Tennessee sets two closing costs by law: a realty transfer tax of $0.37 per $100 of the price or value, owed by the buyer, and a mortgage tax of $0.115 per $100 of the loan after the first $2,000, owed by the borrower. On a $1.5M Franklin home with a $1.2M loan that is $5,550 plus $1,377.70, or $6,927.70. Everything else, from title insurance to agent pay, is set by your contracts and quotes, so read each line rather than relying on a percentage.
At a glance
| Realty transfer tax | $0.37 per $100 of price or value, buyer liable |
|---|---|
| Mortgage tax | $0.115 per $100 of principal after the first $2,000, borrower liable |
| Collected by | County register of deeds at recording |
| Property tax year | January 1 to December 31, billed to the January 1 owner |
| Written buyer agreement | Required before touring since August 17, 2024 |
What Tennessee law sets, and what you can negotiate
Most closing costs on a Tennessee purchase are negotiated or quoted. Only two are set by statute, and both scale with price, which is why they matter more at $1M+ than on the $250,000 and $400,000 examples most calculators use.
The Tennessee Department of Revenue's recordation tax manual makes the buyer (the grantee) liable for the realty transfer tax, and the borrower liable for the mortgage tax. Both are collected by the register of deeds in the county where the deed and deed of trust are recorded; in Franklin, that is Williamson County. The register keeps a 5% commission of the recordation taxes it collects.
Everything else on the settlement statement is set by your purchase agreement, your loan, your title company or attorney, your HOA and your agent agreements. This guide takes each one in turn.
Each closing cost on a Tennessee purchase
Realty transfer tax
The transfer tax is $0.37 per $100 of the greater of the price paid or the property's value, on transfers of real property with certain exceptions. It is due on a cash purchase and a financed one alike. On a $1.5M home it is $5,550; on $3M it is $11,100. The statute is TCA 67-4-409.
Mortgage recordation tax
When a mortgage or deed of trust is recorded, Tennessee charges 11.5 cents per $100 of the principal debt, with the first $2,000 exempt. The debt excludes interest and collection costs. The lender collects it from the borrower and remits it, and it goes to the state only. A cash buyer pays none.
Recording fees
The register of deeds also charges fees to record the deed and deed of trust, paid at the same time as the two taxes. Fee amounts were not confirmed for this guide; your title company or closing attorney will list them.
Owner's title insurance policy
An owner's policy protects you against covered defects in title. Tennessee title insurance rates are filed with the state regulator. Who pays for the owner's policy is not fixed by law, and practice reports conflict for Middle Tennessee. Read the title clause in your purchase agreement and ask your closing attorney or title company before you sign.
Lender's title insurance policy
If you finance, the lender will require a policy that protects its loan. Who pays it is again a matter for the contract and the lender's terms; ask for a quote early.
Closing or attorney fee
A title company or real estate attorney prepares documents, handles funds and records the deed. Fees are set by the firm. Ask for the settlement fee, document preparation and any courier or wire charges in writing.
Lender fees and the appraisal
Origination, underwriting, rate-lock and appraisal charges come from your lender's quote. Above the Williamson County conforming limit of $1,029,250, you are in jumbo territory, where pricing and requirements vary more between lenders. The jumbo loans guide explains where that line falls on Franklin prices.
Inspections and surveys
Home inspection, specialist inspections (septic, well, roof, pool) and a survey are paid by whoever orders them, and the bills often come due before closing. Get quotes for the property type; acreage in Leiper's Fork or College Grove can need more than a suburban lot.
Prorated property tax
Williamson County taxes cover January 1 to December 31 and are billed to the owner of record on January 1, payable from the first Monday in October through February 28. Because the seller owns part of the year and the buyer the rest, the tax is usually prorated in the contract; check yours. On a $1.5M home inside Franklin and the Franklin Special School District, the 2026 bill is $8,412.38, about $23.05 per day. Rates by jurisdiction are in the Williamson County property tax guide.
Escrow deposits for taxes and insurance
If your lender escrows property tax and homeowner's insurance, it may collect several months of each at closing. The amounts depend on your loan and closing month; ask your lender for its escrow figures on the Loan Estimate.
HOA transfer and capital contribution fees
Ask the HOA or management company whether it charges a transfer fee when a home changes hands, and for the amount of that fee, any capital contribution, the dues and any planned special assessment, and check which party the contract assigns them to.
