Closing costs on a home purchase are the one-time fees and prepaid items you pay at settlement, and they are separate from your down payment. Here is an illustration for a Mechanicsville, VA purchase. Every figure below is illustrative, not a quote.
- Price: $400,000. Down payment at 5%: $20,000. Loan amount: $380,000, 30-year fixed.
- Illustrative closing costs: about $12,175 (fees for services of $7,910 plus prepaids and escrow deposits of $4,265), roughly 3% of the price in this example only.
- Cash to close: $20,000 + $12,175 = $32,175, before any credit for earnest money you already paid.
- Illustrative monthly payment: principal and interest $2,402 (assuming a 6.5% interest rate), property tax $333 ($4,000 a year), homeowners insurance $150, and conventional mortgage insurance of about $190, for roughly $3,075.
I’m Duane Buziak, NMLS #1110647, and this article walks through the line items, who pays what, Hanover County and Virginia specifics, ways to structure costs, and how a broker compares with retail lenders.
- What closing costs are
- Line by line on a $400,000 purchase
- Who pays which costs
- Hanover County and Virginia costs
- Broker vs. retail lender
- Planning and reviewing your costs
- Closing costs FAQ
- The Loan Estimate sets your number
What Are Closing Costs on a Home Purchase?
Closing costs are the one-time fees and prepaid items due when you sign final paperwork and the loan funds. They are not part of your down payment, and they are not the same as your monthly payment. Many Virginia purchases land somewhere in a range of a few percent of the price, but a rule of thumb is only a starting point. The only real number is the one on your Loan Estimate.
Two buckets get confused, and separating them makes the total less intimidating.
- Fees for services. These pay people and companies for work on your loan and your title: the lender’s origination and processing charges, the appraisal, the credit report, the title search and title insurance, the settlement agent, and government recording fees and taxes. Once paid, that money is gone.
- Prepaids and escrow deposits. These fund your own future bills. Prepaid interest covers the days between closing and your first payment period. The first year of homeowners insurance is usually paid at closing. Escrow deposits (an escrow account is a holding account your servicer uses to pay property tax and insurance for you) start the cushion that covers those bills.
The second bucket is not a fee in the usual sense. You would owe those taxes and premiums anyway, so you are paying them early rather than paying extra.
Two federal forms put the numbers in writing. The Loan Estimate is the early, standardized summary of your loan terms and projected costs. The Closing Disclosure is the final version you review before signing. Both come from the Consumer Financial Protection Bureau’s standard format, so you can lay two of them side by side and compare line by line.
A few misconceptions are worth clearing up early. Closing costs do not equal your down payment. Not every fee is negotiable. The seller does not always pay. And a “no closing cost” loan is never free: the costs are covered through a seller credit, a lender credit, or a trade-off somewhere else.
Line-by-Line Closing Costs on a $400,000 Hanover County Purchase
This table breaks the introduction’s total into line items. All amounts are illustrative placeholders for a $400,000 purchase with a $380,000 loan. Your Loan Estimate will differ.
| Line item | Illustrative amount | Type |
|---|---|---|
| Lender origination, processing and underwriting | $2,400 | Fee for service (loan-dependent) |
| Appraisal | $600 | Fee for service |
| Credit report | $60 | Fee for service |
| Title search and lender’s title insurance | $1,700 | Fee for service (shoppable) |
| Settlement fee | $600 | Fee for service (shoppable) |
| Recording fees | $150 | Government |
| Virginia recordation and grantor/transfer taxes (placeholder) | $2,400 | Government |
| Subtotal, fees for services | $7,910 | |
| Prepaid interest (15 days, 6.5% assumed) | $1,015 | Prepaid |
| Homeowners insurance, first year | $1,800 | Prepaid |
| Escrow deposit, insurance (3 months) | $450 | Escrow |
| Escrow deposit, property tax (3 months on $4,000 a year) | $1,000 | Escrow |
| Subtotal, prepaids and escrow | $4,265 | |
| Total illustrative closing costs | $12,175 |
The tax line is a placeholder on purpose. Virginia recordation and transfer taxes follow published schedules, and who pays which tax can vary by transaction. Check the current schedules with the Virginia Department of Taxation and the Hanover County Circuit Court Clerk’s office, and rely on your Loan Estimate for the actual amount.
Not every line behaves the same way:
- Fixed by government: recording fees and recordation or transfer taxes follow set schedules. You cannot negotiate them, though you should confirm the amounts.
- Shoppable: title and settlement services are often services you can choose yourself, and the Loan Estimate tells you which ones.
- Dependent on your loan: origination charges, appraisal needs, and whether you pay mortgage insurance all change with the loan type, the down payment and your credit profile.
