How Much Are Closing Costs in Colorado?

Closing costs are one of those things that can blind side us a bit when purchasing a home. 

It’s not that we don’t know closing costs exist, but it’s common for first-time homebuyers to underestimate how much money they’ll actually need to hand over for this inconvenient, but necessary, expense.

If you plan to buy a home in Colorado, it’s important to factor closing costs into the equation. How much are closing costs in Colorado? Does the buyer or the seller pay? Can you get around any of the closing costs?

The more informed and prepared you are, the less of a sting closing costs will make to your home buying journey. Here’s everything you need to know.

Get help with your down payment and closing costs in Colorado

You may have heard about down payment assistance programs available to first-time homebuyers, but did you know many of these programs also let you use the money to pay closing costs? 

Disclaimer: This article is for informational purposes only and should not be considered as legal or financial advice. Please consult an attorney, mortgage lender, or CPA for guidance on your specific situation.

Note: Throughout this article, when we list home costs, we use average home values as of May 31, 2023. We base closing cost data off of an aggregate of information from Closing Corp, Zillow, the Consumer Financial Protection Bureau, and the Stewart Rate Calculator. 

How much are closing costs in Colorado?

Closing costs for a buyer in Colorado average 1.3% of the home’s price. The average home in Colorado costs $549,807. Based on this number, closing costs in Colorado average $7,147. Your closing costs may be more or less, depending on several factors including the value of your home, local taxes, and lender points.

As with any state, home prices (and the associated closing costs) vary depending on the area in which you buy. Below, we’ve listed average closing costs for Denver and Colorado Springs, to give you more specific information and show you how closing costs can vary.

Average closing costs in Denver, Colorado

According to the Stewart Rate Calculator, an estimate of closing costs in Denver, Colorado comes in at 1.33% of the home’s closing price. The average home cost in Denver is $579,471. At this price, closing costs are around $7,728.95. 

Closing costs in Denver are slightly higher than the state average of 1.3%, largely due to a higher property tax rate, a percentage of which is usually prepaid by the buyer at closing.

Average closing cost in Colorado Springs, Colorado

The average home price in Colorado Springs is $456,017. An estimate of closing costs in Colorado Springs, Colorado comes in at 1.26%, according to the Stewart Rate Calculator. Based on these numbers, closing costs for an average priced home are around $5,758. 

A lower property tax rate is one of the reasons the closing cost percentage is lower than Denver.

Read more: Curious about the best neighborhoods in Denver for families? Or maybe Colorado Springs? Check out our lists of top choices for each city. 

What is included in Colorado closing costs?

There are a number of different line items included in closing costs for both buyers and sellers in Colorado. Some of these aren’t mandatory, but many are. Here’s a breakdown of everything that could be included in your closing costs in Colorado.

Closing costs paid by buyer

Buyers in Colorado are usually responsible for these closing costs.

Colorado real estate transfer tax and recording fee

Most, but not all, states impose a real estate transfer tax. Colorado is one of the states that does. The Colorado real estate transfer tax is required on every home sale in the state. Real estate transfer tax revenues cover the costs of record keeping and other real estate administration. 

Colorado’s real estate transfer tax and recording fee is currently .02% of the home’s sale price and the recording fee is roughly $100. 

Loan origination fees

Loan origination fees cover the lender’s costs for allocating money to your loan. These fees help pay loan officers and any other employees who work on your loan. Loan origination fees range from about .5% to 1% of the total loan costs. For our calculations, we used a .5% fee.

Credit report fee

When you apply for a mortgage loan, the lender does a credit check. If there’s a fee for pulling your credit report, and there usually is, it gets added to the closing costs. The cost for a credit report is nominal, usually around $50. 

Title search and title insurance fees

Title search fees cover the costs of filing sale transaction records in the public archives. Title insurance protects you, the seller, and the lender from financial losses caused by mistakes in the title filing process or problems with the title.

In Colorado, the title search fee is $310 and the title insurance fee is $744.

Appraisal and home inspection

Appraisals and home inspections are not always required. However, most home sales involve an appraisal and home inspection because they provide useful information for closing the sale. Some jurisdictions require an appraisal, inspection, or both.

Most of the time, appraisals and home inspection fees range in the hundreds of dollars, unless there are extenuating circumstances that increase the cost. This is a flat fee, not based on a percentage of the home price. 

For this article, we’ve allocated $500 for these costs, which is an average for Colorado.

Prorated interest

At the time of closing, you prepay the interest on your loan through the end of the current month. This includes paying for interest on the day you close. For example, if you close on the 11th of August, you pay 21 days of prorated interest. 

Homeowner’s insurance 

The first payment on your homeowner’s insurance is due as soon as the sale closes, so this first payment typically gets wrapped into the closing costs. That way, your home is insured as soon as you get the title. In some cases, you’ll be asked to pay for a few months in advance.

The amount you pay for homeowner’s insurance depends on the insurance carrier you choose, so it’s worth shopping around. For our calculations, we included three month’s worth of insurance at .033% of the total home cost.

Property taxes (prepaid)

When you buy a home, your property taxes are paid monthly along with your mortgage payment. However, to make sure you are up-to-date from the get go, most lenders require you to pay a few months in advance. This is included in closing costs. 

For our closing cost estimates, we included three months of prepaid property taxes. Property tax rates vary, but the average rate for Colorado is .6%. Assuming you pay three months worth of property taxes at closing, this amounts to .15% of your home’s value paid toward property taxes at the time of closing. 

