Bottom line: Closing costs on a home purchase typically run 2–5% of the loan amount, paid at closing in addition to your down payment. On a $350,000 home with 10% down ($315,000 loan), that is $6,300–15,750 in fees. Some are fixed, some are negotiable, and some can be covered by the seller or rolled into the loan.
Most first-time buyers focus on the down payment and underestimate closing costs. Both must be available at the closing table. Understanding what each fee covers helps you compare lenders and identify where you can save.
The Two Categories of Closing Costs
Lender fees: Charged by your mortgage lender for originating and processing the loan. Third-party fees: Charged by service providers the lender requires — title company, appraiser, attorney, insurance, etc.
Lender fees are negotiable or avoidable. Third-party fees are set by the providers, but you can sometimes shop for lower-cost alternatives.
Common Closing Costs Itemized
| Fee | Typical Cost | Negotiable? |
|---|---|---|
| Origination fee | 0–1% of loan | Yes — compare lenders |
| Discount points | 1% per point bought | Your choice |
| Appraisal | $400–700 | No |
| Credit report | $25–50 | No |
| Title search | $200–400 | Sometimes |
| Title insurance (lender's) | $500–1,500 | Sometimes |
| Title insurance (owner's) | $500–1,500 | Sometimes |
| Escrow/closing fee | $500–1,000 | Sometimes |
| Attorney fee (where required) | $500–1,500 | Sometimes |
| Home inspection | $400–600 | No (separate from closing) |
| Survey | $400–700 | Sometimes |
| Prepaid interest | Varies | No |
| Property tax escrow | 2–3 months | No |
| Homeowners insurance (first year) | $1,200–2,400 | Shop separately |
Fees You Can Often Reduce or Eliminate
Origination fee: This is the lender's primary profit mechanism beyond the interest rate. Some lenders charge 1% of the loan amount; others charge nothing. If a lender quotes a 0.5% lower rate with a 1% origination fee, compare the APR — the fee may offset the rate benefit.
Title insurance: The lender requires you to buy a lender's title policy. An owner's title policy protects you — it is typically optional but worth having. Shop both through independent title companies rather than using the one the lender defaults to.
Homeowners insurance: You must have coverage in place at closing. Shop this independently in advance — premiums for identical coverage vary by 20–40% across insurers.
Discount points: Paying points (1% of loan amount each) to permanently reduce your rate is optional. Calculate the breakeven: divide the point cost by the monthly payment savings. If the breakeven is longer than how long you plan to keep the loan, skip the points.
- Seller concessions — asking the seller to cover a portion of closing costs — are a standard negotiating tool. In slower markets, requesting 2–3% in concessions is common and often granted.
- No-closing-cost mortgages exist — the lender covers fees in exchange for a higher interest rate. This can make sense if you plan to sell or refinance within 5–7 years before the rate premium adds up.
- Compare Loan Estimates from multiple lenders on the same day. Fees in the 'Services You Can Shop For' section (title, closing) can be replaced with lower-cost providers you find yourself.
Strategies to Reduce Cash to Close
Negotiate seller concessions. Ask the seller to cover 2–3% of the purchase price in closing costs. This is most feasible in a buyer's market or when a property has been sitting. In competitive markets, it may cost you the offer.
Use a no-closing-cost loan. The lender covers fees and charges a slightly higher rate. Run the numbers: if you sell or refinance within 5–7 years, you often save money overall.
Roll eligible costs into the loan. Some loan programs (FHA, VA) allow rolling certain upfront costs into the loan balance. This reduces cash to close but increases your loan amount and monthly payment.
Use gift funds. Down payments and closing costs can often be funded with gift money from family members, provided the funds are properly documented with a gift letter. Lender requirements for gift funds vary.
Apply for assistance programs. Many state and local first-time buyer programs cover down payments and closing costs. These are worth checking before closing — see the first-time homebuyer guide for details.
What Happens at the Closing Table
Three business days before closing, you receive a Closing Disclosure — a finalized version of all costs. Compare it to your Loan Estimate; significant increases in certain fee categories require explanation. If fees changed unexpectedly, ask your lender before closing.
At closing, you bring a cashier's check or wire transfer for the total "cash to close" amount shown on your Closing Disclosure. Personal checks are not accepted.
Closing costs vary significantly by location, loan type, and lender. Request a Loan Estimate from each lender to compare actual figures for your specific purchase.
Frequently Asked Questions
What should I do after reading Closing Costs Explained: What You Will Pay and How to Reduce Them?
Can Money Map help with mortgage decisions like this?
Are the products mentioned in this article paid placements?
How often is this article reviewed?
Act on this: today's top mortgage
Ranked by SwitchWize's composite score. We may earn a referral fee, and it never changes the ranking order.
Editorial review
What changed since the last update
Was this guide helpful?