Buying a home in Gilroy and wondering how much cash you’ll need beyond your down payment? You are not alone. Closing costs can feel murky, especially when county fees, title charges, and lender requirements all stack up at once. In this guide, you’ll learn what buyers typically pay in Gilroy, how Santa Clara County norms can change your total, and how to estimate your costs with confidence. Let’s dive in.
What closing costs include
Closing costs are separate from your down payment. A practical rule of thumb is to budget about 2% to 5% of the purchase price for closing costs. Your actual number depends on your loan program, whether you pay points, property taxes and assessments, HOA fees, and local recording or transfer charges.
Your lender must provide a detailed Loan Estimate within three business days of application. The Closing Disclosure arrives before you sign and shows final line items. To understand these documents, review the Consumer Financial Protection Bureau’s guides to the Loan Estimate and Closing Disclosure.
Loan and lender fees
Origination and processing
Lenders may charge an origination fee, processing fee, and underwriting fee. Some lenders quote origination as a percentage of the loan amount, often around 0.5% to 1.0%, while others use flat fees. Expect these combined items to add up to several hundred to a few thousand dollars.
Discount points
Discount points are optional. One point typically costs 1% of the loan amount and lowers your interest rate by a lender-specific amount. Points increase cash to close and reduce your monthly payment, so compare the APR and ask for the break-even timeline on your Loan Estimate.
Third-party fees ordered by your lender
Most loans require an appraisal. In the Bay Area, a typical appraisal often ranges from about $500 to $1,200, with higher costs for complex or acreage properties. Your file may also include a credit report fee and small verification items like flood certification or tax service fees. Pest or termite inspections are common in California and are often a few hundred dollars, with payment handled by custom or negotiation.
Title, escrow, and recording
Title insurance and escrow services
Title and escrow companies handle the transfer, prepare the preliminary title report, insure title, and coordinate documents and disbursements. When you have a mortgage, the lender’s title insurance policy is required. An owner’s title policy is recommended, and who pays for it varies by local custom and negotiation. Combined title and escrow fees typically run from several hundred to a few thousand dollars depending on price and fee schedules.
Recording and transfer taxes
The county records your deed and mortgage and charges recording fees. Documentary transfer taxes may apply at the county level and sometimes at the city level. Gilroy is in Santa Clara County, so you should verify both county and city items for the specific property address. Your escrow officer will calculate the exact amounts, and you can also review requirements with the Santa Clara County Clerk-Recorder and the City of Gilroy.
Prepaids and impounds in Santa Clara County
Property taxes in California include about a 1% base tax on assessed value under Proposition 13, plus voter-approved local assessments or special taxes. In Santa Clara County, many properties include these additional assessments, which affect your monthly escrow and the initial reserves collected at closing. To see how taxes are structured locally, consult the Santa Clara County Assessor.
At closing, you may prepay one year of homeowners insurance and fund your initial impound account for taxes and insurance. Lenders often collect a couple of months of reserves, but the exact number varies. If the property is in an HOA, plan for HOA move-in and transfer fees, prepaid dues, and document fees that can add a few hundred dollars.
Prorations and inspections
Escrow will prorate property taxes, HOA dues, and certain utilities or assessments at closing. Depending on timing and whether the seller has paid bills in advance, prorations can either lower or increase your cash due. Most buyers also pay for a general home inspection and, if needed, specialty inspections for roof, pest, well, or septic. These are separate from lender-required items and typically range from a few hundred to over a thousand dollars depending on scope.
Local factors in Gilroy that move totals
- HOA prevalence. Many planned communities and condos have HOAs with transfer or move-in fees. Budget for association documents, transfer processing, and potential prepaid dues.
- Who pays what. In Santa Clara County, the split for items like the owner’s title policy and escrow fees is set by local custom and negotiation. Ask your agent and escrow officer what is typical for your specific offer.
- Property tax details. Special assessments or parcel taxes increase your annual bill and the initial impound deposit at closing. Request the current tax bill and preliminary title report early.
How much to budget
Use these quick rules of thumb to estimate your cash needs before you receive your Loan Estimate and Closing Disclosure:
- Total closing costs: about 2% to 5% of the purchase price, excluding your down payment.
