Closing Costs in Tennessee — What Buyers and Sellers Need to Know

By Britton Kinnard, REALTOR® | Home & Lake | Old Hickory Lake Resident

I have sat across the closing table from a lot of buyers and sellers over the years, and there’s a pattern I see constantly: the purchase price gets all the attention, and closing costs catch people off guard. A buyer has saved diligently for their down payment, done all the math, and then somebody hands them a Closing Disclosure with another $10,000–$16,000 worth of line items they weren’t fully expecting.

That doesn’t have to happen to you. Whether you’re buying your first home in Hendersonville, selling a lakefront property on Old Hickory Lake, or moving up to something bigger in Gallatin, this guide walks through what you’ll actually pay, why, and how to minimize surprises at the table.

One thing to say upfront: every transaction is different. This article gives you solid ballpark figures based on current Tennessee rates and practices, but it is not a quote or a substitute for the Loan Estimate your lender is required to provide. Use this to get educated — then ask good questions.

Key Takeaways

  • Buyers in Tennessee typically pay 2%–5% of the purchase price in closing costs, or roughly 3.6% on average — so $14,000–$15,000 on a $393,700 median-priced home.
  • Sellers in Tennessee typically pay 8%–10% of the sale price when you include real estate commissions, transfer taxes, and title costs.
  • Tennessee’s realty transfer tax is $0.37 per $100 of purchase price — one of the more transparent fees in the state.
  • Tennessee’s mortgage recording tax is $0.115 per $100 of loan amount (first $2,000 of indebtedness is exempt).
  • Tennessee is NOT a mandatory attorney state — closings are handled by title companies or escrow agents, though attorneys are frequently used for complex transactions.
  • In Middle Tennessee, the seller customarily pays the owner’s title insurance policy on existing homes.
  • Lakefront buyers on Old Hickory Lake face unique costs: Corps of Engineers dock permit transfer, potential survey to identify the Corps boundary (ordinary high water mark), flood certification, and possible additional inspections.
  • Everything is negotiable — the contract governs who pays what.

What Are Closing Costs?

Closing costs are all the fees, taxes, and prepaid expenses due at settlement — on top of your down payment. They pay for everything required to legally transfer a property from one person to another: government-imposed taxes, title work, lender fees, third-party services, and prepaid items like homeowners insurance and property taxes.

Some of these costs are fixed (recording fees, state taxes). Others vary by lender, provider, or what you negotiate in the contract. The key is understanding what you’re looking at before the Closing Disclosure lands in your inbox.

Buyer’s Closing Costs in Tennessee

Lender Fees (Origination, Underwriting, and Application)

Your mortgage lender charges for processing your loan. These include:

  • Loan origination fee: Typically 0.5%–1% of the loan amount. On a $350,000 loan, that’s $1,750–$3,500.
  • Underwriting fee: Often $400–$900, depending on the lender.
  • Credit report fee: Usually $25–$75.
  • Rate lock fee: May apply if you lock your rate for an extended period.

Lender fees are among the most negotiable items in your closing costs. Shopping at least two or three lenders on a purchase — not just checking a rate — can save you real money.

Appraisal ($400–$700 for Most Homes)

Your lender will require an independent appraisal to confirm the home’s market value supports the loan amount. In Tennessee, appraisals for a standard single-family home typically run $400 to $700, with rural or complex properties costing more. Lakefront homes and properties with unique features can land at the higher end — sometimes $700–$1,200 — because comparable sales are harder to find.

FHA and VA appraisals sometimes cost a bit more due to additional property condition requirements.

Home Inspection ($375–$650)

You are not required by law to have a home inspection in Tennessee, but I recommend it on every transaction without exception. You need to know what you’re buying.

