What Home Buyers in Virginia Pay at Closing: A Downsizer's Guide

The Recordation Tax: Virginia's Big Buyer Cost

The single largest tax a Virginia buyer usually pays is the recordation tax, set by state law at $0.25 per $100 of the deed amount (Va. Code § 58.1-801). Here is the detail many first-time Virginia buyers miss: for a financed purchase, the tax is charged twice. Once on the deed, based on the full purchase price, and once on the deed of trust, based on the loan amount.

• Example on a $500,000 home with a $400,000 loan: the state tax on the deed is about $1,250, and the tax on the deed of trust is about $1,000, for roughly $2,250 of state recordation tax before any local add-on.
• Local add-ons: Virginia cities and counties may add a local recordation tax of up to one third of the state rate (Va. Code § 58.1-814). Some Northern Virginia localities add even more for regional transportation funding. The exact total depends on where you close.
• Smaller loan, smaller tax: paying more cash down or buying a smaller home lowers the deed-of-trust portion of the tax, another quiet financial benefit of downsizing.

The grantor's tax of $0.50 per $500 (about 0.1%) is charged on the seller under state law (Va. Code § 58.1-802) and appears on the settlement statement, though who effectively pays it is negotiated. For the full seller-side picture, see our guide to what Virginia home sellers pay at closing.

Title, Settlement, and the Services Attached

• Title search, exam, and title insurance

  A title company or settlement attorney searches public records to confirm the seller can convey clear title, then issues owner's and lender's title insurance policies. Combined, this typically runs in the range of 0.5% of the purchase price. In Virginia the buyer usually selects the settlement agent, so shop rates before the contract is signed.

• Home inspection

  A general home inspection typically costs a few hundred dollars, with bigger-ticket add-ons like sewer scope, radon, well, or septic testing charged separately. For rural Virginia homes on wells and septic, those extra tests are often worth every dollar.

• Appraisal

  Your lender will order an appraisal to confirm the home's value, usually a few hundred dollars, paid at or before closing. For cash buyers this cost disappears.

Lender Fees and Prepaids

When you finance the purchase, expect loan origination fees, typically 0.5% to 1% of the loan amount, plus smaller charges for the credit report, underwriting, and processing. You will also prepay at closing the initial property tax and homeowners insurance escrow and any mortgage points you agreed to buy to lower your rate.

On a financed purchase, these lender fees, third-party services, and prepaids stack on top of the recordation tax, which is why the 2% to 5% total guidance is more reliable than listing any single fee. Every buyer should request a Loan Estimate from their lender within a few days of applying; it itemizes almost every number above before you commit.

One planning tip for downsizers: sellers in slower markets often agree to a contribution toward your closing costs, and in Virginia that credit can offset your recordation tax directly. Your agent can shape the offer strategy, and your lender can tell you the exact cap your loan program allows.

How a Cash Purchase Changes the Math

Many Virginia downsizers sell first and buy their smaller home in cash. A cash deal still pays the deed recordation tax, title insurance, and settlement fees, but it eliminates the second recordation tax on the deed of trust, lender fees, appraisal, and escrow prepaids. That is a meaningful savings, and it is one reason the sell-first path is so popular in 55+ communities and condo purchases.

Run the comparison before you commit: the equity freed by selling your larger home, minus the taxes and costs on both sides of the transaction, tells you how much you truly have to work with. Our guide to using home equity in retirement and the cost of staying vs. moving walk through both directions of that math.