Who Pays Closing Costs in Pennsylvania?


One of the most common questions buyers and sellers ask is, “Who pays the closing costs?”


In Pennsylvania, the short answer is: it depends. There is no statewide rule that automatically assigns all closing costs to one party. Instead, who pays what is determined by the Agreement of Sale, the type of financing involved, local practices, and what is negotiated between the buyer and seller.


This page explains how closing costs are typically handled in Pennsylvania and how those costs are shown at settlement.

How Closing Costs Are Shown at Settlement


At closing, buyers and sellers receive a settlement statement that itemizes all financial debits and credits for the transaction. In most residential purchases involving a mortgage, this document is the Closing Disclosure, which is required by federal law.


Some settlement companies may also use an ALTA-style settlement statement format, particularly in certain transaction types, but the purpose is the same: to clearly show who pays what at closing.


Not every transaction includes the same line items, but the settlement statement provides a complete breakdown for both parties.

What Are Closing Costs?


Closing costs are the fees and expenses required to complete a real estate transaction. They are separate from the purchase price and are paid at or before settlement.

Closing costs may include:

  • Loan-related fees
  • Title and settlement charges
  • Government recording and transfer charges
  • Insurance premiums
  • Prepaid items and escrow reserves
  • Prorated expenses and adjustments


The exact costs vary by transaction, property, financing, and municipality.

Closing Costs Commonly Paid by the Buyer

Buyers in Pennsylvania often pay closing costs related to financing the purchase and setting up ownership of the property. These costs are typically tied to the buyer’s loan program and lender requirements.


Loan-Related Charges

Buyer-paid loan charges may include:

  • Loan processing, underwriting, or origination fees
  • Appraisal and credit report fees
  • Mortgage insurance premiums, when required by the loan program
  • Compliance, certification, or re-inspection fees required by the lender


These costs are generally determined by the buyer’s lender and are required as part of loan approval.


Because many buyer closing costs are tied to loan approval, it can be helpful to understand what pre-approval actually means and how lender requirements are established early in the process.


Prepaid Items and Escrows

In addition to fees, buyers are often required to prepay or escrow funds for future expenses, such as:

  • Homeowner’s insurance premiums
  • Property taxes, including county, municipal, and school taxes
  • Initial interest from the settlement date through the end of the month


These amounts are not additional fees. They are advance payments for expenses the buyer will owe after closing.


Title and Settlement Charges

Buyers commonly pay certain title and settlement-related costs, which may include:

  • Lender’s title insurance policy
  • Required title endorsements
  • Closing protection letters
  • Settlement, escrow, or closing fees charged by the title company


These charges help ensure the lender’s interest is properly insured and the transaction is completed correctly.


Title-related costs and settlement fees are part of the broader closing process, which includes contract terms, inspections, appraisals, and lender underwriting.

Closing Costs Commonly Paid by the Seller

Sellers in Pennsylvania typically pay closing costs related to transferring ownership of the property and satisfying any existing financial obligations.


Real Estate Commissions

Seller-side closing costs usually include:

  • Listing brokerage commission
  • Buyer’s brokerage commission, if agreed to in the listing agreement


These commissions appear as debits to the seller on the settlement statement.


Transfer Taxes

Pennsylvania imposes a real estate transfer tax when property ownership changes.

  • A state transfer tax applies
  • Local municipalities and school districts may impose additional transfer taxes
  • In many Pennsylvania transactions, the total transfer tax is divided evenly between the buyer and seller (50/50), unless the Agreement of Sale specifies a different allocation


In some transactions, sellers may also agree to credits in lieu of repairs, which can affect how closing costs are allocated and shown on the settlement statement.


Loan Payoffs and Liens

If the seller has an existing mortgage or other liens, the settlement statement will reflect:

  • Payoff of the seller’s mortgage
  • Required lien releases
  • Related certification, recording, or payoff processing fees


These items are necessary to ensure the buyer receives clear title to the property at closing.

Prorated Costs at Closing

In addition to standard closing costs, many expenses are prorated between the buyer and seller as of the settlement date. Proration means each party pays their share of certain ongoing costs based on how long they owned the property during the billing period.


Common prorated items include:

  • Property taxes (county, municipal, and school)
  • Homeowner association dues, if applicable
  • Utility bills such as water, sewer, or trash, depending on the municipality
  • Fuel costs, such as oil or propane, if applicable


At closing, the seller is typically credited or debited for their portion up to the day of settlement, and the buyer assumes responsibility from that point forward. These adjustments are calculated by the settlement company and shown on the settlement statement.