Standard home inspections in Middle Tennessee run $425–$550 for an average single-family home. A larger home (2,000–3,000 sq ft) may run $550–$725. Consider add-ons based on the property:

Additional InspectionTypical Cost
Termite / WDI$75–$150
Radon testing$150–$250
Sewer line camera$200–$400
Septic inspection$300–$600
Mold testing$300–$700

If you’re buying a property with a septic system, budget for that inspection — a failed drainfield is not a small problem.

Title Search and Title Insurance

There are two title insurance policies in a typical transaction: the owner’s policy (protects your ownership) and the lender’s policy (protects the mortgage lender). These are separate products with separate premiums.

In Middle Tennessee, the seller customarily pays for the owner’s title insurance policy on existing homes. On new construction, the buyer typically pays for it. The buyer pays for the lender’s policy. All of this is negotiable, and the contract controls.

Title insurance in Tennessee is generally priced around 0.7% of the property value, though this varies by provider. On a $400,000 home with a $320,000 loan, you’re looking at roughly:

  • Owner’s policy: ~$2,800 (at 0.7% of $400,000)
  • Lender’s policy: ~$2,240 (at 0.7% of $320,000)

Most closing companies also charge a title search / exam fee of $300–$1,000 depending on the complexity of the title history.

Attorney Fees (If Used)

Tennessee is not a mandatory attorney state. Closings here are handled by title companies or escrow professionals, and an attorney is not legally required for a residential transaction. That said, many buyers and sellers choose to use one — particularly for complex deals, estate sales, inherited properties, or when there are title clouds.

If you hire a real estate attorney for a closing in Middle Tennessee, expect to pay $500–$1,500 in attorney fees depending on the complexity of the transaction.

Survey ($350–$1,500)

Surveys aren’t always required in Tennessee residential transactions, but there are common situations where you’ll need one:

  • The lender requires it (more common with rural or unusual parcels)
  • The property lines are unclear or disputed
  • You’re buying lakefront property and need to identify the ordinary high water mark (Corps boundary)
  • The title company identifies an issue requiring survey confirmation

A standard residential boundary survey in the Nashville area typically runs $500–$1,500. A more detailed ALTA/NSPS survey, sometimes required for commercial or complex deals, can run $1,500–$3,000+.

Recording Fees (Sumner County)

Recording fees are paid to the county Register of Deeds to officially record the deed and deed of trust. Per Sumner County’s published fee schedule:

  • Deed recording: $12.00 for the first two pages, $5.00 each additional page
  • Deed of Trust recording: $12.00 for the first two pages, $5.00 each additional page
  • State Conveyance Tax: $3.70 per $1,000 of purchase price (the transfer tax — see below)
  • State Mortgage Tax: $1.15 per $1,000 of loan amount (the mortgage recording tax — see below)

Total recording fees for a typical transaction (deed + deed of trust + taxes) generally run $50–$150 in base recording fees, exclusive of the state taxes.

Tennessee Mortgage Recording Tax

On financed purchases, the buyer pays Tennessee’s mortgage recording tax (also called the “indebtedness tax”). The TN Department of Revenue sets this at $0.115 per $100 of loan amount, with the first $2,000 of debt exempt.

Example on a $320,000 loan: $320,000 − $2,000 = $318,000 × 0.00115 = $365.70

Cash buyers don’t pay this tax. It’s collected at the Register of Deeds when the deed of trust is recorded.

Prepaid Items

Lenders require you to prepay certain items into escrow at closing. These are not really “fees” — you’re paying costs you’d pay anyway, just in advance:

  • Homeowners insurance: Most lenders require you to pay the first year’s premium at closing, plus 2–3 months into escrow. Budget $1,200–$2,000+ depending on the home’s value and location.
  • Property taxes: Typically 2–3 months of estimated taxes into escrow. Sumner County’s tax rate varies by city — work with your lender to calculate.
  • Prepaid interest: Interest due from your closing date through the end of that month. The later in the month you close, the smaller this is.

Prepaid items can add $3,000–$6,000 to your cash-to-close figure, and first-time buyers are often surprised by this.