Agent compensation after the NAR settlement
Since August 17, 2024, an MLS participant working with a buyer must sign a written agreement with that buyer before touring a home, in person or by live video. The agreement sets out the services and how the agent is paid. Offers of buyer-agent compensation can no longer appear on the MLS. Sellers pay their listing agent under the listing agreement. Commission is negotiable, and no typical rate is stated here.
Seller concessions
A buyer can ask the seller to pay some closing costs as part of the offer. The seller can agree, counter or decline. Ask your lender whether it limits seller contributions on your loan before writing a request into an offer.
Who pays what: the law vs the contract
| Cost | Who Tennessee law makes liable | What actually decides it |
|---|---|---|
| Realty transfer tax | Buyer (grantee) | Statute; the contract can reallocate who funds it |
| Mortgage tax | Borrower; lender collects | Statute |
| Owner's title policy | No statutory payer | Purchase agreement; confirm with your closing attorney |
| Lender's title policy | No statutory payer | Purchase agreement and lender terms |
| Property tax for the year | January 1 owner is billed | Proration in the contract |
| Listing agent pay | None | Listing agreement |
| Buyer agent pay | None | Written buyer agreement and any offer terms |
| HOA transfer fees | None | HOA documents and the contract |
The table explains liability, not custom. Ask your agent and closing attorney how the standard Tennessee contract form you are signing allocates each item.
Closing costs on a $250,000, $400,000, $1M, $1.5M and $3M home
Tennessee's two statutory closing taxes scale with the price and the loan, so they are the one part of the bill you can calculate exactly before you have a single quote. The table assumes the price equals the property's value and an 80% loan (20% down). Title insurance, lender charges, the closing or attorney fee, recording fees, prepaid taxes, escrow and HOA charges are not included: they come from quotes, and no average for them was verified for this guide.
| Price | Transfer tax (buyer) | Loan (80%) | Mortgage tax (borrower) | State taxes total |
|---|---|---|---|---|
| $250,000 | $250,000 / 100 x $0.37 = $925 | $200,000 | ($200,000 - $2,000) / 100 x $0.115 = $227.70 | $1,152.70 |
| $400,000 | $400,000 / 100 x $0.37 = $1,480 | $320,000 | ($320,000 - $2,000) / 100 x $0.115 = $365.70 | $1,845.70 |
| $1,000,000 | $1,000,000 / 100 x $0.37 = $3,700 | $800,000 | ($800,000 - $2,000) / 100 x $0.115 = $917.70 | $4,617.70 |
| $1,500,000 | $1,500,000 / 100 x $0.37 = $5,550 | $1,200,000 | ($1,200,000 - $2,000) / 100 x $0.115 = $1,377.70 | $6,927.70 |
| $2,000,000 | $2,000,000 / 100 x $0.37 = $7,400 | $1,600,000 | ($1,600,000 - $2,000) / 100 x $0.115 = $1,837.70 | $9,237.70 |
| $3,000,000 | $3,000,000 / 100 x $0.37 = $11,100 | $2,400,000 | ($2,400,000 - $2,000) / 100 x $0.115 = $2,757.70 | $13,857.70 |
Closing costs on a $250,000 home in Tennessee
The transfer tax is $250,000 / 100 x $0.37 = $925. With 20% down the loan is $200,000, and the mortgage tax is ($200,000 - $2,000) / 100 x $0.115 = $227.70. The two state taxes total $1,152.70. A cash buyer owes the $925 transfer tax only. Everything else on the settlement statement depends on the lender, the title company or attorney and the contract, so ask for a Loan Estimate and a title quote rather than applying a national percentage.
Closing costs on a $400,000 home in Tennessee
The transfer tax is $400,000 / 100 x $0.37 = $1,480. With a $320,000 loan the mortgage tax is ($320,000 - $2,000) / 100 x $0.115 = $365.70, for $1,845.70 in state taxes. The other lines are the same list as at any price: title policies, the settlement fee, recording, prepaid property tax and escrow, plus inspections and the appraisal paid along the way.
