How much are closing costs on a mortgage?

A common range is 2–5% of the loan amount, but totals vary by location, loan program, and service providers. Some costs are negotiable.

Who pays closing costs: buyer or seller?

Both parties have costs. Buyers typically pay most loan-related fees and prepaids; sellers often pay title insurance for the owner’s policy in some states plus transfer taxes where customary. Terms are negotiable in the contract.

Can I roll closing costs into the loan?

Sometimes. Government programs may allow financed upfront fees; lenders may also offer lender credits (no-closing-cost loans) in exchange for a higher interest rate. Ask your lender for scenarios and trade-offs.

Are closing costs the same as a down payment?

No. The down payment reduces your loan amount; closing costs pay third parties and taxes/fees to complete the transaction.

Is earnest money part of closing costs?

Earnest money is a deposit credited toward your cash-to-close at settlement. It isn’t a fee itself, but it reduces the remaining cash you must bring.

Closing Costs Explained

Q: What are closing costs?

They are the fees and prepaids required to finalize a real estate transaction, such as lender charges, appraisal, title, escrow, taxes, recording and transfer fees. They are separate from your down payment.

What are closing costs, what do they include, and how much can you expect to pay?

Closing costs are the fees and prepaids needed to finalize a home purchase or refinance—separate from your down payment. This guide explains typical amounts, who pays what, every common fee, and proven ways to reduce costs.

Estimate your payment Mortgage glossary

1) What are closing costs?

They’re the expenses required to complete a home purchase or refinance—lender charges, appraisal, title search and title insurance, escrow/settlement fees, recording and transfer taxes, and “prepaids” (property taxes and homeowners insurance collected upfront). Most are paid on closing day.

Key takeaways

Typical range: 2–5% of the loan amount.
Both buyers and sellers have costs; buyer covers most loan-related fees.
Some costs are negotiable; you can also use lender credits to offset costs.

2) How much are closing costs?

The most common rule of thumb is 2–5% of the loan amount. Actual totals vary by state and county fees, loan program (Conventional, FHA, VA, USDA), the lender’s pricing, and third-party providers.

Example

Home price: $300,000 • Down payment: 20% → Loan amount: $240,000.
Closing costs at 3% ≈ $7,200.

What changes the total?

State/local transfer taxes and recording fees
Loan program rules (e.g., FHA upfront MIP, VA funding fee)
Service providers (title, escrow, attorney, appraisal)
Rate/points choice and lender credits

3) Detailed breakdown of common closing costs

Lender-related fees

Loan Origination/Underwriting: lender processing & approval.
Appraisal: independent value opinion for the lender.
Credit Report: bureau charges to pull credit.
Discount Points: optional prepaid interest to lower the rate.
Mortgage Insurance: PMI (Conventional) or FHA/USDA/VA program fees.

Third-party fees

Title search & title insurance: verify ownership and insure against defects.
Escrow/settlement: closing agent manages funds & documents.
Attorney (where required): closing oversight in attorney states.
Inspection(s): general, pest, or specialty inspections.
Survey (as needed): confirm property boundaries.

Taxes & government fees

Transfer taxes: charged by state/county/municipality (where applicable).
Recording fees: record the deed and mortgage.
Prepaid taxes & insurance: collected for escrow setup.

Your Loan Estimate (LE) and later Closing Disclosure (CD) itemize these amounts.

4) Who pays what: buyer vs. seller

Customs vary by state and the purchase agreement. Many expenses are negotiable via seller concessions or lender credits.

Typically paid by the buyer

Lender charges (origination, underwriting, credit)
Appraisal and inspections
Title search and lender’s title policy (varies by state)
Escrow/settlement fee (varies)
Prepaid taxes & homeowners insurance
Program fees: PMI, FHA MIP, VA funding fee, USDA guarantee fee

Typically paid by the seller

Owner’s title policy (common in many states)
Real estate commissions
Transfer taxes (local custom)
Prorated property taxes/HOA dues through closing date
Any agreed seller concessions toward buyer costs

5) How to reduce or manage closing costs

Request quotes from multiple lenders; compare the Loan Estimate line‐by‐line.
Ask for lender credits (a slightly higher rate that offsets costs).
Negotiate with the seller for concessions where market conditions allow.
Shop providers you’re allowed to choose (e.g., title, certain inspections, sometimes escrow).
Evaluate points vs. time horizon; see our Refinance & Break-Even calculator.

6) Frequently Asked Questions

Are closing costs different for FHA, VA, and USDA?

Yes—each program has its own rules and fees. FHA includes upfront and annual MIP; VA often has a Funding Fee (exemptions apply); USDA has an upfront and small annual Guarantee Fee.

What’s the difference between prepaids and closing costs?

Prepaids set up your escrow account (taxes and insurance collected in advance). Other closing costs pay service providers and government fees to complete the transaction.

Do I need cash for both down payment and closing costs?

Usually yes, unless you negotiate concessions or use lender credits. Some programs allow certain costs to be financed—ask your lender for scenarios.

7) Related resources

About this page

Prepared by the Mortgage Loan Calculator editorial team. We build calculators and explainers to help you make informed decisions. This article is for education—not legal, tax, or credit advice. Always review your lender’s disclosures and consult qualified professionals.