NJ Closing Costs for Home Buyers: What to Expect When Purchasing in New Jersey

Updated July 10, 2025: New Jersey's mansion tax has been restructured and renamed. As of July 10, 2025, the fee is paid by the seller, not the buyer. The official name is the Graduated Percent Fee. The rate is graduated — starting at 1% and rising to 3.5% on the highest-value sales — and applies to the entire purchase price on covered property classifications with consideration over $1 million. If you are buying in New Jersey above $1,000,000, you no longer owe this at closing. If you are selling, this is now a significant line item against your net proceeds.[/UPDATE_CALLOUT]

New Jersey's current terminology is the Graduated Percent Fee — sometimes informally called the mansion tax. It is a supplemental fee to the ordinary Realty Transfer Fee. For covered property classifications and consideration over $1 million, the seller is statutorily responsible. The fee is calculated on total consideration, not merely the amount above $1 million.

| Total consideration | Graduated Percent Fee |

|---|---:|

| More than $1,000,000 through $2,000,000 | 1% of total consideration |

| More than $2,000,000 through $2,500,000 | 2% of total consideration |

| More than $2,500,000 through $3,000,000 | 2.5% of total consideration |

| More than $3,000,000 through $3,500,000 | 3% of total consideration |

| More than $3,500,000 | 3.5% of total consideration |

Examples:

- $1,500,000 sale: $15,000 Graduated Percent Fee

- $2,250,000 sale: $45,000

- $2,750,000 sale: $68,750

- $3,250,000 sale: $97,500

- $4,000,000 sale: $140,000

The Graduated Percent Fee applies to covered property classifications, including Class 2 residential, Class 3A farm property when the statutory residential-building condition is met, Class 4A commercial property other than industrial or apartment property, and Class 4C cooperative units.

The Graduated Percent Fee is separate from and supplemental to New Jersey's ordinary Realty Transfer Fee. The ordinary Realty Transfer Fee may still apply. Other closing costs, exemptions, filing requirements, and property classifications must be reviewed separately.

Form RTF-1EE may be required with a deed for consideration over $1 million. Confirm the current filing requirements and any exemption with the closing attorney or title professional.

Unlike New York City — where the mansion tax has a graduated rate that is generally paid by the buyer — New Jersey's Graduated Percent Fee is a seller obligation. Do not say that New Jersey buyers have no closing costs; say only that the seller is statutorily responsible for the Graduated Percent Fee.

Official source: NJ Division of Taxation — Realty Transfer Fee

## Title Insurance

Title insurance protects against any future claims against the title of the property. There are two policies:

- Owner's Policy: Protects you as the buyer. A one-time premium, typically 0.5%–0.6% of the purchase price.

- Lender's Policy: Protects your mortgage lender. Required if you're financing. Typically 0.3%–0.4% of the loan amount.

Both are purchased at closing. New Jersey title insurance rates are regulated by the state. Compare this to NY buyer closing costs.

## Attorney Fees

In New Jersey, real estate agents typically prepare the initial purchase contract using standard forms. After signing, there is a three-business-day attorney review period during which your attorney reviews the contract and can negotiate modifications or cancel the deal. Attorney involvement continues through inspections, mortgage contingency, title, and closing. Understand the truth about common attorney review myths. For a complete breakdown of what a buyer's attorney does throughout a New Jersey transaction, see: Do You Need a Lawyer When Buying a House in New Jersey?

Note that before you even get to the contract stage, New Jersey law now requires buyers to sign a written buyer agency agreement with their real estate agent before the agent can show them any property. That agreement can carry direct financial liability for buyer commissions. See Why Do I Still Have to Sign a Contract Just to See a House in NJ? for what to review before you sign.

Attorney fees for a standard NJ residential transaction typically run $1,500–$2,500. If Pete is representing you on both the Staten Island sale and the NJ purchase, discuss combined fee arrangements with his office. See the FAQ about attorney fees.

## Home Inspection

A standard home inspection runs $400–$700 and is strongly recommended for every purchase. The inspector evaluates the structural and mechanical condition of the home. Issues found become the basis for negotiating repairs or credits with the seller during the attorney review or inspection contingency period.

## Well and Septic Inspections

Many NJ homes — especially in Monmouth, Morris, Somerset, and Hunterdon Counties — use private wells and septic systems rather than public water and sewer. If the home has either:

- Well water test: $200–$400. Tests for bacteria, nitrates, and other contaminants. Required by most NJ mortgage lenders.

- Septic inspection: $300–$600. A licensed contractor pumps and evaluates the system. A failed drain field can cost $15,000–$40,000 or more to replace.

Never skip these inspections. They are standard in NJ transactions and your attorney will ensure they are included in your inspection contingency. Learn more about well water and septic systems.

## Radon Testing

New Jersey has elevated radon levels in many areas, particularly in the northwestern counties. Testing costs $150–$300. If elevated levels are found, mitigation systems typically cost $800–$2,000 and are almost always negotiable for the seller to address before closing.

## Mortgage Costs

If you're financing your NJ purchase, your lender will charge origination fees (0.5%–1.5% of the loan), an appraisal ($500–$800), and a credit report fee ($50–$100). You'll also prepay several months of property taxes and homeowner's insurance into escrow at closing.

## Recording Fees

The county records the deed and mortgage. Recording fees run $100–$300 and are paid by the buyer at closing.

## Total NJ Buyer Closing Cost Estimate

For a $650,000 NJ home purchase with a $520,000 mortgage (below the $1M mansion tax threshold):

| Item | Estimated Cost |

|------|----------------|

| Owner's Title Insurance (~0.55%) | $3,575 |

| Lender's Title Insurance (~0.35%) | $1,820 |

| Attorney Fee | $2,000 |

| Home Inspection | $550 |

| Well and Septic Inspections | $700 |

| Radon Test | $200 |

| Mortgage Origination (1%) | $5,200 |

| Appraisal | $650 |

| Recording Fees | $200 |

| Pre-paid Taxes and Insurance | $3,000 |

| Total Estimate | ≈ $17,900 |

Note: The NJ Graduated Percent Fee (formerly the mansion tax) applies only to sales at or above $1,000,000 and is paid by the seller as of July 10, 2025 — it is not a buyer closing cost for this example.

Don't forget to budget for New Jersey's high property taxes, which are often the largest recurring cost of homeownership in the state.

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