In a Minnesota home sale, both sides pay closing costs, but they pay for different things. Who pays closing costs in Minnesota breaks down along predictable lines: the seller covers the state deed tax, real estate commissions, and by custom the owner’s title insurance policy, while the buyer covers the mortgage registry tax, lender fees, the lender’s title policy, prepaid interest, and the initial escrow deposit. On a $400,000 home the seller usually spends more in raw dollars because commissions alone can top $20,000, but the buyer faces a longer list of individual charges. None of this is fixed by law. The purchase agreement can move almost any specific cost from one party to the other.
What the Seller Typically Pays
The deed tax is the seller’s biggest government-imposed cost. Minnesota taxes every deed that transfers real property at 0.0033 of the net sale price, or $1.65 per $500 of consideration. A $400,000 sale generates a $1,320 deed tax, paid when the deed is recorded with the county. Sellers in Hennepin and Ramsey counties pay a slightly higher combined rate of 0.0034 because of a local Environmental Response Fund surcharge.1Minnesota Department of Revenue. Deed Tax Rate
Agent commissions dwarf every other seller cost. The national average total commission sits around 5.4% as of 2025, split roughly in half between the listing agent and the buyer’s agent, and Minnesota transactions generally fall within the 5% to 6% range. On a $400,000 home at 5.5%, that is $22,000 out of the seller’s proceeds. Since the 2024 NAR settlement, sellers no longer automatically advertise a buyer-agent commission through the MLS, but many still agree to cover some or all of the buyer-agent fee in the purchase agreement because refusing shrinks the buyer pool.
Minnesota custom puts the owner’s title insurance policy on the seller’s side. This policy protects the buyer against pre-existing title defects that surface after closing, and it typically runs $1,000 to $2,500 for a residential sale. The Minnesota Department of Commerce notes that who pays for the owner’s policy can be negotiated in the purchase agreement, so this is custom, not law.2Minnesota Department of Commerce. Title Insurance The seller also pays the county recorder to record the deed and any releases of existing liens, at $46 per document.3Stevens County, MN. Fees for Recording Documents Settlement fees charged by the title company for running the closing are typically split between the parties, and the exact division varies by company.
What the Buyer Typically Pays
The mortgage registry tax is the buyer’s counterpart to the seller’s deed tax. Minnesota charges 0.0023 per dollar of the mortgage amount, collected when the mortgage is recorded.4Minnesota Office of the Revisor of Statutes. Minnesota Code Chapter 287 – Section 287.035 – Imposition of Tax A $350,000 mortgage produces an $805 charge; a $300,000 mortgage, $690. Because the tax is tied to the loan amount rather than the sale price, a larger down payment lowers it directly. Cash buyers skip it entirely.
Then come the lender’s fees. An appraisal in Minnesota typically runs around $575, with higher costs for complex or rural properties. Loan origination, underwriting, and credit report charges together usually add another $1,000 to $1,500 depending on the lender. FHA borrowers also pay an upfront mortgage insurance premium of 1.75% of the base loan amount, which on a $350,000 FHA loan comes to $6,125.5Department of Housing and Urban Development. Appendix 1.0 – Mortgage Insurance Premiums Most FHA borrowers roll this premium into the loan balance. Conventional borrowers putting down less than 20% pay private mortgage insurance monthly instead, so it does not appear as a closing cost.
The buyer pays separately for a lender’s title insurance policy, which protects the mortgage holder rather than the owner. It is usually only a few hundred dollars. The buyer also pays the $46-per-document recording fee for the new mortgage and any other buyer-side instruments.3Stevens County, MN. Fees for Recording Documents
Prepaid items catch most first-time buyers off guard. The lender collects prepaid interest covering the days between closing and the start of the first mortgage payment cycle.6Consumer Financial Protection Bureau. What Are Prepaid Interest Charges? Close on the 5th and you owe about 25 days of daily interest at the table. Close on the 28th and you owe only a few. Scheduling your closing late in the month is one of the simplest ways to lower the cash you need on day one.
The lender also requires an initial escrow deposit to seed the account that will pay future property tax and homeowners insurance bills. Federal rules cap this at what is needed to cover charges from the last payment date through the first disbursement, plus a cushion of up to two months of escrow payments.7Consumer Financial Protection Bureau. Regulation 1024.17 – Escrow Accounts In Minnesota, where property tax bills are substantial, the deposit can run several thousand dollars. The money is not lost — it stays in your escrow account — but you need it available at closing.
Prorated Property Taxes Shift Money at the Table
Minnesota property taxes are paid in arrears. The assessment happens on January 2, and the resulting taxes come due the following year in two installments, May 15 and October 15.8Minnesota Department of Revenue. Property Tax Calendar for Property Owners Because of this timing, the seller almost always owes the buyer a credit at closing for the share of the current tax year the seller occupied the home before the bill came due.
The closing agent calculates the credit down to the day. Close on August 1 and the seller has lived in the property for roughly seven months of the current tax year without paying those taxes yet, so the seller credits the buyer for that portion. HOA dues prorate the same way, with the buyer reimbursing the seller for any prepaid amount covering days after closing. These adjustments move real money and can meaningfully change what each side brings to the closing table.
How Seller Concessions Move Buyer Costs onto the Seller
The purchase agreement can shift buyer-side closing costs to the seller through a seller concession, where the seller agrees to cover a set dollar amount of the buyer’s fees out of the sale proceeds. The seller nets less; the buyer brings less cash. Concessions are harder to negotiate when inventory is tight and more common when it is loose.
Each loan program caps how much the seller can contribute:
- Conventional loans tie the cap to the loan-to-value ratio. Buyers putting down less than 10% are capped at 3% of the purchase price. Buyers putting down 10% to 25% can receive up to 6%. Buyers putting down more than 25% can receive up to 9%.9Fannie Mae. Interested Party Contributions (IPCs)
- FHA loans cap seller concessions at 6% of the sale price or appraised value, whichever is lower.
- VA loans allow up to 4% of the home’s reasonable value, and that 4% includes the VA funding fee and prepaid insurance.10Veterans Affairs. VA Funding Fee and Loan Closing Costs
- USDA loans cap concessions at 6% of the sale price.11U.S. Department of Agriculture. 2026 USDA Explanatory Notes – Rural Housing Service
The conventional structure is where buyers most often get stuck. A buyer with 5% down can only accept 3% in concessions, which on a $400,000 purchase caps the help at $12,000. That may not cover the full stack of lender fees, prepaids, and escrow deposits.
Two Situations That Override the Usual Split
If the seller is not a U.S. citizen or resident, FIRPTA requires the buyer to withhold 15% of the total sale price and send it to the IRS.12Internal Revenue Service. FIRPTA Withholding On a $400,000 sale, that is $60,000 held back from the seller’s proceeds. The closing agent handles the mechanics, but the buyer is legally responsible if the withholding does not happen. A narrow exception removes the obligation when the buyer is purchasing the property as a personal residence at a price of $300,000 or less, provided the buyer or a family member plans to occupy it for at least half the days the home is used during each of the first two years.13Internal Revenue Service. Exceptions From FIRPTA Withholding The seller can file a U.S. tax return afterward to recover any withholding above the actual tax owed.
Minnesota also requires a Well Disclosure Certificate whenever property with a known well is sold. The seller must provide the certificate before the sale agreement is signed, identifying each well on the property and its status. When the deed is recorded, the buyer submits the certificate with a $54 filing fee.14Minnesota Department of Health. Well Disclosure It rarely matters in the Twin Cities, but on rural parcels a missing certificate can hold up closing.