Closing costs are the fees beyond your home’s purchase price that both buyers and sellers must pay to transfer ownership. Knowing what they include and how much they can run prevents surprise expenses and helps you budget accurately.
Buyers need to plan for 2%–5% of the purchase price in closing costs. Sellers often cover 8%–10%, including agent commissions. Even renters considering purchase and investors financing portfolios benefit from grasping these fees.
Closing costs are the various lender fees, third-party charges and prepaid items required to finalize a real estate transaction. They cover services like underwriting, title searches, inspections, taxes and insurance.
On top of your down payment, expect to set aside 2%–5% of the home price for closing costs. For example, a $300,000 home typically incurs $6,000–$15,000 in buyer closing costs.
Buyers typically pay 2%–5% of the purchase price in closing costs. Sellers pay more—usually 8%–10%—mainly due to agent commissions.
Buyers generally cover loan-related fees, most third-party fees, prepaid items and their share of title insurance.
Sellers usually pay real estate agent commissions (5%–6%), transfer taxes and the owner’s title insurance policy.
Buyers can negotiate seller credits toward closing. Alternatively, you may choose to roll closing costs into your mortgage—raising your loan balance and monthly payment.
Request Loan Estimates from at least three lenders to find the lowest aggregate fees.
Negotiate for lender credits, origination fee reductions or underwriting fee waivers.
Financing closing costs increases your principal but reduces cash needed at closing.
Many agencies offer grants or low-interest loans to help with down payment and closing costs.
You’ll receive a Loan Estimate within three business days of application and a Closing Disclosure at least three days before closing, detailing all fees.
Funds must typically be wired or delivered as a certified cashier’s check to the title company or escrow agent.
Shortfalls can delay closing. You may need an emergency wire, extend the closing date or negotiate seller concessions.
Refinances include appraisal, title and underwriting fees but omit agent commissions and transfer taxes. Expect 2%–3% of the loan amount in total.
Recording fees, transfer taxes and title insurance rates vary by state and county—always verify local rates before budgeting.
Fees and expenses beyond the purchase price, including lender, third-party and prepaid items needed to transfer property.
Lender fees cover origination, underwriting, points; third-party fees include appraisal, title search, inspections.
Yes. Rolling costs into the loan reduces upfront cash but increases your loan balance and interest paid.
Some items like mortgage interest and certain loan points may be deductible—you’ll need IRS guidance or a tax professional.
Negotiable. Standard practice: buyers pay most closing costs; sellers pay commissions and transfer taxes. Agreements can shift costs.
At closing, after you receive the Closing Disclosure (three days before). Funds must be certified or wired.
Closing can be delayed. You may need to wire additional funds, renegotiate, or postpone the closing date.
Yes. Transfer taxes, recording fees and title insurance rates vary by jurisdiction.
Refinances skip agent commissions and transfer taxes but still require appraisal, title and underwriting fees.
Compare Loan Estimates, negotiate lender fees, consider credits, and explore first-time buyer programs.
Sarah budgets 3% in closing costs on her $350,000 home ($10,500). She requests Loan Estimates from two lenders and compares each fee line by line to choose the best deal.
Plan for 2%–5% in buyer closing costs (and 8%–10% for sellers). Understand each fee category to avoid surprises and budget wisely.
Contact multiple lenders for Loan Estimates, review fee breakdowns carefully, and begin setting aside funds to cover closing costs alongside your down payment.