HOA Transfer Fees (Where Applicable)

If you’re buying in a neighborhood with a homeowners association, expect possible HOA-related closing costs:

  • Transfer fee: Typically $100–$500, paid to the HOA to transfer membership records
  • Resale package / disclosure packet: $100–$300 (this is what the HOA charges to prepare the required documents)
  • Capital contribution / initiation fee: Some HOAs charge new owners a one-time fee to contribute to capital reserves — this can range from $100 to several hundred dollars

Your agent should request the HOA documents during the inspection period so you know what you’re getting into before you’re at the closing table.

Seller’s Closing Costs in Tennessee

Real Estate Commission

The largest single cost for most sellers. Commission is fully negotiable under federal settlement changes effective August 2024. Historically, total commission in our market ran 5%–6% of the sale price. How that commission is structured is now explicitly negotiated in each transaction.

On a $450,000 sale at 5.5% total commission: $24,750

Tennessee Realty Transfer Tax

This is a state-mandated tax paid when a deed is recorded. Per the Tennessee Department of Revenue, the rate is $0.37 per $100 of purchase price — or 0.37% of the sale price.

By law and TCA § 67-4-409, this tax falls on the grantee (buyer) upon recordation. In practice, however, it has long been customary for the seller to pay this in most Tennessee transactions, and that is reflected in most standard purchase agreements. It can be negotiated either way.

Examples:

Sale PriceTransfer Tax
$300,000$1,110
$400,000$1,480
$500,000$1,850
$650,000$2,405

Note: Quitclaim deeds are exempt from Tennessee transfer tax.

Owner’s Title Insurance Policy

As mentioned above, it’s customary in Middle Tennessee for the seller to pay the owner’s title insurance policy on an existing home. On a $400,000 sale, this typically runs $2,500–$3,000.

Title Search / Exam Fee

The seller often covers the title search and examination on their side. Expect $300–$700.

Attorney Fees (If Used)

If either party uses an attorney, that party pays their own attorney. Seller-side attorney fees for a closing typically run $500–$1,000.

Deed Preparation

Someone has to prepare the deed transferring the property to the buyer. This is often done by the closing attorney or title company and may run $100–$300.

Mortgage Payoff

If you have an existing mortgage, the balance (plus accrued interest through the payoff date) comes out of your proceeds. Your lender will issue a formal payoff statement. Don’t confuse your current balance with your payoff — accrued interest and possible fees can make the payoff slightly higher.

Prorated Property Taxes

Property taxes in Tennessee are paid in arrears. If you close mid-year, you’ll credit the buyer for the portion of the year’s taxes that accrued while you owned the property. This is calculated based on the prior year’s tax bill prorated to the day of closing.

HOA Transfer Fees / Capital Contributions (Seller Side)

Some HOAs charge the seller a transfer fee as well. If your neighborhood has a capital contribution fee, it may be split between buyer and seller or fall entirely on one party — check your HOA documents.

Tennessee-Specific Closing Cost Details

The Transfer Tax in Plain English

Tennessee’s realty transfer tax — officially called the Recordation Tax — is set by state law (TCA § 67-4-409) at $0.37 per $100 of the greater of the sale price or fair market value. It is collected by the county Register of Deeds at recording. In Sumner County, that shows up on the fee schedule as $3.70 per $1,000.

A 2025 legislative proposal (HB649/SB1080) discussed returning 50% of transfer tax collections to counties, but did not change the $0.37 rate.

The Mortgage Recording Tax

The mortgage recording tax (or “indebtedness tax”) is separate from the transfer tax and applies only when a deed of trust is recorded — meaning cash buyers skip this. The rate is $0.115 per $100 of loan amount, with the first $2,000 exempt on the initial filing. This is paid by the buyer (borrower) at recording.

Tennessee Is NOT a Mandatory Attorney State

Unlike Georgia, South Carolina, and many northeastern states, Tennessee does not require a licensed attorney to conduct or supervise real estate closings. Most Tennessee residential transactions close through title companies or escrow agents. Attorneys are used when the parties want one, or when the complexity of the deal warrants it.

