriting fees, and initial escrow reserves.
Add optional items: inspections and HOA estoppel fees if applicable.
Confirm seller concessions: negotiate who pays the owner’s title policy and transfer tax, and whether you receive any seller credits.
Request a Loan Estimate from each lender within 3 business days of application, and review the Closing Disclosure at least 3 business days before closing. Compare the two to verify final costs.
Example: $700,000 purchase, 20% down
- Loan amount: $560,000
- Conservative buyer closing cost range: 2% = $14,000 to 4% = $28,000
- Example composition:
- Lender fees and origination: $2,800 to $5,600 (0.5% to 1%)
- Appraisal: $600 to $850
- Title, escrow, and recording: $1,500 to $3,000
- Prepaids and reserves: $3,000 to $7,000
- Inspections and HOA estoppel: $400 to $1,200
- Total aligns with the 2% to 4% range above. Add points if you choose to buy down your rate.
Example: $1,000,000 purchase, 20% down
- Loan amount: $800,000
- Conservative buyer closing cost range: 2% = $20,000 to 4% = $40,000
- Expect higher dollar amounts for tiered items like title premiums and transfer taxes, plus larger prepaids due to tax and insurance reserves.
Ways to reduce what you pay
- Shop lenders: compare Loan Estimates for rates, points, and fees.
- Negotiate seller credits: within your loan program’s limits, credits can offset a portion of your closing costs.
- Compare title and escrow quotes: ask for itemized fee estimates before you open escrow.
- Be selective with optional services: balance savings today with long-term value. Paying points may make sense if you plan to stay in the home long enough to break even.
Common pitfalls to avoid
- Assuming the seller will pay the owner’s title policy without confirming it in the contract.
- Underestimating initial escrow deposits for taxes and insurance. These can add several thousand dollars to your cash needed to close.
- Overlooking HOA special assessments or transfer fees in condo and planned communities.
Quick checklist
- Multiply your target price by 2% and 4% to set a realistic low/high budget.
- Ask lenders for sample Loan Estimates based on your price and down payment.
- Request a title and escrow fee quote early. Confirm who pays the owner’s policy and transfer taxes in San Diego.
- If buying in an HOA, get the estoppel fee estimate and ask about any known assessments.
- Budget for inspections and appraisal.
- Keep a small contingency for unexpected items found during title or HOA review.
When you know what to expect, closing day feels a lot less stressful. If you want help tailoring these estimates to your price point and loan type, our team is glad to walk you through a sample closing disclosure and a plan to reduce out-of-pocket costs. Reach out to Melvin Li’ah for a friendly, clear consult.
FAQs
What are typical buyer closing costs in San Diego?
- Most buyers should plan for about 2% to 5% of the purchase price, including lender fees, title and escrow, prepaids, and optional inspections.
Who usually pays for owner’s title insurance in San Diego?
- In much of Southern California the seller often pays the owner’s policy, while the buyer pays the lender’s policy, but this is negotiable and should be confirmed in your contract.
How do FHA and VA loans affect closing costs?
- FHA and VA have program-specific fees and limits on seller credits, which change how much you pay up front and what the seller can cover.
When will I see my exact closing costs?
- Your lender must send a Loan Estimate within 3 business days of application and a Closing Disclosure at least 3 business days before you sign.
Are HOA fees part of closing costs in San Diego?
- You may see HOA estoppel or transfer fees at closing and prorated dues; monthly HOA dues are separate ongoing expenses after you own the home.
What is prepaid interest and why is it collected?
- Prepaid interest covers the interest from your closing date to the end of that month, so your first full mortgage payment aligns with the next standard due date.