Prepaids shift with your closing date and your insurance quote, which the next sections cover.
Who Pays Which Closing Costs: Buyer, Seller, or Lender?
Your cash to close is not always set in stone. Four tools can reduce it, and each has limits.
Seller concessions
A seller concession is a negotiated amount the seller agrees in the contract to put toward your costs. Loan programs cap how much a seller can contribute. As of 2026, the published guidelines tie conventional limits to your down payment, with a smaller percentage allowed at lower down payments. FHA and VA have their own caps. Confirm the current numbers in the Fannie Mae Selling Guide, the Freddie Mac Guide, and HUD, because they can change. With 5% down in our example, you would be in the most restrictive conventional tier.
Lender credits
A lender credit reduces your out-of-pocket costs, but it usually comes with a trade-off: a higher interest cost over the life of the loan. If you plan to keep the loan a long time, that trade can cost more than the credit saved. If you plan to sell or refinance soon, it may make sense. I can show you both versions side by side, and I call this a no-out-of-pocket closing option, not free money. Whether it fits depends on your situation and what a lender will offer.
VA loans
For eligible veterans, VA rules limit certain fees the veteran may be charged, and the VA funding fee is a separate item that may be financed or waived in some cases. Review the current rules at VA.gov. I can usually pull the Certificate of Eligibility electronically on your behalf.
Down payment assistance
Programs such as those from Virginia Housing may help with cash to close. Eligibility, income limits and credit minimums change, so confirm them on the program page before you plan around one.
Hanover County and Virginia Costs That Change Your Cash to Close
Property tax is the biggest local variable. Hanover County sets its real estate tax rate each year, and that rate drives both your escrow deposits and your monthly payment. Get the current rate directly from Hanover County’s official site rather than from an old listing, and apply it to your price and the county’s assessed value.
Your closing date matters more than most buyers expect. Prepaid interest covers the days from closing to the end of that month, so a closing near the start of the month means more days of prepaid interest, and one near the end means fewer. Property tax is prorated between buyer and seller as of the closing date. Two buyers on the same price, one closing in Ashland on the 3rd and another in Doswell on the 28th, can see different cash to close for this reason alone.
New construction, such as a build in Atlee Station, can add its own timing and fees. Builders often have preferred lenders and title companies, deposit schedules, and closing-date windows tied to completion. Read the contract and ask which charges are the builder’s and which are yours.
Other costs to pin down early:
- Homeowners insurance. Premiums vary by property, age, roof, and location. Richmond-bound commuters along I-95 and Route 301 buy homes of very different ages and sizes, so quote early. A surprise premium changes both your prepaids and your monthly payment.
- HOA or community fees. Many newer Hanover neighborhoods have them. Ask for the amount, any capital contribution due at closing, and any transfer fee.
- USDA eligibility. USDA financing depends on the specific address. Never assume a whole town qualifies. Check the property on the official USDA eligibility map.
Mortgage Broker vs. Retail Lender: How Closing Costs Compare
Duane Buziak is an independent broker, so I shop your loan across hundreds of wholesale lenders. A retail lender lends its own money under its own roof. Both give you a Loan Estimate in the same federal format. The structures differ, and each has strengths. The table is deliberately general, so confirm details on each company’s own site.
| Company | Business model | Product shelf | How fees are presented | Where it shines |
|---|---|---|---|---|
| Duane Buziak | Independent mortgage broker, shops across wholesale lenders | Varies by the wholesale lender chosen | Standard Loan Estimate and Closing Disclosure | Comparing several options for one borrower, including self-employed and VA families |
| Movement Mortgage | Retail lender with local loan officers | Its own programs | Standard Loan Estimate and Closing Disclosure | In-person service and a single point of contact |
| Rocket Mortgage | National retail lender, digital-first | Its own programs | Standard Loan Estimate and Closing Disclosure | Online application and tracking tools |
| C&F Mortgage | Retail mortgage arm of a Virginia-based financial company | Its own programs | Standard Loan Estimate and Closing Disclosure | Regional roots and local knowledge |
| Southern Trust Mortgage | Retail lender serving multiple states | Its own programs | Standard Loan Estimate and Closing Disclosure | Local loan officers and community presence |
| Sparrow Home Loans | Retail lender | Its own programs | Standard Loan Estimate and Closing Disclosure | A focused borrower experience |
| Lower.com | Online lender; PowerTPO is Lower, LLC’s wholesale arm | Its own programs | Standard Loan Estimate and Closing Disclosure | Digital process; I have direct wholesale access to PowerTPO without a retail markup |
None of this says one model produces lower closing costs. A fair comparison uses the same loan type, the same lock period and the same Loan Estimate line items, with sections A, B and C lined up. Compare total cash to close and the interest cost together, since a lower fee can come with a higher interest cost.