That said, I often recommend buyers and sellers consult an attorney for transactions involving estate sales, divorce, significant title issues, commercial elements, or unusual circumstances. The peace of mind is usually worth the fee.

Who Pays What — The Short Version

Nothing in Tennessee law mandates exactly who pays which closing cost. Everything is negotiable. But the customary practice in Middle Tennessee (and what most standard purchase agreements reflect) looks like this:

CostCustomary Payer
Transfer taxSeller (customary, though law says buyer)
Mortgage recording taxBuyer
Owner’s title insurance (existing home)Seller
Lender’s title insuranceBuyer
AppraisalBuyer
Home inspectionBuyer
Recording fees (base)Buyer
Loan origination / lender feesBuyer
Real estate commissionSeller
Deed preparationSeller
Attorney feesWhoever hires the attorney

How to Estimate Your Total Closing Costs

Here’s a practical rule of thumb for budgeting:

Buyers: Expect 2%–5% of the purchase price in closing costs (excluding down payment). The Rocket Mortgage average for Tennessee buyers is 3.63%. I’d plan for 3%–4% and treat anything under that as a good outcome.

Sellers: Add up commission + transfer tax + title costs + any other negotiated seller concessions. Total seller-side costs typically run 8%–10% of the sale price when commission is included.

Quick estimates at common price points:

Purchase PriceBuyer Closing Costs (3.5%)Seller Closing Costs (8.5%)
$300,000~$10,500~$25,500
$400,000~$14,000~$34,000
$500,000~$17,500~$42,500
$650,000~$22,750~$55,250

These are estimates. Your actual Loan Estimate — which your lender must provide within three business days of application — will give you a much more precise figure.

Ways to Reduce Your Closing Costs

For Buyers

Shop your lender. Origination fees and lender charges vary more than most people realize. Getting two or three Loan Estimates on the same day from different lenders gives you a real comparison. This is probably the single highest-impact thing a buyer can do to reduce closing costs.

Ask about seller concessions. In a buyer-friendly market, sellers can contribute money toward your closing costs as a negotiated concession. The amount that’s allowed depends on your loan type and down payment. Conventional loans allow up to 3%–9% in seller concessions depending on LTV; FHA allows up to 6%. This doesn’t reduce the sale price, but it reduces your out-of-pocket cash at closing.

Time your closing. Closing at the end of the month reduces the prepaid interest you owe (since it only covers the remaining days of that month). Not a huge number, but it’s a real one.

Negotiate title and escrow fees. In Tennessee, title insurance rates aren’t strictly regulated — you can shop them. Closing/escrow fees are also sometimes negotiable, particularly on higher-priced transactions.

Ask about lender credits. Some lenders offer lender credits in exchange for accepting a slightly higher interest rate. This reduces your upfront cash-to-close. Whether this makes sense depends on how long you plan to keep the loan.

For Sellers

Negotiate the commission structure. Real estate commission is fully negotiable. Interview agents and understand what you’re getting for the fee — and what you’re not.

Negotiate who pays the transfer tax. While sellers customarily pay Tennessee’s transfer tax, it’s legally the buyer’s obligation. In a competitive multiple-offer situation, a motivated buyer might agree to pick up this cost.

Control the HOA fees. Know your HOA’s transfer and capital contribution fees before listing — some of these are negotiable with the HOA board, particularly if you’ve been a long-time member.

Lakefront Property Closing Costs — Special Considerations

This is the section nobody else is writing, and it matters enormously if you’re buying or selling on Old Hickory Lake (or any Corps-managed lake in the Nashville area, including Percy Priest and Cordell Hull).

Lakefront properties have a layer of complexity that doesn’t exist in standard residential transactions. I’ve navigated these deals firsthand as a resident of Old Hickory Lake, and I want you to understand what’s different.

