Buying a home in Minneapolis comes with a big question: how much cash will you need at the closing table beyond your down payment? You want a clear number, not a surprise. The good news is that closing costs follow a predictable pattern once you know the pieces and local norms in Hennepin County. In this guide, you’ll learn what fees to expect, who typically pays what in Minnesota, and how to estimate your cash to close with confidence. Let’s dive in.
What closing costs cover
Closing costs are the one-time fees and prepayments you make to get your loan and transfer ownership. As a budgeting rule of thumb, buyers often plan for about 2% to 5% of the purchase price in closing costs, not including your down payment. Your lender will confirm your exact figures.
Loan costs (lender fees)
- Origination or lender fee for processing and underwriting (sometimes 0.25% to 1% of the loan).
- Discount points if you choose to buy down your interest rate (one point equals 1% of the loan).
- Application, processing, and underwriting fees.
- Credit report fee, typically a small charge.
- Rate lock or lock extension fee, if applicable.
These appear in the Loan Estimate and Closing Disclosure under Loan Costs.
Third-party services
- Appraisal, commonly several hundred dollars depending on property and complexity.
- Home inspection(s) you select, usually paid out of pocket before closing. Specialty inspections are extra.
- Survey, if required by the lender or requested by you.
- Title search and settlement/closing services provided by a title company or attorney in Minnesota.
Title and recording fees
- Lender’s title insurance policy, usually required by the lender.
- Owner’s title insurance policy, recommended and negotiable based on local custom.
- Recording fees assessed by the Hennepin County Recorder to record the deed and mortgage.
Title insurance premiums are based on price and loan amount. Recording fees are set by the county and can change, so your title company will estimate them.
Prepaids and escrow deposits
- Homeowner’s insurance premium, often the first year collected at closing.
- Prepaid interest from your closing date to month-end.
- Property tax prorations and initial escrow deposits for taxes and insurance, including a permitted two-month cushion under federal escrow rules.
These prepaids and deposits can be a large share of your cash to close.
Other items
- HOA move-in or transfer fees, if applicable.
- Mortgage insurance costs, such as upfront FHA mortgage insurance or the VA funding fee when applicable. Some programs allow these to be financed.
Minneapolis and Hennepin County details
- Property taxes are typically prorated at closing so the seller covers taxes up to the closing date, and you cover your share going forward. Your title company will use Hennepin County tax records and the seller’s statements to calculate accurate amounts.
- Recording fees are set by the Hennepin County Recorder and cover recording the deed and the mortgage. Amounts change periodically, so your title company will quote current figures.
- In Minnesota, closings are often handled by a title company or an attorney. The settlement or closing fee varies by provider.
- Local customs are negotiable. Minnesota purchase agreements include lines that allocate fees. Always confirm who pays what in your signed contract.
Who pays what in Minnesota
While many items are negotiable, here are common practices in our area:
- Common buyer-paid items: lender fees, appraisal, credit report, buyer’s inspections, lender’s title policy, survey if required, recording of the mortgage, and your share of prorated taxes after closing.
- Common seller-paid items: real estate commission, unpaid taxes through the closing date, and in some cases the owner’s title policy. The owner’s policy is negotiable and varies by local custom and contract.
- Seller credits: You can request seller-paid buyer closing costs, subject to your loan program’s limits. Conventional loans often allow up to 3% with less than 10% down, up to 6% with 10% to 25% down, and up to 9% with 25% or more down. FHA has a typical 6% cap, and VA has its own rules for concessions. Your lender will confirm current limits and which items are eligible.
Estimate your cash to close
Use this simple framework to build your number. Your lender’s Loan Estimate (LE) is a great place to start, and your Closing Disclosure (CD) will be final.
- Cash to close = Down payment + Closing costs + Prepaids + Initial escrow deposit − Seller credits − Earnest money − Other credits
Here is an example to show how the math works:
- Purchase price: 400,000
- Down payment: 10% = 40,000
- Estimated closing costs: 3% = 12,000
- Prepaids: 2,000
- Initial escrow deposit: 3,000
- Earnest money already paid: 5,000
- Cash to close = 40,000 + 12,000 + 2,000 + 3,000 − 5,000 = 52,000
Your figures will vary based on your loan, price point, and closing date. Ask your lender to run itemized estimates early.
Required disclosures and timing
- Loan Estimate: Your lender must provide an LE within three business days of your completed application. It outlines loan terms and estimated closing costs.
- Closing Disclosure: Your lender must provide the CD at least three business days before closing. It is your final accounting of costs and credits.
- Escrow rules: Lenders may collect an initial deposit and a cushion of up to two months for taxes and insurance in your escrow account.
Compare your LE and CD line by line. Ask questions right away if anything looks different than expected.
Ways to manage or reduce costs
- Negotiate seller credits in your offer, aligned with your loan program’s limits.
- Compare lenders on both interest rate and total fees, including origination and discount points, not just the monthly payment.
- Time your closing date to manage prepaid interest, since closing near month-end can reduce that line item.
- Ask your lender for scenarios with and without discount points so you can weigh total cash to close versus long-term interest savings.
- Clarify who pays the owner’s title policy and settlement fee in your purchase agreement. These are negotiable.
Buyer checklist for Minneapolis
- Request your Loan Estimate within three business days of application and review it carefully.
- Ask for itemized figures for lender fees, discount points, appraisal, credit report, title insurance, recording fees, prepaid interest, and initial escrow deposit.
- Confirm seller credits in writing and make sure they appear in your purchase agreement.
- Decide who pays for the owner’s title policy and settlement fee, and note the allocation in the contract.
- Verify your earnest money credit and how it will apply on the CD.
- Line up your homeowner’s insurance early so the premium and coverage are ready for closing.
- Budget for out-of-pocket inspections and any immediate repairs, separate from your closing costs.
- Ask your lender for a draft CD as early as possible, then review the final CD at least three business days before closing.
Final thoughts and next steps
Closing costs do not have to be confusing. Once you understand the categories, local customs, and your loan’s rules, you can build a clear cash-to-close plan and avoid last-minute surprises. The right strategy may include targeted seller credits, smart loan structuring, and careful timing.
If you want a line-by-line walkthrough of your Minneapolis closing costs and a plan to minimize them, reach out to The McNamara Group. We will coordinate with your lender and title team, explain each item in plain English, and help you close with confidence.
FAQs
What are typical buyer closing costs in Minneapolis?
- Many buyers budget 2% to 5% of the purchase price for closing costs, not including the down payment. Your lender will provide precise figures for your loan.
Can a seller pay my closing costs in Minnesota?
- Often yes, within loan program limits for seller concessions. Your lender will confirm allowable amounts and eligible items for your specific loan.
Are inspections included in closing costs?
- Usually no. You typically pay inspectors directly before closing, and these costs may not appear on the Closing Disclosure.
How are Hennepin County property taxes handled at closing?
- Taxes are prorated so the seller covers taxes up to the closing date. Your lender may also collect several months of tax escrow at closing.
Who pays for title insurance in Minnesota?
- The lender’s title policy is typically a buyer cost. The owner’s policy is common and negotiable by contract, with local custom varying by area.
When will I see my final numbers before closing?
- Your lender must provide the Closing Disclosure at least three business days before closing. Review it and ask questions right away if anything changes.
