Florida closing costs for buyers usually run 2% to 5% of the purchase price. Some of those costs are the same in every state, such as lender and appraisal fees. Others are unique to Florida, including two state taxes on your mortgage. Here is what to expect, with a worked example and ways to lower the total.
What Florida Closing Costs Do Buyers Pay?
In general, most buyer costs fall into four groups:
- Lender costs: origination or broker fees, credit report, underwriting and any points you choose to buy
- Third-party costs: appraisal, survey, home inspection and title services
- State and county charges: Florida mortgage taxes and recording fees
- Prepaid items: homeowners insurance, property taxes and interest paid upfront into escrow
Your lender must give you a Loan Estimate within three business days of your application. It lists each of these costs, so you can compare offers line by line.
Florida Taxes on Your Mortgage
Florida charges two taxes when you record a new mortgage. Both are set by state law, and the borrower usually pays them:
- Documentary stamp tax on the note: 35 cents per $100 of the loan amount, under Florida Statutes section 201.08
- Nonrecurring intangible tax: 2 mills, or 0.2% of the loan amount, under section 199.133
Cash buyers do not pay these two taxes because there is no mortgage. However, there is also a separate documentary stamp tax on the deed: 70 cents per $100 of the price in most counties, under section 201.02. Miami-Dade uses a different rate. By custom, the seller often pays the deed tax, although your contract decides who pays.
Example: Florida Closing Costs on a $400,000 Loan
Say you buy a $500,000 home with 20% down, so your loan is $400,000. The two mortgage taxes alone come to:
- Doc stamps on the note: $400,000 ÷ 100 × $0.35 = $1,400
- Intangible tax: $400,000 × 0.002 = $800
As a result, you pay $2,200 before any lender, title or prepaid costs. Then add title insurance, the appraisal, recording fees and your escrow deposits. In total, many buyers in this price range bring $10,000 to $20,000 in closing costs on top of the down payment.
Why Prepaids Are Higher in South Florida
However, prepaids are often the biggest surprise for Florida buyers. Lenders collect your first year of homeowners insurance at closing. They also set aside several months of property taxes and insurance in escrow.
Because South Florida insurance premiums are high, this part of the bill can be large. For a condo, the master policy covers the building, so your own policy may cost less. Still, ask for an insurance quote early, since it affects both your closing costs and your monthly payment.
How to Lower Your Florida Closing Costs
- Ask for seller credits. In many deals, the seller agrees to pay part of your costs. Your loan program sets the maximum credit.
- Compare Loan Estimates. For example, lender fees and rates vary widely. Comparing two or three offers can save thousands.
- Use a lender credit. You can accept a slightly higher rate in exchange for a credit toward costs.
- Look for down payment help. Programs such as Florida Hometown Heroes may help eligible buyers when funding is available.
- Time your closing. Closing near the end of the month reduces the prepaid interest you owe at closing.
Do Not Forget the Homestead Exemption
After you close on your primary home, apply for Florida’s homestead exemption. It can reduce your home’s taxable value by up to $50,000. You must file with your county property appraiser by March 1 of the tax year, according to the Palm Beach County Property Appraiser. As a result, your future property tax bills, and your escrow payment, can drop.
Get an Estimate of Your Florida Closing Costs
Every purchase is different, so the best way to know your number is a written estimate. We can price your loan, list each fee and compare options for you at no cost. Call (754) 289-0196 or visit our home purchase page to get started.
