Buyers prepare carefully for the down payment. The number that catches them off guard is everything else due at the settlement table — and in Philadelphia specifically, one line item towers over the rest.
Here's the line-by-line reality of what buyers pay at closing in Northwest Philadelphia and the bordering Montgomery County towns, with real numbers. If you read nothing else, read the transfer tax section: it's the biggest cost, it changed recently, and it differs by thousands of dollars depending on which side of the county line your new home sits on.
The Transfer Tax: The Big One
Pennsylvania charges a 1% realty transfer tax on every home sale, and each municipality adds its own local tax on top. This is where Philadelphia stands apart.
Philadelphia's total transfer tax is 4.578% of the sale price — 3.578% to the city plus 1% to the state. The city raised its portion from 3.278% effective July 1, 2025, so plenty of older articles (and older closing-cost estimates) are now wrong. It's one of the highest transfer taxes of any major city in the country.
Most of Montgomery County totals 2% — a 1% local tax plus the 1% state tax. That covers the townships on the other side of the Northwest Philadelphia line: Springfield Township (Wyndmoor and Flourtown), Upper Dublin (Oreland), and Cheltenham (Glenside).
By local custom, buyer and seller split the transfer tax 50/50. That custom is not law — both parties are jointly liable and the split is negotiable in the offer — but it's the standard starting point. Here's what the buyer's customary half looks like:
| Sale price | Buyer's share in Philadelphia (2.289%) | Buyer's share in Montgomery County (1%) | Difference |
|---|---|---|---|
| $300,000 | $6,867 | $3,000 | $3,867 |
| $400,000 | $9,156 | $4,000 | $5,156 |
| $500,000 | $11,445 | $5,000 | $6,445 |
| $700,000 | $16,023 | $7,000 | $9,023 |
This is the rare closing cost that's big enough to belong in your house-hunting math. A buyer choosing between Chestnut Hill (Philadelphia, 19118) and Wyndmoor (Springfield Township, 19038) is sometimes looking at homes a few blocks apart — and a five-figure swing in transaction costs at the same price point. It shouldn't drive the decision by itself; Philadelphia and Montgomery County also differ on property taxes, the city wage tax, and services, and those ongoing differences can outweigh a one-time tax. But you should know the number before you write the offer, not at the settlement table.
One more wrinkle: because the split is negotiable, it's also a lever. In a competitive situation, offering to pay the seller's share of the transfer tax is a meaningful sweetener that costs less than most price escalations. In a slower negotiation, asking the seller to cover more of it works the other direction.
Title Insurance
Pennsylvania title insurance pricing is more standardized than most states: rates are filed by the Title Insurance Rating Bureau of Pennsylvania (TIRBOP) and are all-inclusive, meaning the premium covers the title search, examination, and settlement services rather than itemizing them separately.
If you're financing, your lender requires a lender's policy. An owner's policy protects you, not the bank, and it's optional — but in Northwest Philadelphia I consider it close to essential. This housing stock is 80 to 140 years old. The chains of title are long, and estates, old liens, and decades-old paperwork irregularities are exactly what title insurance exists for.
As a planning number, expect roughly 0.5–0.7% of the purchase price — in the neighborhood of $2,500–$2,800 on a $400,000 home. Your title company can quote the exact filed rate for your price as soon as you're under contract, and you're free to choose your own title company.
Lender Costs, Prepaids, and Escrows
The rest of the settlement sheet breaks into three buckets:
- Lender charges. Origination fees, the appraisal (typically $500–$700), credit report, and underwriting fees. These vary by lender more than buyers expect, which is why the Loan Estimate exists — get one from at least two lenders and compare these lines specifically.
- Prepaids. Your first year of homeowners insurance, paid upfront at or before closing, plus per-diem mortgage interest covering the gap between your settlement date and your first full payment cycle.
- Escrows. Most lenders collect a cushion of property taxes and insurance at closing to fund your escrow account — commonly a few months of each, with the exact amount depending on your settlement date and the local tax calendar.
Budget roughly $4,000–$7,000 across these three buckets on a typical Northwest Philadelphia purchase, with the understanding that the escrow lines are timing-dependent.
Don't Forget the Money You Spend Before Closing
Two costs land during the transaction rather than at the table, and they belong in the same budget:
- Inspections. A general home inspection plus the add-ons that older homes here genuinely warrant — wood-destroying insect, radon, and a sewer scope — typically totals $800–$1,500 depending on scope. Here's what each inspection actually covers and why the sewer scope earns its few hundred dollars in this housing stock.
- Earnest money deposit. Not a cost — it's credited back to you at settlement — but it's cash you need available within days of an accepted offer, typically 2–5% of the price. More on how deposits fit into offer strategy here.
