Are you trying to figure out how much cash you’ll need to close on a home in Birmingham? You’re not alone. Getting a clear picture before you tour homes can make your search smoother and your offers stronger. In this guide, you’ll learn what buyer closing costs include, typical ranges for Birmingham and Oakland County, who usually pays what in Michigan, and how your loan type changes the numbers. Let’s dive in.
What closing costs include
Closing costs are the non–down payment funds you pay at the settlement table. For buyers in Birmingham, they typically fall into four buckets:
- Loan-related fees: lender origination, underwriting, rate lock, credit report, and optional discount points if you buy down your rate.
- Third-party services: appraisal, title search, closing/escrow fee, and lender’s title insurance. Optional items like a home inspection, survey, or pest inspection may also apply.
- Prepaids and reserves: prepaid interest from your closing date to your first payment, plus the initial escrow deposit for property taxes and homeowners insurance (often 2–3 months’ worth).
- Government and recording charges: recording fees and any local filings, plus transfer taxes if applicable and as negotiated in the purchase agreement.
You may also choose to purchase an owner’s title insurance policy. It’s a one-time premium that protects your equity. In many local transactions, buyer and seller allocate some of these items by contract, so ask your agent what is customary for your specific deal.
Who pays what in Michigan
In Michigan, items tied to the mortgage are usually paid by the buyer when financing, including origination, appraisal, and the lender’s title policy. Sellers commonly pay real estate commissions and their own title charges. An owner’s title policy is optional for buyers and, in some local deals, sellers may cover it, but practices vary by market and are negotiable.
Transfer taxes and recording fees can be allocated between buyer and seller in the purchase agreement. Because customs can shift by neighborhood and market conditions, confirm your allocations with your agent and lender before you write an offer.
Typical Birmingham buyer totals
Most buyers in the U.S. can expect total closing costs of about 2%–5% of the purchase price, not counting the down payment. In Birmingham and other higher-value Oakland County suburbs, your total may trend toward the middle or upper end of that range due to property values and how title and insurance costs scale.
Common cost ranges
Here are typical ranges buyers in Birmingham see. Your actual numbers will come from your lender and title company.
- Lender and third-party loan charges: 0.5%–1.5% of the price
- Title insurance (lender’s policy): often 0.2%–0.6% of the loan amount; owner’s policy is additional and optional
- Appraisal: $400–$800
- Home inspection: $350–$700
- Title/closing/escrow fee: $300–$1,000
- Recording and local filings: $50–$500
- Survey if required: $300–$1,000+
- Miscellaneous (courier, HOA transfer, flood determinations, pest): $50–$500
- Prepaids and escrow deposits: varies widely based on taxes, insurance, and timing of closing
Example: $400,000 purchase
- Estimated buyer closing costs: 2%–4% → about $8,000–$16,000
- This excludes your down payment and reflects ballpark ranges for lender fees, title, appraisal, inspections, prepaids, and government charges.
Example: $700,000 purchase
- Estimated buyer closing costs: 2%–4% → about $14,000–$28,000
- Higher prices may increase title-related fees and escrow deposits, so plan on the middle to upper end of the range.
These are planning figures only. Your actual cash to close depends on your loan program, chosen title company, local tax escrows, and any negotiated seller credits.
Michigan and Oakland County fees
- Recording and transfer taxes: Michigan has state-level transfer and filing requirements, and counties have their own recording charges. Who pays what is often negotiated. Verify current rates and payer allocation with the Michigan Department of Treasury and the Oakland County Register of Deeds.
- Property tax proration: In Michigan, property taxes are commonly prorated at closing based on the settlement date. The exact method follows county or township practice and your purchase agreement. Check the Oakland County Treasurer or your local tax office for calendars and millage details.
- HOA and condo items: Some Birmingham condo and townhome communities require transfer fees, estoppel letters, or other documents. Request HOA documents early so you know what to expect.
How your loan type changes costs
Your financing drives which fees apply, how much you can ask the seller to contribute, and whether you can finance certain upfront costs.
Conventional loans
- Private mortgage insurance (PMI) applies if your down payment is under 20%. You can structure PMI monthly or as a single premium.