Closing costs on a $1,000,000 home
At $1M the transfer tax is $3,700 and the mortgage tax on an $800,000 loan is $917.70, for $4,617.70. An $800,000 loan is conforming in Williamson County in 2026, where the one-unit limit is $1,029,250, so lender pricing follows conforming guidelines rather than a jumbo lender's own rules.
The $1.5M purchase with a $1.2M loan, step by step
Transfer tax: $1,500,000 / 100 x $0.37 = $5,550. Mortgage tax: ($1,200,000 - $2,000) / 100 x $0.115 = $1,377.70. Together, $6,927.70 owed by the buyer and borrower under the statute. A $1.2M loan is above the Williamson County limit, so this is a jumbo loan; the jumbo loans guide shows the down payment that would keep it conforming.
Closing costs on a $2,000,000 home
The transfer tax is $7,400 and the mortgage tax on a $1,600,000 loan is $1,837.70, for $9,237.70. At this price the tax side is still small next to the down payment, but it is cash due at recording, so include it in the funds you move before closing day.
Closing costs on a $3,000,000 home
The transfer tax is $3,000,000 / 100 x $0.37 = $11,100. With a $2,400,000 loan the mortgage tax is ($2,400,000 - $2,000) / 100 x $0.115 = $2,757.70, for $13,857.70. Lender charges and title premiums also rise with the loan and the price, so ask for both in writing early.
The same homes bought with cash
No deed of trust is recorded, so there is no mortgage tax. The transfer tax is still due: $925 at $250,000, $1,480 at $400,000, $3,700 at $1M, $5,550 at $1.5M and $11,100 at $3M. To see how the loan size changes your monthly payment as well, try the jumbo mortgage calculator.
When the property's value is higher than the price
The transfer tax is charged on the greater of the price paid or the property's value. In an arm's-length sale the two are normally the same, but on a sale below market value the tax is figured on the value instead. Some transfers are exempt; ask your closing attorney before recording whether yours qualifies.
Costs to get quoted in writing at any price
- Title: the owner's and lender's policy premiums, and which party the contract assigns each to.
- Settlement: the closing or attorney fee, document preparation, courier and wire charges.
- Lender: origination, underwriting, rate-lock, points and the appraisal, all on the Loan Estimate.
- Recording: the register of deeds' fees for the deed and deed of trust.
- Escrow and prepaids: months of property tax and insurance the lender collects at closing.
- HOA: any transfer fee, capital contribution and the current dues.
Costs that come due before closing day
Inspections, specialist inspections, a survey and often the appraisal are paid when they are ordered, not at the closing table. Earnest money is also paid early, though it is credited toward your purchase at closing. Budget for them from the day the contract is signed.
When closing costs are due
- Before you tour. Sign the written buyer agreement your agent must have in place since August 17, 2024. It states how your agent is paid, which may become a cost you carry at closing if the seller does not cover it.
- Once under contract. Inspections, any survey and the appraisal are ordered and often paid as they happen, not at closing. Request the HOA's documents and fee schedule now, and ask the title company or attorney to open title.
- A few days before closing. Review the settlement statement line by line. Check that the transfer tax uses the greater of the price or the value at $0.37 per $100, that the mortgage tax excludes the first $2,000 of the loan, and that the property tax proration uses the right jurisdiction's rate.
- At recording. The Williamson County register of deeds collects the transfer tax, the mortgage tax and the recording fees when the deed and deed of trust are recorded.
- The following October. The first full property tax bill arrives, due by February 28. If you bought after January 1, the bill may go to the seller as the January 1 owner of record, who must forward it to you; confirm with the Trustee that it was paid.
If you would like a second pair of eyes on a settlement statement before you sign, I can go through it with you line by line.
Mistakes to avoid at a $1M+ closing
- Budgeting with a national percentage. Use the two statutory taxes above plus written quotes; an average says little about a $2M purchase.
- Assuming custom decides title insurance. The purchase agreement does. Read the clause.
- Forgetting the January 1 bill. A buyer closing in summer still owes that year's tax under the proration, and a seller who receives a bill after closing must forward it to the new owner.
- Missing HOA fees. Ask for transfer and capital contribution fees before you sign, not at the closing table.
- Skipping the buyer agreement terms. Since 2024 your agent's pay is set in writing before you tour. Read it as carefully as the contract.