The Corps of Engineers Dock Permit: It Does NOT Automatically Transfer

This is the most important thing a buyer on Old Hickory Lake needs to understand: dock permits and mowing permits are not automatically transferable at closing.

Old Hickory Lake is managed by the U.S. Army Corps of Engineers Nashville District. Any private dock on Corps land requires a permit from the Resource Manager’s Office at 5 Power Plant Road, Hendersonville, TN 37075 (phone: 615-822-4846).

Here’s how it works in practice:

Before closing (seller’s responsibility): The seller should request a “Realtor Letter” from the Corps. This is an application submitted by the seller that asks the Corps to inspect the dock and confirm its status. The Corps will send back a letter stating whether the existing dock can remain and noting any issues with electric lines, water lines, steps, or other permitted features on Corps property. This letter can take up to 14 days to receive.

After closing (buyer’s responsibility): The new owner has 14 days after closing to contact the Resource Manager’s Office and schedule an appointment with a ranger. At that meeting, you’ll discuss:

  • The dock permit, which must be transferred into your name
  • Mowing permits for Corps property adjacent to your lot
  • Shoreline management rules, including what you can and cannot do without additional permits
  • Any requirements related to licensed features (electrical, water lines, etc.)

Key points for buyers:

  • Confirm the property has a valid permit before you go under contract. Not all lakefront lots qualify for a dock (minimum 65 feet of allocated shoreline is required).
  • Include a contingency in your purchase agreement requiring receipt and approval of an acceptable Realtor Letter from the Corps. Something like: “This offer is contingent upon the buyer’s receipt and approval of an acceptable Realtor Letter for the dock from the Corps of Engineers.”
  • Grandfathered docks — those permitted before November 17, 1986 — do pass to new owners and remain grandfathered, but you still need to transfer the permit.
  • Dock permits expire every 5 years and must be renewed.

Survey for the Ordinary High Water Mark (OHWM)

On many lakefront properties, the Corps holds a flowage easement or owns the land up to the ordinary high water mark. Your private property line and the Corps boundary are not always the same thing, and title work alone won’t tell you where the Corps boundary falls on the ground.

If there’s any question about where the property ends and Corps land begins — or if you want to place any structures near the water — a licensed surveyor needs to locate the OHWM and mark it. Budget $500–$1,500 for this survey depending on property size and shoreline complexity. For waterfront properties with irregular shorelines or unclear easements, it can run higher.

Flood Zone Determination / Flood Certification

Your lender is federally required to obtain a flood zone determination for any financed purchase. This is a small fee — typically $15–$30 — that checks whether the property is in a FEMA-designated Special Flood Hazard Area.

For many Old Hickory Lake properties, this matters a lot. If the home or structures are in a flood zone, your lender will require flood insurance, which can run $1,000–$3,500+ annually depending on the elevation certificate and coverage amount. Ask the seller for an existing elevation certificate — it can significantly reduce the insurance premium if the home is built above base flood elevation.

Additional Inspections Worth Considering on Lakefront Properties

Beyond the standard home inspection, consider these for waterfront properties:

  • Dock inspection: A qualified marine contractor can inspect the dock’s structural integrity — floats, decking, pilings, electrical system, and compliance with Corps standards. I’ve seen deals where the dock looked fine and turned out to need $20,000–$40,000 in work.
  • Seawall / bulkhead inspection: If the property has a concrete or steel seawall, inspect it. Seawall replacement is one of the most expensive lakefront repairs you’ll encounter.
  • Septic inspection: Many older lakefront properties on Old Hickory Lake are on septic systems rather than municipal sewer. Budget $300–$600 for a full septic inspection — tanks, drainfield evaluation, and pumping if needed.
  • Well water testing: Properties on well water should have the water tested at minimum for bacteria, nitrates, and common contaminants. Basic testing starts around $100–$300; more comprehensive testing runs higher.