Two tools I offer help you start. Dare to Compare is my pricing challenge: bring a Loan Estimate from anywhere and I will put mine next to it, with no promised result. The NoTouch Credit Pull soft pull pre-approval has no credit hit, no cost, no fees and no commitment. I have been helping families find their new homes since 2014, and I have 2,000+ verified reviews across all platforms.
A Step-by-Step Way to Plan and Review Your Closing Costs
- Start with a soft pull pre-approval. It shows your budget without a hard inquiry.
- Apply and receive your Loan Estimate. Under CFPB rules, you should receive it within three business days of applying. Check the timing at consumerfinance.gov.
- Decide on your lock. A rate lock holds your terms for a set period. Match the period to your closing date.
- Shop title and settlement services if your Loan Estimate lists them as shoppable.
- Review the Closing Disclosure at least three business days before closing.
When the Closing Disclosure arrives, compare it to your Loan Estimate:
- Loan amount, interest rate and monthly payment.
- Lender fees in the origination section, which should not increase without a valid change.
- Title and recording charges, where limited increases are allowed.
- Prepaids and escrow amounts, which can shift with your closing date and insurance quote.
- Total cash to close.
The CFPB sets tolerance rules for how much certain fees can change. Some, like lender charges and transfer taxes, generally cannot rise. Others, like recording fees and services you pick from the lender’s list, can rise by a limited percentage overall. Prepaids and services you choose yourself are not capped the same way. Check the current rules on the CFPB’s closing disclosure page.
Avoid these mistakes: forgetting prepaids when you budget, moving large unexplained deposits in the weeks before closing (underwriters will ask about them), and skipping a check on your final funds figure before the walk-through. Wire money only after verifying instructions by phone with a number you already trust.
For questions, call Duane Buziak at 804-212-8663. My legal office is in Glen Allen, VA.
Closing Costs FAQ for Hanover County Buyers
How much are closing costs on a home purchase?
They vary by price, loan type, location and choices you make. Many buyers see a few percent of the price, but that is only a rough guide. Your Loan Estimate shows the actual figures for your loan, and your Closing Disclosure confirms them.
Can the seller pay my closing costs?
Often yes, if the contract says so and the loan program allows it. As of 2026, each program caps seller contributions differently. Check the current limits with Fannie Mae, Freddie Mac, HUD and VA.gov.
Can closing costs be rolled into the loan?
Sometimes. On a purchase, the loan generally cannot exceed the program’s limit or the appraised value, so there is rarely room to add costs. Certain items, like the VA funding fee, may be financed. A lender credit is another way to reduce cash needed at the table.
Are closing costs tax deductible?
Some items may be, such as certain points and prepaid mortgage interest, while many fees are not. Property tax paid at closing may also play a role. Confirm with a tax professional and the IRS, since rules change.
What is a Closing Disclosure?
It is a five-page federal form that lists your final loan terms, projected payments and every closing cost. You should receive it at least three business days before closing. The CFPB explains how to read it.
How long does it take to close?
Timelines depend on the loan, the appraisal, the title work and how quickly documents come in. Your contract sets the target closing date. Ask for a written timeline at the start, and keep it in sync with your rate lock.
Do VA buyers pay closing costs?
VA buyers still have closing costs, but VA rules limit certain fees a veteran may be charged. The funding fee is separate. Sellers may contribute under VA guidelines. Review current details on VA.gov.
What are prepaids?
Prepaids are costs you pay in advance at closing: interest for the first partial month, the first year of homeowners insurance, and sometimes property tax. They fund your own future bills, so they differ from lender or title fees.
Can down payment assistance cover closing costs?
Some programs allow it. Virginia Housing lists current programs, credit minimums and eligibility. Terms change, so verify before you build a budget around one.
Why do closing costs differ between lenders?
Lenders set different origination charges, offer different credits, and price the interest cost differently. Title and settlement providers also differ. Compare same-day Loan Estimates for the same loan type and lock period, then look at both cash to close and the interest cost.
The Loan Estimate Sets Your Real Number, Not a Rule of Thumb
A percentage of the price can help you plan, but your Loan Estimate decides what you bring to the table. Read it, compare it, and ask me about anything that looks unfamiliar.
Ready to see what you qualify for in Hanover County? Duane Buziak, VA Broker of the Year 2024 & 2025 and Scotsman Guide Top Originator, runs a soft credit check first so there’s no hard inquiry on your credit report. Call 804-212-8663 or apply online. Duane Buziak NMLS #1110647.