Selling instead of buying? The selling a $1M+ home in Franklin page covers seller costs and offers. This guide explains how closing costs work; it is not legal advice. Confirm the details of your transaction with a Tennessee real estate attorney.
Common questions
What are the closing costs on a $400,000 home in Tennessee?
The two state taxes are exact: a transfer tax of $1,480 ($400,000 / 100 x $0.37) and, with 20% down, a mortgage tax of $365.70 on a $320,000 loan, for $1,845.70. Title insurance, lender fees, the settlement fee, recording, prepaid taxes and HOA charges come on top and vary by provider, so get written quotes and a Loan Estimate.
What is the closing cost on a $250,000 home in Tennessee?
The state taxes come to $1,152.70 with 20% down: a $925 transfer tax ($250,000 / 100 x $0.37) plus a $227.70 mortgage tax on a $200,000 loan, after the first $2,000 is exempted. A cash buyer pays only the $925. Lender, title, settlement and recording charges are extra and come from your quotes.
What are closing costs on a $1.5 million home in Tennessee?
The two state taxes are fixed: $5,550 in transfer tax on a $1.5M price, plus $1,377.70 in mortgage tax on a $1.2M loan, for $6,927.70. Title insurance, lender fees, attorney or settlement fees, recording fees, prepaid taxes and HOA fees come on top and vary by provider, so ask for written quotes rather than applying a percentage.
Who pays closing costs in Tennessee, the buyer or the seller?
By statute the buyer is liable for the realty transfer tax and the borrower for the mortgage tax. Most other costs, including title insurance, concessions and HOA fees, are allocated by the purchase agreement. Sellers pay their listing agent under the listing agreement. Ask your closing attorney how your contract form assigns each item.
How much do sellers usually pay towards closing costs?
There is no fixed amount. A seller's costs come from the listing agreement, any loan payoff, the property tax proration, whatever the contract assigns on title and HOA fees, and any concessions agreed with the buyer. Tennessee law does not make the seller liable for the transfer tax; the buyer is. Ask for a seller net sheet before you accept an offer.
Can a seller refuse to pay closing costs?
Yes. A buyer's request for the seller to pay part of the closing costs is a negotiating term. The seller can accept it, counter with a lower amount or a higher price, or decline. Costs the law or the listing agreement assigns to the seller, such as paying the listing agent, are a separate matter and depend on what the seller signed.
What is a transfer tax on property in Tennessee?
It is a state tax on recording a transfer of real property, charged at $0.37 per $100 of the greater of the price or the property's value, with certain exceptions. The county register of deeds collects it at recording. On a $1M Franklin home it is $3,700, and on a $2M home $7,400.
Who is subject to transfer tax in Tennessee?
The grantee, meaning the buyer or person receiving the property, is responsible for paying it under Tennessee law. It applies whether you pay cash or finance. Some transfers are exempt; whether a gift, an estate transfer or another deed qualifies is a question for your closing attorney before recording.
Is the mortgage tax charged on the whole loan?
Almost. Tennessee's mortgage tax is 11.5 cents per $100 of the principal debt, and the first $2,000 is exempt. Interest and collection costs are excluded. On a $1.2M loan the tax is $1,377.70, and on a $1.6M loan $1,837.70. Your lender collects it and sends it to the state.
Sources
- Tennessee Department of Revenue: Realty Transfer and Recordation Tax Manual (March 2022)
- Tennessee Department of Revenue: Recordation Taxes
- UT County Technical Assistance Service: Transfer Tax
- Tennessee Code Annotated 67-4-409 (Justia)
- Felix Homes: Who really pays for title insurance in Tennessee
- Williamson County Trustee: Frequently Asked Questions
- Williamson County Trustee: 2026 Property Tax Rates & Calculator
- NAR: Consumer Guide to Written Buyer Agreements
- NAR: Settlement FAQs (updated Sept 5, 2024)
- FHFA: Full county loan limit list 2026 (XLSX)
Brianna Morant
I have worked in real estate for more than 20 years. In 2013 I founded Oak Street Real Estate Group with Benchmark Realty, and I lead every listing the team takes on. Here I focus on homes from $1 million in Franklin, Leiper's Fork and College Grove. If you are thinking of selling, I would be glad to tell you what your home could sell for.
Realtor®, Benchmark Realty, LLC. General information, not legal, tax or lending advice.
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