USACE Shoreline Management Plan Update (2026)

As of early 2026, the Corps of Engineers Nashville District is actively updating the Old Hickory Lake Shoreline Management Plan. Proposed changes include updates to dock policy and shoreline allocation rules. If you’re buying on Old Hickory Lake, this is worth monitoring — and worth asking your agent about.

FAQ: Closing Costs in Tennessee

How much should I budget for closing costs as a buyer in Tennessee?

Plan for 3%–5% of the purchase price as a reasonable buffer. The state average is around 3.63%, but FHA buyers or those in higher-priced transactions can see costs at the higher end of that range. On a $400,000 purchase, I’d have at least $14,000–$16,000 set aside for closing costs, separate from your down payment.

Who pays closing costs in Tennessee — the buyer or the seller?

Both parties pay closing costs. Tennessee law doesn’t mandate who pays most fees, so the contract governs everything. Generally, buyers pay loan-related fees, appraisal, inspection, mortgage recording tax, and prepaid items. Sellers typically pay the transfer tax, owner’s title insurance, and real estate commission. Seller concessions — where the seller contributes toward the buyer’s costs — are common and negotiable.

Does Tennessee require a real estate attorney at closing?

No. Tennessee is not a mandatory attorney state. Most closings here are handled by title companies or escrow professionals. You may choose to hire an attorney for complex transactions, but it is not legally required for a residential purchase or sale.

What is Tennessee’s transfer tax, and who pays it?

The Tennessee Realty Transfer Tax is $0.37 per $100 of the purchase price (0.37%). On a $400,000 sale, that’s $1,480. By statute, the buyer (grantee) is the taxable party, but in Middle Tennessee practice, the seller customarily pays this cost. It’s negotiable.

Can I roll my closing costs into my mortgage?

In some loan programs, yes — partially. FHA and some conventional loans allow the seller to contribute a percentage of the sale price toward buyer closing costs, which effectively reduces the cash you need at closing. You can also sometimes finance discount points or buy down the rate. What you can’t do is simply add your closing costs to the loan without a corresponding concession or specific program that permits it.

Do lakefront properties on Old Hickory Lake have extra closing costs?

Yes, and this is something buyers often underestimate. In addition to standard closing costs, lakefront buyers should budget for: a flood zone determination and possibly flood insurance (varies widely), a potential Corps boundary survey ($500–$1,500), dock inspection ($200–$500), and the cost of the Corps of Engineers dock permit transfer process (minimal administrative fees, but it does require action within 14 days of closing). If you’re on well and septic, add those inspections as well. Budget an extra $1,500–$3,000+ in due diligence costs for a lakefront property on top of standard inspections.

Ready to Talk Through Your Numbers?

Buying or selling in Hendersonville, Gallatin, or on Old Hickory Lake is what I do — it’s also where I live. I know these neighborhoods, I know these transactions, and I know how to help you understand exactly what you’re walking into before you’re sitting at the closing table wondering where all that money went.

If you want a realistic estimate of what your closing costs will look like on a specific property or sale, let’s talk through it together. It’s one of the first things I cover with every client, and there’s no obligation.

You might also find our property taxes guide and neighborhoods guide useful as you’re researching the area. If you’re specifically considering Old Hickory Lake waterfront, I’d love to walk you through the process — the dock permit steps alone are worth a conversation.

Britton Kinnard, REALTOR® Home & Lake 141 New Shackle Island Rd, Hendersonville, TN 37075 📞 615-505-HOME (4663) ✉️ britton@homeandlake.com homeandlake.com

The information in this article is provided for general educational purposes and reflects current Tennessee law and market practice as of 2025–2026. Closing costs vary by transaction, lender, location, and negotiated terms. This article does not constitute legal, tax, or financial advice, and should not be treated as a quote or guarantee of your actual closing costs. Always review your Loan Estimate and Closing Disclosure carefully and consult with your lender, closing agent, and advisors as appropriate.

Sources: