How much are closing costs?

When you’re ready to buy, sell or refinance a home, you’ve likely thought about how much the property will sell for or what the monthly mortgage payments will be. But what about the closing costs?

Closing costs are related to closing—or finalizing—the mortgage loan and often transferring the home’s ownership. And it’s a good idea to account for closing costs because they can total about 2%-7% of the cost of the home. Keep reading to learn more about who pays for closing costs, what’s included in them and more.

Key takeaways

  • Closing costs are usually paid when you’re buying, selling or refinancing a home.
  • Closing costs can include fees for things like the application, appraisal, inspection and loan underwriting. 
  • On average, closing costs are about 2%-7% of the cost of the home.
  • For a home sale, the buyer typically pays closing costs, but the seller may pay some of the fees.

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What are closing costs?

Closing costs are charges related to finalizing a real estate transaction like buying, refinancing or selling a home.

Closing costs can include:

  • Home appraisal fee
  • Home inspection fee
  • Title insurance
  • Application fee
  • Loan underwriting fee
  • Attorney fee

What are the average closing costs?

Closing costs often fall somewhere between 2% and 7% of the cost of the home. For a $200,000 home, that could be between $4,000 and $14,000.

Keep in mind, closing costs can depend on the price of a home, where it’s located and whether you’re buying, selling or refinancing.

Who pays closing costs?

Closing costs are typically paid by a homebuyer, although they may sometimes be paid—at least partially—by the seller. And if you’re refinancing your home, as the owner, you’d pay the closing costs.

Seller concessions

Seller concessions—or seller credits—are when the seller pays for part of the closing costs. They’re not paid directly to the buyer, though. They’re put toward the buyer’s mortgage.

And while seller concessions can benefit both the buyer and seller, there are limits to how much the seller can pay based on the loan type. The following are the limits for different types of home loans:

  • Conventional loans: For a primary residence or second home, if the buyer’s down payment is less than 10%, the seller can provide up to 3% of the purchase price in seller concessions. If the buyer’s down payment is between 10% and 25%, the limit is 6%. If the down payment is more than 25%, the seller concession limit is 9%. But for an investment property, the seller concession limit is 2%, no matter what the down payment is.
  • Federal Housing Administration (FHA) loans: The seller can provide up to 6% of the purchase price in closing costs, no matter what the down payment is.
  • U.S. Department of Veteran Affairs (VA) loans: The seller concession amount can be up to 4% of the purchase price for any down payment amount.
  • U.S. Department of Agriculture (USDA) loans: The seller concession limit is up to 6% of the purchase price, no matter what the down payment is.

How much are closing costs for a buyer?

As you’re considering how much you can afford to pay for a home, it can be helpful to have an idea of what closing costs you may have to pay. They can include costs such as escrow funds, which the lender holds for things like property taxes, homeowners insurance, premiums and mortgage insurance. Closing costs could also include a credit reporting fee for the lender to pull your credit reports during the application process. 

Here are some of the fees that may be included in closing costs and what you might expect to pay for them:

Type of fee Possible cost
Appraisal fee $300-$700
Escrow funds 2 months’ worth of expenses
Recording fees $100
Home inspection fee $300-$500
Title search $200-$400
Land survey $300-$950
Credit reporting fee $35
Origination fee 0.5%-1% of the loan
Application fee Up to $500
Underwriting fee Up to $795
Discount points 1% of the loan per point
Attorney fee Varies
Courier fee $30
Notary fee $100


How much are closing costs for a seller?

If you’re selling your house and will be paying some of the closing costs, it’s a good idea to know what could be included. The following are some potential fees and costs:

Type of fee Possible cost
Real estate commissions (for the buyer and seller) 5%-6% of the purchase price
Title insurance $150-$1,000
Mortgage payoff Varies
Outstanding property debts Varies
Seller’s attorney fees Varies
Transfer taxes Varies
Recording fees $100


How to reduce closing costs

Closing costs can add up, but there are some ways for homebuyers to lower what they pay:

  • Lender comparison: Before you decide which lender to apply for a mortgage with, it can help to shop around and see what fees they may charge or what discounts they might offer. For example, you may want to use a lender that offers no origination fee or has a discount if you’re currently a customer. 
  • Down payment assistance: If you’re a first-time or qualified homebuyer, you may be able to apply for down payment assistance, which can help cover some or all of your closing costs. Keep in mind, there are certain requirements for these programs. 
  • Seller contributions: One way to reduce costs is by having the seller contribute to the closing costs through seller concessions. It may be easier to negotiate this in a buyer’s market
  • No-closing-cost mortgage: Another option is a no-closing-cost mortgage, which can reduce the upfront fees when you close on a home. However, the fees are typically added to the loan principal or could result in a higher interest rate on the loan, so you’ll still pay for them. 

Closing costs FAQ

If you’re still wondering about things like how to estimate closing costs and when you’ll pay for them, look no further. Here are some common questions:

Closing costs can be about 3% of the cost of the home, so if you know what the total will be, you can go from there. You might also consider using a closing costs calculator online.

As you’re considering lenders, one of the questions you ask could be about estimated closing costs. No matter what, you’ll receive the closing disclosure, which will outline how much you’ll pay for closing costs, just before the closing occurs. 

Most closing costs are paid during the closing. But some fees—like the appraisal and inspection fees—are typically paid ahead of time.

It’s not always possible, but your lender may allow you to include—or roll—closing costs in your loan. However, it could mean paying a higher interest rate on the overall loan.

Home closing costs in a nutshell

When you’re ready to buy, sell or refinance a home, it’s a good idea to be prepared for closing costs. They can include fees for different things like the appraisal, inspection and loan underwriting and could fall between 2% and 7% of the cost of the home. One way to prepare for these costs is by creating a budget. And if you’re interested in building a house, check out some homebuilding expenses you might encounter.

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