A Worked Example: $400,000, Financed
Illustrative numbers for a conventional purchase — your Loan Estimate will be the real version:
| Line item | Philadelphia (19119) | Springfield Twp (19038) |
|---|---|---|
| Transfer tax (buyer's customary half) | $9,156 | $4,000 |
| Title insurance (all-inclusive, owner's + lender's) | ~$2,700 | ~$2,700 |
| Lender charges (origination, appraisal, credit) | $1,500–$2,500 | $1,500–$2,500 |
| Homeowners insurance (year one) | $1,200–$1,800 | $1,200–$1,800 |
| Tax/insurance escrows + prepaid interest | $2,500–$4,500 | $2,500–$4,500 |
| Recording and miscellaneous fees | ~$400 | ~$400 |
| Estimated total (excluding down payment) | ~$17,500–$21,000 | ~$12,300–$15,900 |
Call it roughly 4.5–5.5% of the purchase price in Philadelphia and 3–4% in the Montgomery County townships, on top of your down payment.
Ways to Bring the Number Down
- Seller assist. The seller credits a negotiated amount toward your closing costs at settlement, in exchange for (usually) a somewhat higher purchase price. It converts cash-due-at-closing into financed dollars — useful when your constraint is cash, not monthly payment. Lenders cap seller assist based on loan type and down payment, so confirm your ceiling with your lender before writing it into an offer.
- Lender credits. Most lenders will trade a slightly higher interest rate for a credit against closing costs. Worth pricing out both ways.
- First-time buyer programs. PHFA offers down payment and closing cost assistance statewide, and Philadelphia has run its own first-time buyer assistance programs with funding cycles that open and close. Eligibility and funding availability change year to year, so check current status early in your search rather than assuming.
- After closing: file for the homestead exemption. Not a closing cost, but Philadelphia buyers should do this in their first months of ownership: the homestead exemption removes $100,000 of your home's assessed value from taxation, saving most owners about $1,399 a year at the current 1.3998% rate. It's a simple application with the city, due by December 1 to apply to the following year's bill. Montgomery County townships have their own, more modest homestead provisions through their school districts.
The Bottom Line
The transfer tax makes Philadelphia one of the most expensive places in the country to transact real estate, even while the homes themselves remain reasonably priced for a major-metro neighborhood of this quality. Budget for it from the start, know that the county line changes the math, and use the negotiable pieces — the tax split, seller assist, lender credits — deliberately rather than discovering them late.
If you're budgeting a purchase anywhere in Northwest Philadelphia or eastern Montgomery County and want to run your actual numbers — purchase price, loan type, township — reach out. The estimate is free and it'll be more accurate than any table on the internet, including this one.
I'm a REALTOR®, not a lender, title agent, or tax advisor. Rates and program details above are current as of June 2026 and do change — verify the specifics with your lender and title company for your transaction.
Sources: City of Philadelphia Department of Revenue — Realty Transfer Tax rate increase, PA Department of Revenue — Realty Transfer Tax, City of Philadelphia — Homestead Exemption.
Henry is a Philadelphia-based REALTOR® serving buyers and sellers in Northwest Philadelphia and Montgomery County, PA. Questions? Get in touch.
Frequently Asked Questions
How much are buyer closing costs in Philadelphia?
For a financed purchase in Philadelphia, plan on roughly 4.5–5.5% of the purchase price on top of your down payment. The single largest line is the buyer's customary half of the city's 4.578% realty transfer tax — about 2.29% of the price. The rest is title insurance, lender fees, the first year of homeowners insurance, and prepaid tax and insurance escrows. On a $400,000 home, that's typically in the $17,000–$21,000 range.
How much is the Philadelphia transfer tax in 2026?
The total realty transfer tax on a Philadelphia home sale is 4.578% of the sale price: 3.578% to the city (raised from 3.278% effective July 1, 2025) plus 1% to the Commonwealth of Pennsylvania. By local custom it's split evenly between buyer and seller — about 2.289% each — though the split is negotiable, not set by law.
Who pays the transfer tax in Pennsylvania — the buyer or the seller?
Legally, both parties are jointly liable, and the law doesn't dictate the split. By long-standing custom in the Philadelphia area, the buyer and seller each pay half. The split can be negotiated as part of the offer — in a buyer's market, asking the seller to cover more of it is a legitimate ask; in a competitive multiple-offer situation, offering to cover the seller's share can strengthen a bid.
Why are closing costs lower in Montgomery County than in Philadelphia?
The transfer tax. Most Montgomery County municipalities — including Springfield Township (Wyndmoor and Flourtown), Whitemarsh, Upper Dublin (Oreland), and Cheltenham (Glenside) — charge a 1% local transfer tax plus the 1% state tax, for 2% total. Philadelphia charges 4.578% total. On a $400,000 purchase with the customary 50/50 split, the buyer's share is about $4,000 in Montgomery County versus about $9,156 in Philadelphia — a difference of more than $5,000 on the same-priced house.
Is title insurance required in Pennsylvania, and what does it cost?
If you're financing, your lender will require a lender's title policy; an owner's policy is optional but strongly recommended, especially for older homes with long chains of title. Pennsylvania title insurance rates are filed with the state by the Title Insurance Rating Bureau of Pennsylvania (TIRBOP) and are all-inclusive, covering the search, examination, and settlement services. Expect roughly 0.5–0.7% of the purchase price depending on the price tier — get an exact quote from your title company early.
