Construction loan closing costs can include an origination fee, appraisal or valuation charges, title and settlement costs, legal fees, processing charges, recording fees, and construction-review or draw-setup costs. The timing and classification of construction-related charges vary by lender and loan type. There's no single industry-wide construction-loan closing-cost average, so this guide gives you a planning framework built on our own fix-and-flip fee schedule and the government rules that apply in New York and New Jersey.
This breakdown draws on government guidance, an Urban Institute analysis of mortgage-cost data, and our own published fee schedule, current as of September 2026. We use our fix-and-flip pricing as the numerical starting point because it's the clearest published proxy we have for private-lending fee structure; ground-up construction adds its own draw inspections, longer legal review, and often higher origination costs on top of it. New York tax rules, the New York City calculation process, a Middlesex County, New Jersey recording-fee example, and federal disclosure context round out the picture below. The math is reproducible, but every deal is different, so treat this as a starting point and get a project-specific quote before you budget final numbers.
The table below shows illustrative arithmetic based on our own published fix-and-flip fee schedule. It's not a record of actual construction-loan closings; it's a planning tool. Add applicable taxes, construction-administration charges, and third-party quotes for a real project-specific estimate.
|
Loan Amount |
Illustrative Arithmetic Only (Not Total Closing Costs) |
Arithmetic Share |
Project-Specific Closing-Cost Calculation |
|
$500,000 |
$7,194–$23,798 |
1.44%–4.76% |
Baseline + actual mortgage tax + upfront construction review and draw setup + project-specific survey, title, and legal adjustments |
|
$1,000,000 |
$12,194–$38,798 |
1.22%–3.88% |
Baseline + actual mortgage tax + upfront construction review and draw setup + project-specific survey, title, and legal adjustments |
|
$2,000,000 |
$22,194–$68,798 |
1.11%–3.44% |
Baseline + actual mortgage tax + upfront construction review and draw setup + project-specific survey, title, and legal adjustments |
Calculation method: (loan amount times 1.0% to 3.0% origination) plus $2,194 to $8,798 in published fixed-fee inputs. The fixed-fee sum uses the source categories of lender title insurance, processing or administration, appraisal or valuation, title search, settlement or closing counsel, and recording. These are source categories, not universally separate fees. For example, the $1 million row equals $10,000 plus $2,194 at the low end and $30,000 plus $8,798 at the high end. This arithmetic assumes every listed component is separately charged and non-overlapping; bundled title, settlement, or legal charges could make the sum inapplicable.
The proxy is built from our own published fix-and-flip inputs, not a construction-loan market average. Ground-up financing typically adds draw inspections, longer legal review, and higher origination costs on top of this baseline. We'll confirm those additions from your project documents once we're structuring your deal. In this framework, recurring draw charges, insurance, reserves, and construction-period interest are shown separately from closing costs, since they're paid differently and on a different timeline.
The baseline cannot determine construction-administration or property-specific charges. Here's what a lender needs from you, and what you should ask for, before those numbers can be filled in.
|
Cost Category |
Why It Varies |
Document Needed Before Closing |
|
Plans, budget, and feasibility review |
Project size, complexity, property type, and third-party scope |
Lender fee sheet and consultant engagement letter |
|
Inspection and draw handling |
Draw process, inspection method, servicing terms, and number of disbursements |
Written draw schedule and servicing agreement |
|
Survey and environmental work |
Property, jurisdiction, lender requirements, and prior reports |
Vendor quote and lender requirements list |
|
Title, settlement, and legal work |
Property value, title condition, entity structure, and transaction complexity |
Title quote and attorney estimate |
|
Insurance, reserves, and interest |
Coverage requirements, loan structure, disbursement method, and project duration |
Insurance binder, term sheet, and loan documents |
|
Extension or modification costs |
Completion timing and the executed loan's extension provisions |
Draft and final loan agreement |
Urban Institute's owner-occupied Fannie Mae analysis provides general context for common mortgage fee categories but does not establish fee patterns for private construction loans. The CFPB's December 2019 Version 1 guide explains how construction inspection and handling fees are generally treated under TRID, depending on the transaction structure, disclosure method, and timing of collection. The current Regulation Z text, official interpretations, and applicable TRID coverage provisions should be consulted because they control over the explanatory guide.
Location-specific government charges can materially change the amount due. They should be calculated for the actual property rather than folded into a generalized statewide estimate.
|
Jurisdiction |
Verified Rule |
How to Calculate |
|
New York State |
Component rates include a basic tax of $0.50 per $100 secured; special additional tax of $0.25 per $100; additional tax of $0.25 or $0.30 per $100 where applicable; and possible city or county tax of $0.25 to $0.50 per $100. These are component rates, not an estimated total tax rate. |
Use current Form MT-15 and applicable county or municipal instructions; confirm property classification, exemptions, suspensions, and deductions, including the qualifying one- or two-family residence deduction for the additional-tax calculation |
|
New York City |
Combined state and city mortgage recording tax depends on the mortgage amount |
Use the ACRIS "Calculate Taxes / Fees" tool for the property and mortgage |
|
Middlesex County, New Jersey |
Base mortgage-recording fee: $35 for the first page and $10 for each additional page, plus any applicable additional charges under the current county fee schedule |
Apply the current fee schedule to the actual document package |
New York State publishes the component rates and notes that local taxes vary by jurisdiction. New York City directs filers to ACRIS because the combined rate depends on the mortgage amount. The New Jersey example is a county recording schedule, not a statewide construction-loan estimate.
Closing-day cash and total transaction costs are not always the same. Some diligence charges may be paid before closing, while inspection and draw-handling costs may arise as construction funds are released.
|
Stage |
Costs to Confirm |
Verification Document |
|
Before closing |
Appraisal or valuation, plans and budget review, survey, environmental work, title search, and legal deposits |
Engagement letters, invoices, title quote, and lender fee sheet |
|
At or near closing |
Origination, processing, title and settlement, remaining legal charges, recording fees, and applicable mortgage tax may be confirmed or collected at this stage, depending on the transaction |
Final settlement statement, lender or commercial closing statement, or Closing Disclosure when applicable |
|
During construction |
Inspection, draw-handling, title updates, wire charges, and interest on advanced or committed funds |
Written draw schedule, servicing agreement, and loan documents |
|
If the project extends |
Extension, modification, legal, title-update, default-rate, or additional inspection charges |
Extension and modification provisions in the executed loan documents |
Under the applicable TRID provisions, a creditor may generally treat qualifying construction-permanent financing as one combined transaction or as separate phases, depending on Regulation Z Section 1026.17(c)(6), the creditor's treatment of the transaction, the legal obligation, and applicable consumer-credit and coverage requirements. The CFPB guide explains how inspection and handling fees may be disclosed depending on the transaction and timing. These rules do not automatically apply to every private or commercial construction loan.
Get a property-specific written fee sheet and reconcile it against your title quote, legal estimate, recording-tax calculation, draw schedule, interest calculation, and extension provisions. Our new-construction program runs rates from 9.99%, 12- to 18-month terms, a $500,000 minimum, up to 90% LTC, and closes in 7 to 14 days, subject to underwriting. Related guides cover construction loan requirements, New York construction lenders, and New Jersey construction lenders.
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