Private mortgage insurance (if applicable)

Like your homeowner’s insurance, the first payment on your private mortgage insurance (PMI) is due as soon as the sale closes. If your lender requires PMI (usually the case if your down payment is less than 20%, this payment gets included in the closing costs. For our calculations, we based our numbers on a 20% down payment, so we didn’t include PMI in our calculations. 

Discount points (if applicable)

Discount points are an optional closing cost, but they are a smart choice for many home buyers. Discount points are money you pay upfront at closing in exchange for a lower interest rate on your mortgage loan. If you intend to keep your loan for a long period of time, this can save you a significant amount of money in the long run.

For one discount point, you pay 1% of the total loan amount at closing. A total of four discount points is generally the maximum a lender will allow, but this is not set in stone. The amount of interest rate reduction you get for each point depends on your lender as well as the type of loan.

Attorney fees 

Attorney fees are not part of every home sale. You only have to pay for an attorney if you need one to complete the transaction or if something goes wrong in the sale. If there are attorney fees to pay, they usually get lumped in with the rest of the closing costs.

Survey fee

In many cases, the property will already be surveyed and you won’t have to pay any survey fee. If there is a need to survey the property, though, the fees are part of your closing costs.

Closing costs paid by seller

Realtor commissions

This is the largest closing cost line item. The standard realtor commission is 6%, split between the buyer’s agent and the seller’s agent, although these fees can sometimes be negotiated down. 

Traditionally, the seller pays realtor commissions. That being said, this cost usually gets passed on to the buyer by way of a higher sale price on the home (to cover those costs). So if you are buying a home and your realtor is open to negotiating a lower commission, it might be to your benefit to pursue it. 

Title transfer fees

Once the sale is complete, the home title gets transferred from the seller to the buyer. The title transfer fees cover the cost of this transfer. This is another closing cost item usually paid by the seller.

Escrow fees

Escrow fees pay for services from the title company and escrow company. These companies conduct the sale closing and help distribute money from the sale to the appropriate recipients. The seller usually pays escrow fees. 

Homeowners association transfer fees (if applicable)

If you buy a home within a homeowner’s association (HOA), there are fees associated with preparing new HOA documents and transferring ownership information. In most cases, the seller pays these fees.  

Outstanding property taxes (if applicable)

If the seller owes any property taxes at the time of sale, they are responsible for paying these off at the time of closing. 

Does the buyer always pay closing costs in Colorado?

Like most states, home buyers in Colorado are responsible for paying the majority of the closing cost items, as we listed above. But considering the standard 6% realtor commission paid by the seller, it is the seller who usually pays the largest amount of money at closing. 

Also, as a buyer you can sometimes negotiate to have the seller cover additional closing costs, so you may be able to get some of these costs off your plate.

How can I get help with my closing costs in Colorado?

These are some pretty big numbers. The good news is that there are ways to get help with your closing costs in Colorado, or to otherwise reduce or offset the costs so you avoid paying them all out of pocket. 

Offsetting closing costs

First, many of your closing costs can be negotiated. Not negotiated away, but you can sometimes negotiate for the seller to pay some of the closing costs, such as realtor commissions.

Just bear in mind that if you want the seller to cover closing costs, you’ll likely have to make other concessions on your end. Most sellers won’t pay closing costs for free, and they can reject your offer if they feel you’re asking too much.

Your real estate agent can help you strike a balance between getting some of your closing costs covered and still making a strong offer.

Using down payment assistance for closing costs

Down payment assistance is another option for getting help with your closing costs. Many down payment assistance programs — whether they’re grants, loans, or deferred payment loans — are flexible about how you use the assistance funds. 

This means you can often pay closing costs with down payment assistance, if you decide that’s the best option for your specific circumstances.

Just be careful to read the fine print, because not all down payment assistance programs allow you to use the money to cover closing costs.

Ready to get started? Stairs can help you find out what down payment assistance programs you qualify for and connect you with a trusted lender familiar with those programs. 

Learn more about down payment assistance in Colorado. 

What is the most expensive part of closing costs?

In most cases, the most expensive part of closing costs are the realtor commissions. The good news is that realtor commissions are one of those closing costs which you can negotiate to have paid by the seller. If you negotiate on just one closing cost, negotiate on the realtor commission. 

Also, it’s worth noting that having the seller cover realtor commissions isn’t the only way to reduce this closing cost. A typical realtor commission rate is 6%, split evenly between the buyer’s agent and the seller’s agent. But this percentage isn’t set in stone. You can often negotiate with the real estate agents to reduce their commission rates.

Buying a home in Colorado with down payment assistance

Although there are ways to negotiate some closing costs and avoid others, the best way to pay less out of pocket for closing costs is to get down payment assistance. You can often use down payment assistance funds to cover some or all of your closing costs.

Believe it or not, the most challenging thing about getting down payment assistance is finding out which programs are available. The information tends to be buried in the back alleys of the internet. Until now. 

Stairs matches your information up with a huge database of loan options offered by trusted lenders. You get a targeted list of loans and any down payment assistance programs for which you qualify, making it easy to compare down payment assistance options side-by-side, apples-to-apples.

You also get access to knowledgeable lenders who understand the nuances of your specific down payment assistance program, so you can reduce the headaches of buying a home and ultimately get the most benefits possible.

Learn more about your down payment assistance options.