Closing Costs
Closing costs are the fees and charges you pay on top of your home’s purchase price when the deal officially closes — and they typically run 2%–5% of the loan amount. On a $350,000 home, that’s $7,000–$17,500 in cash you need beyond your down payment.
These costs cover everything from the lender’s paperwork to the government’s recording fees. Some are negotiable. Some aren’t. Knowing the difference saves you real money.
Typical Closing Costs Breakdown
| Fee | Typical Range | Who Pays | Negotiable? |
|---|---|---|---|
| Loan origination fee | 0.5%–1% of loan amount | Buyer | Yes |
| Appraisal | $400–$700 | Buyer | No |
| Home inspection | $300–$600 | Buyer | No (but optional) |
| Title search | $200–$400 | Buyer or Seller | Sometimes |
| Title insurance (lender’s) | $500–$1,500 | Buyer | No |
| Title insurance (owner’s) | $500–$2,000 | Buyer or Seller | Varies by state |
| Attorney/settlement fee | $500–$1,500 | Buyer and/or Seller | Sometimes |
| Recording fees | $50–$250 | Buyer | No |
| Transfer tax/stamps | Varies widely by state | Buyer or Seller | No |
| Prepaid property taxes | 2–6 months | Buyer | No |
| Prepaid homeowners insurance | 6–12 months | Buyer | No |
| Mortgage insurance (FHA/PMI) | Varies | Buyer | No |
| Discount points | 0%–2% of loan | Buyer | Yes (optional) |
| Credit report | $30–$75 | Buyer | No |
| Flood certification | $15–$30 | Buyer | No |
State-by-State Variations
Closing costs vary dramatically depending on where you buy. Some states require attorneys at closing. Others don’t. Transfer taxes alone can swing costs by thousands.
| State | Avg. Closing Costs (incl. taxes) | Notable Fees |
|---|---|---|
| New York | $16,800+ | Mansion tax (1%+ over $1M), mortgage recording tax |
| Texas | $9,200 | No state income tax, but high property tax escrows |
| Florida | $8,500 | Documentary stamp tax, intangible tax on mortgages |
| California | $7,900 | Transfer tax varies by county ($1.10 per $1,000) |
| Ohio | $6,400 | Conveyance fee ($4 per $1,000) |
| Missouri | $4,800 | Among the lowest in the nation |
These numbers shift every year with local tax changes and lender fee adjustments. Always get quotes from at least three lenders to compare.
Buyer vs. Seller Closing Costs
Buyers usually pay the bulk of closing costs — all the lender fees, prepaid items, and insurance. Sellers typically cover the real estate agent commissions (5%–6% of sale price), their share of property taxes, and any title fees customary in their state.
That said, buyers can negotiate seller concessions. In a slow market, it’s common to ask the seller to cover $5,000–$10,000 toward your closing costs. FHA loans allow up to 6% in seller concessions. Conventional loans cap it at 3%–9% depending on your down payment.
How to Reduce Closing Costs
You won’t eliminate closing costs, but you can trim them meaningfully:
- Shop lenders aggressively. Origination fees vary by $1,000+ between lenders on the same loan
- Negotiate the origination fee. Some lenders waive it entirely if you accept a slightly higher rate
- Ask about lender credits. A 0.25% higher rate might come with $3,000 in credits that offset your closing costs
- Choose your own title company. Don’t automatically use whoever the lender or agent suggests
- Skip discount points unless you’ll keep the loan 7+ years
- Close at end of month. You’ll prepay fewer days of interest
Wire Fraud Warning
Closing day means wiring large sums of money — and criminals know it. Wire fraud targeting real estate transactions has exploded in recent years. Scammers hack email accounts (usually the title company’s or agent’s) and send fake wiring instructions that route your down payment and closing costs to a thief’s account.
Always confirm wiring instructions by phone using a number you already have — never a number from the email itself. Call the title company directly. If the wiring instructions change last-minute, that’s a massive red flag. Once a wire goes to the wrong account, recovery is rare.
When Are Closing Costs Due?
You pay closing costs on closing day, usually via wire transfer or cashier’s check. Your lender sends a Closing Disclosure at least three business days before closing, showing every line item. Compare it to your original Loan Estimate. If anything jumped by more than the legal tolerance, push back.
Some lenders let you roll closing costs into the loan balance. This means you pay nothing upfront but you’re borrowing more — and paying interest on those fees for 30 years. On $10,000 in closing costs at 7%, that’s an extra $13,900 in interest over the life of the loan.
Frequently Asked Questions
Can I get a loan with no closing costs?
Sort of. “No closing cost” mortgages don’t eliminate fees — they hide them. The lender either rolls costs into your loan balance (so you borrow more) or charges a higher interest rate to recoup them. On a $300,000 loan, a “no closing cost” option might add 0.25%–0.50% to your rate. That costs more in the long run than just paying upfront. Run both scenarios through our mortgage calculator to see the real difference.
How much cash do I actually need to close?
Add your down payment plus closing costs (2%–5% of loan), then subtract any seller concessions or lender credits. On a $300,000 home with 5% down and 3% closing costs, you’d need roughly $24,000 in cash — $15,000 for the down payment and $9,000 for closing. Use our closing cost calculator to get a personalized estimate, and check our affordability calculator to see what you can actually afford.