Because billing cycles vary, prorated amounts may be estimates and may not exactly match final bills issued after closing.


Prorated expenses are one example of how final numbers can change late in the transaction, especially after inspections and negotiations are complete.

Seller Credits and Concessions

Seller credits are negotiated amounts the seller agrees to pay toward the buyer’s costs and are shown as credits on the settlement statement.


Common examples include:

  • Contributions toward the buyer’s closing costs
  • Credits in lieu of repairs
  • Other negotiated financial concessions


Credits must be agreed to in writing and may be limited by the buyer’s loan program. Even when both parties agree, the lender must approve how credits are applied.

Government Recording and Miscellaneous Charges


Additional closing items may include:

  • Deed and mortgage recording fees
  • Tax certifications
  • Municipal certifications or lien searches
  • Deed preparation fees
  • Utility final reads or required escrows, when applicable


These costs vary by county and municipality and are itemized on the settlement statement.

Are Closing Costs Negotiable in Pennsylvania?

Some closing costs are negotiable, while others are not.


Often negotiable:

  • Seller concessions
  • Repair credits
  • Allocation of certain settlement or title fees


Generally not negotiable:

  • Transfer tax rates
  • Government recording fees
  • Lender-required charges tied to loan approval


Understanding which costs are flexible — and which are fixed — can help prevent surprises late in the transaction.

How Closing Costs Fit Into the Bigger Picture


Closing costs interact with other parts of the transaction, including:

  • Financing and underwriting
  • Appraisals and inspections
  • Repair negotiations
  • Settlement timing


Buyers and sellers who understand how these pieces fit together are better prepared for closing day.

Final Takeaway

In Pennsylvania, there is no universal rule that dictates who pays closing costs. While certain patterns are common, the final allocation depends on the Agreement of Sale, the financing involved, and what is negotiated between the buyer and seller.


Reviewing closing costs early and understanding how they are typically handled can reduce confusion and help keep a transaction on track through settlement.

Frequently Asked Questions About Closing Costs in Pennsylvania


Who pays closing costs in Pennsylvania?
In Pennsylvania, who pays closing costs depends on the Agreement of Sale, the financing involved, local practices, and what the buyer and seller negotiate. There is no single statewide rule that assigns all closing costs to one party.


What are closing costs?
Closing costs are the fees and expenses required to complete a real estate transaction. They are separate from the purchase price and may include loan-related fees, title and settlement charges, government recording and transfer charges, insurance premiums, prepaid items, escrow reserves, and prorated adjustments.


What closing costs does the buyer typically pay in Pennsylvania?
Buyers commonly pay loan-related charges such as underwriting and appraisal fees, prepaid items and escrow reserves like homeowner’s insurance and property tax escrows, and certain title and settlement charges such as the lender’s title insurance policy and settlement fees, depending on the transaction.


What closing costs does the seller typically pay in Pennsylvania?
Sellers commonly pay real estate commissions, may pay or share transfer taxes depending on the Agreement of Sale, and pay costs related to satisfying existing obligations such as mortgage payoffs and lien releases. Sellers may also agree to credits or concessions as negotiated in the contract.


How is the Pennsylvania transfer tax usually handled?
Pennsylvania transfer tax includes a state component and may include additional local transfer taxes. In many Pennsylvania transactions, the total transfer tax is divided evenly between the buyer and seller (50/50), unless the Agreement of Sale specifies a different allocation.


What are prorated costs at closing?
Prorated costs are ongoing expenses that are divided between the buyer and seller as of the settlement date. Common prorated items include property taxes, HOA dues if applicable, and certain utility charges. The settlement company calculates these adjustments and shows them as credits or debits on the settlement statement.


Are closing costs negotiable in Pennsylvania?
Some closing costs are negotiable, such as seller concessions, repair credits, and allocation of certain settlement or title fees. Other costs are generally not negotiable, such as transfer tax rates, government recording fees, and lender-required charges tied to loan approval.

For reference only. Not all situations are covered. Closing costs, tax practices, and contract terms vary by transaction. Buyers and sellers should consult their real estate agent, lender, settlement company, and, if needed, an attorney or accountant for guidance specific to their situation.