- Seller concessions are allowed but capped depending on down payment and program rules. Ask your lender for current limits.
FHA loans
- Up-front mortgage insurance premium (UFMIP) applies and can often be financed into the loan.
- Monthly mortgage insurance applies for most FHA loans.
- FHA typically allows higher seller concessions, often up to 6% of the price, subject to current FHA guidance.
VA loans
- A one-time VA funding fee usually applies and can be financed. It may be waived for qualifying disabled veterans.
- No monthly mortgage insurance.
- VA allows sellers to pay certain closing costs, and in some cases the funding fee, within VA rules.
USDA loans
- A guarantee fee applies, with options to finance up-front and pay an annual fee.
- Seller concessions are allowed up to USDA limits. Confirm the current cap with your lender.
Cash purchases
- You avoid loan-related fees and lender’s title insurance.
- You still may pay for an owner’s title policy, recording fees, and any inspections or surveys you choose.
Practical tip: Programs that allow higher seller concessions can reduce your cash due at closing. Financing certain fees lowers cash to close but increases the long-term cost of the loan. If you are considering discount points to buy down your rate, ask your lender for the break-even timeline.
Ways to lower your cash to close
- Negotiate seller concessions: Request credits to cover eligible buyer closing costs and prepaids. Your loan type will set the maximum allowed.
- Shop your loan: Compare Loan Estimate quotes from multiple lenders and ask for line-item details on origination versus third-party charges.
- Price out title and settlement: Title and closing fees vary by company. Small differences add up.
- Time your closing: Closing near month-end can reduce prepaid interest, depending on your payment schedule.
- Consider PMI structure: With conventional loans under 20% down, compare monthly PMI versus single-premium options to see which fits your cash flow.
Your step-by-step budget plan
Pre-shopping
- Estimate closing costs at 2%–5% of your price range. Add your down payment to plan total cash needed.
- If you’re targeting higher-priced Birmingham homes, lean toward the middle to upper end of the range.
Before touring and offering
- Get pre-approved. Your lender must provide a Loan Estimate within three business days of application.
- Ask for sample Loan Estimates across loan types you’re considering to compare cash-to-close.
- Call a local title company for an Oakland County estimate of title premiums, closing fees, and recording charges.
Preparing for closing
- Review your Closing Disclosure at least three business days before settlement and compare it to your Loan Estimate.
- Confirm who pays transfer taxes, owner’s title policy, and HOA transfer fees in your purchase agreement.
- Verify tax prorations and escrow deposits so you are not surprised by prepaids.
Final thoughts
Planning your cash to close is one of the smartest steps you can take before shopping in Birmingham. Start with the 2%–5% rule of thumb, then refine your number with a lender quote and a title fee estimate for Oakland County. With the right loan structure, clear allocations in your offer, and strategic timing, you can reduce your upfront costs and move forward confidently.
If you want a local, line-by-line estimate for a specific Birmingham price point, reach out to Ryan Nelson. Our family-led team pairs neighborhood knowledge with clear, proactive guidance so you can buy with confidence.
FAQs
How much cash do Birmingham buyers typically need at closing?
- Plan for closing costs of about 2%–5% of the purchase price, plus your down payment. The exact figure depends on your loan program, title and lender fees, prepaids, and any seller credits.
In Michigan, who usually pays transfer tax and recording fees?
- Allocation is often negotiated in the purchase agreement. Verify current transfer tax rates with the Michigan Department of Treasury and recording charges with the Oakland County Register of Deeds.
Can sellers in Birmingham pay some of my closing costs?
- Yes, seller concessions are common and can cover eligible buyer costs and prepaids. The allowed amount depends on your loan program’s concession limits.
Do I have to buy an owner’s title insurance policy?
- No. Your lender will require a lender’s title policy if you finance, but an owner’s policy is optional. Many buyers choose it to protect their equity.
When will I know my exact cash to close?
- After loan application, your lender must provide a Loan Estimate within three business days. Your final Closing Disclosure arrives at least three business days before settlement and shows the exact amount to bring to closing.
