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When you buy a home, you pay more than just the down payment on closing day. Closing costs are the fees and charges that complete the home purchase. They can add up to thousands of dollars. This guide breaks down every closing cost line by line so you know what to expect.
How Much Are Closing Costs?
Closing costs typically run 2% to 5% of the purchase price. Here is what that looks like at different price points:
| Home Price | Low Estimate (2%) | High Estimate (5%) |
|---|---|---|
| $200,000 | $4,000 | $10,000 |
| $300,000 | $6,000 | $15,000 |
| $400,000 | $8,000 | $20,000 |
| $500,000 | $10,000 | $25,000 |
Rates as of May 2026. Rates change often. Check with each lender for current rates before you apply.
Closing Costs by Category
Lender Fees
These are fees charged by your mortgage lender:
- Origination fee: 0.5% to 1% of the loan for processing your application
- Application fee: $300 to $500 (many lenders waive this)
- Underwriting fee: $500 to $1,000 for reviewing your loan application
- Rate lock fee: Sometimes charged for locking in your interest rate
- Discount points: Optional — you pay upfront to lower your interest rate (1 point = 1% of loan)
Third-Party Fees
These are fees paid to outside services required to complete the sale:
- Title search: $300 to $600 — verifies the seller actually owns the home and there are no liens
- Title insurance (lender’s policy): 0.5% to 1% of loan — required by most lenders
- Title insurance (owner’s policy): Optional but strongly recommended
- Home appraisal: $300 to $600 — lender requires this to confirm the home’s value
- Home inspection: $300 to $500 — paid before closing, not at closing (but part of overall buying costs)
- Survey: $400 to $700 — maps the property boundaries
- Attorney fees: Required in some states, $500 to $1,500
Prepaid Items
These are costs you pay upfront that cover future expenses:
- Homeowners insurance (1 year upfront): $800 to $2,000
- Prepaid interest: Interest that accrues from your closing date to the end of the month
- Property tax escrow (2 to 3 months): Held in escrow to cover upcoming tax bills
Government Fees
- Recording fees: $25 to $250 — paid to the local government to record the deed
- Transfer tax: Varies by state — some states charge a tax when real estate changes hands
Negotiable vs. Non-Negotiable Closing Costs
Costs You Can Negotiate or Shop
- Lender origination fees
- Title company (in states that allow you to choose your own)
- Settlement agent or attorney
- Home inspector (choose your own)
Costs That Are Fixed
- Government recording fees
- Transfer taxes
- Prepaid interest (based on your rate and closing date)
- Property tax escrow amounts
How to Reduce Closing Costs
1. Shop Your Lender
Different lenders charge very different fees. Get Loan Estimates from at least three lenders and compare the fees side by side. Even a $1,000 difference in fees matters.
2. Ask for a Seller Concession
When you make an offer, you can ask the seller to cover some of your closing costs. This is called a seller concession. In a buyer’s market, sellers may agree. In a competitive market, sellers rarely budge.
3. Look for No-Closing-Cost Mortgage Options
Some lenders offer no-closing-cost mortgages. You do not pay fees upfront — instead, the costs are rolled into your loan or covered by a slightly higher interest rate. This helps in the short term but costs more over time.
4. Negotiate Lender Fees
Origination fees, application fees, and underwriting fees are often negotiable, especially for borrowers with strong credit profiles.
5. Close at the End of the Month
You pay prepaid interest from your closing date to the end of the month. Closing on the last day of the month minimizes prepaid interest. (But it means your first full payment comes sooner.)
Getting the Loan Estimate and Closing Disclosure
By law, your lender must give you a Loan Estimate within 3 business days of your application. The Loan Estimate shows your projected closing costs. Three days before closing, you get a Closing Disclosure with final numbers. Compare them carefully — unexpected changes need to be explained.
For more on the mortgage process, see our guides on first-time homebuyer loan programs, FHA loan requirements, and how to get pre-approved for a mortgage.
Frequently Asked Questions
- How much are closing costs on average?
- Closing costs typically range from 2% to 5% of the home purchase price. On a $300,000 home, that is $6,000 to $15,000.
- Can closing costs be rolled into the mortgage?
- In some cases, yes. Some loan programs allow you to roll closing costs into your loan balance. But this increases your loan amount and total interest paid over time.
- What closing costs are negotiable?
- Lender fees like origination fees, application fees, and discount points are often negotiable. Title search fees, settlement fees, and escrow fees may also be negotiated if you shop for your own providers.
- What is a seller concession?
- A seller concession is when the seller agrees to pay some of your closing costs. This is negotiable during the purchase offer process. It reduces your upfront cash needs.
- Do closing costs vary by state?
- Yes. Property taxes, transfer taxes, and recording fees vary widely by state and county. States like New York and Pennsylvania have higher average closing costs than states like Missouri or Indiana.
Bottom Line
Closing costs add 2% to 5% to the cost of buying a home. Know what each fee is for, which fees you can negotiate, and how to compare lenders. Budget for closing costs before you start house hunting so there are no surprises on closing day.