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by Reginald Butler, Jr.
Quick answer: On a $400,000 home in Prince George’s County with a conventional loan and no discount points, plan on roughly $13,500 to $20,000 in closing costs on top of your down payment. Call it $16,500, or a bit over 4%. At 3% down, that means bringing about $28,500 to the table. At 5% down, about $36,500. Prince George’s is among the most expensive counties in the country to close in, and the reason is transfer and recordation taxes.
Why is Prince George’s County so expensive to close in?
Three separate taxes stack on every transaction. Maryland charges a state transfer tax of 0.5%, which is $2,000 on a $400,000 sale. Prince George’s County charges a county transfer tax of 1.4%, which is $5,600. And the county recordation tax runs $2.75 per $500 of consideration, or 0.55%, which is $2,200.
That is $9,800, or 2.45% of the purchase price, before a single lender or title fee. For comparison, Montgomery and Anne Arundel county transfer taxes are 1.0% and Charles County is 0.5%.
One piece of good news: your purchase mortgage is not taxed again. Under Tax-Property § 12-108(i), a purchase money deed of trust is exempt from recordation tax as long as it recites purchase money and is executed and recorded within thirty days of the deed. So you pay recordation once, on the price.
Under Real Property § 14-104(a), the Maryland default is that buyer and seller split these 50/50 unless the contract says otherwise. So your customary share is about $4,900.
What is the first-time buyer break, and why does it disappear?
This is the single biggest source of surprise at the closing table, and I want you to understand it before you write an offer.
Maryland Tax-Property § 13-203(b) cuts the state transfer tax in half for qualifying first-time buyers, to 0.25%, and requires the seller to pay all of it. That part is statutory. It cannot be negotiated away. You save $1,000.
Real Property § 14-104(c) goes further and defaults the county transfer tax and recordation tax to the seller for first-time buyers — but only, in the words of the statute, “unless there is an express agreement” otherwise. And the Maryland REALTORS® First-Time Homebuyer Addendum, which is used on a great many contracts, routinely shifts it back to a 50/50 split.
So a buyer who reads about the first-time buyer exemption and budgets accordingly can arrive at closing owing nearly $4,000 more than expected, because a checkbox on an addendum moved it. Read that addendum. Ask about it during negotiation, not after.
To qualify you must never have owned residential real property in Maryland as your principal residence, you must occupy the home, and every grantee on the deed has to qualify.
What do the lender fees actually run?
Origination runs from zero to 1% of the loan, up to about $4,000, though many lenders now charge nothing here. Underwriting is typically $300 to $900, processing another $300 to $900, the credit report $35 to $100, and the appraisal $500 to $750. Assuming no discount points, a realistic total is $1,500 to $3,000. If a lender quotes a rate well below everyone else’s, check whether they are charging points to buy it down, because that is cash out of your pocket on closing day.
What about title and settlement?
Maryland is a file-and-use state, so title rates vary between companies and it pays to compare. Expect a lender’s policy of $1,000 to $1,600, an owner’s policy of $1,600 to $2,600, a settlement fee of $600 to $1,200, a title exam of $200 to $400, and recording fees of $150 to $250. Total, $2,500 to $5,500.
The owner’s policy is technically optional. Buy it anyway. It is a one-time premium protecting your equity against a defect in the chain of title.
Prepaids and escrows: the category nobody budgets for
This is where most buyers get caught. At closing you prepay interest from your closing date to the end of the month. At roughly 6.67%, a $388,000 loan accrues about $71 a day, so a mid-month closing costs you about $1,050 in prepaid interest.
That gives you the cheapest lever you actually control. Closing on the 28th instead of the 3rd can save you eight hundred dollars or more of cash at the table.
You will also fund an escrow account, typically three months of property taxes and two to three months of homeowners insurance, and you pay the entire first year of insurance up front. In unincorporated Prince George’s County the FY2026 combined rate is $1.4440 per $100 of assessed value, which is about $5,776 a year on a $400,000 assessment. Inside Bowie city limits the combined rate is $1.7080, or roughly $6,830 a year, so confirm the specific parcel rather than using a county average. Insurance for a $400,000 home in Maryland realistically runs $1,800 to $2,300 a year, since dwelling coverage tracks replacement cost rather than purchase price.
Altogether, prepaids and escrows land between $4,500 and $6,500, and can run higher if you close near a tax due date.
What do I have to pay before closing day?
Some of this money leaves your account weeks earlier. Earnest money in the DMV is typically about 1%, so $4,000, wired within days of ratification. It is credited back at closing, but you need it liquid now. Then inspections: general inspection $400 to $700, radon $100 to $200, termite $75 to $150, sewer scope $150 to $300. Roughly $1,100 to $1,900, and that money is gone whether or not the deal closes.
Can the seller just pay my closing costs?
Within limits, and the limits are the problem. On a conventional loan with less than 10% down, seller concessions are capped at 3%, or $12,000. From 10% to 25% down the cap is 6%, above 25% it is 9%, FHA allows a flat 6%, and investment property is capped at 2%. Notice the trap: the buyer who most needs help is the one putting 3% down, and that buyer is capped at 3%, which does not cover a $16,500 bill. Concessions also cannot fund your down payment or reserves.
Frequently Asked Questions
What is the total cash I need at 20% down? About $80,000 down plus roughly $16,500 in closing costs, so approximately $96,500. Your earnest money counts toward that total rather than adding to it.
Is 3% to 5% a reliable rule of thumb for closing costs? It is a reasonable national range, but Prince George’s sits at the top of it, closer to 4% to 5%, because of the county transfer and recordation taxes.
Does Maryland have the highest closing costs in the country? Maryland is consistently among the highest, though published rankings disagree on the exact order and some 2026 analyses put Delaware first. Either way, budget as if you are near the top.
Can I roll closing costs into the loan? Not on a purchase, generally. You can sometimes take a lender credit in exchange for a higher interest rate, which reduces cash at closing and increases your monthly payment.
Want me to build you a line-by-line cash-to-close estimate for a specific price point and neighborhood before you start touring?
No pressure — just an honest conversation.