- Lender and third-party loan costs: roughly 0.5% to 1.5% of price, or several hundred to a few thousand dollars.
- Title, escrow, and recording: several hundred to a few thousand dollars depending on price and fee schedules.
- Prepaids and impounds: often 1 to 3 months of property tax and insurance, plus the first year’s insurance premium.
- Transfer taxes: county and possibly city taxes are address-specific and can be material. Verify with escrow.
Sample estimate for a Gilroy purchase
Let’s look at an illustrative example for a purchase price of $800,000. Your actual figures will come from your Loan Estimate and Closing Disclosure, but this helps you frame the conversation.
- Lender and loan costs, plus appraisal and credit fees: about $2,500 to $8,000.
- Title, escrow, and recording: about $1,000 to $3,500.
- Transfer taxes: varies by jurisdiction. Confirm with title and the county or city schedule.
- Prepaids and escrow reserves for taxes and insurance: about $2,000 to $6,000 depending on the tax bill and insurance premium.
- Inspections and HOA-related items: about $500 to $2,000 based on property and HOA requirements.
A combined estimate could land around $7,000 to $20,000 for this example. Your numbers may be higher if you buy discount points, have larger prepaids, or if transfer taxes apply at the city level.
Cash now vs monthly payment trade-offs
- Paying points. Buying discount points raises your cash to close and lowers your interest rate. Ask for the APR, the cost per point, and the time to break even.
- Mortgage insurance. If your down payment is under 20% on a conventional loan, you may have monthly PMI. Some programs offer upfront or single-premium MI that changes your cash and payment mix.
- Seller credits. You can negotiate seller-paid closing costs up to lender program limits. Credits reduce cash to close but cannot exceed your actual allowable costs.
Your lender and escrow checklist
Use this checklist when you request estimates and plan your funds to close.
Ask your lender
- Provide a complete, itemized Loan Estimate within 3 business days of application.
- Show how many discount points lower the rate, the APR, and your break-even timeline.
- Clarify which fees are refundable if your loan does not close.
- Confirm whether impounds are required and how your initial escrow deposit is calculated.
- Outline PMI or mortgage insurance options and costs.
Ask the title and escrow company
- Estimate title and escrow fees and confirm who usually pays the owner’s title policy for Gilroy transactions.
- Detail any county or city documentary transfer taxes for the property address.
- Confirm deed and mortgage recording fees and any special requirements for your file.
Gather property-specific items
- Current property tax bill, any supplemental assessments, and any parcel taxes or Mello-Roos districts.
- HOA resale packet, transfer fees, required reserves, and any pending special assessments.
Negotiation and repairs
- Decide who pays for pest or termite inspections and repairs.
- Ask your lender about limits on seller-paid closing costs for your loan program before you write the offer.
Pre-close logistics
- Review the Closing Disclosure at least 3 business days before signing as required by CFPB rules.
- Verify wire instructions directly with your escrow company and use their security steps.
- Confirm the funding and recording timeline and when you will receive keys.
Need help tailoring these line items to a specific Gilroy property and loan program? Book a quick consult and bring your questions. When you are ready to run scenarios or negotiate credits, reach out to Erica Trinchero for local, step-by-step guidance.
FAQs
How much are buyer closing costs in Gilroy?
- Budget about 2% to 5% of the purchase price, excluding the down payment, then confirm with your Loan Estimate and Closing Disclosure.
Who pays transfer taxes for Gilroy homes?
- Responsibility depends on county and any city tax ordinances plus local custom and negotiation, so verify with your title company for the property address.
What title insurance do I need as a buyer?
- The lender’s policy is required when you have a mortgage; an owner’s policy is recommended and who pays it varies by local custom and negotiation.
Can the seller cover my closing costs?
- Yes, seller credits are common up to lender program limits and must be negotiated in the purchase contract and approved by your lender.
Will my lender require an escrow account for taxes and insurance?
- Many lenders require impounds for property taxes and homeowners insurance, and the initial deposit depends on payment schedules and lender policy.
