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Mortgage Closing Costs: How Much You’ll Pay

Mortgage closing costs typically run from 2% to 6% of the loan amount, including property taxes, title insurance and more.

Robin Rothstein
Chris Jennings
Updated
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After saving for a down payment, house hunting and applying for a mortgage, closing costs can come as an unpleasant surprise.
Understanding what closing costs cover and budgeting for them will help smooth out the final stretch of the homebuying process.

What are closing costs?

Closing costs include the myriad fees for the services and expenses required to finalize a mortgage and transfer property ownership. You’ll pay closing costs whether you buy a home or refinance.

How much are closing costs?

Average closing costs for the buyer run between about 2% and 6% of the loan amount. That means, on a $300,000 home loan, you would pay from $6,000 to $18,000 in closing costs in addition to the down payment.
The most cost-effective way to cover the costs is to pay them out-of-pocket as a one-time expense. You may be able to finance them by folding them into the loan, if the lender allows, but then you’ll pay interest on those costs through the life of the mortgage.
When buying a home, you can comparison shop and negotiate some of the fees to lower your closing costs. And some states, counties and cities offer low-interest loan programs or grants to help first-time home buyers with closing costs. Check with your local government to see what’s available.
» MORE: Find first-time home buyer programs in your state
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How to determine your closing costs

A local real estate agent can help estimate closing costs based on your area and prospective home price.
After you apply for a mortgage, the lender will outline the projected closing costs along with other details in a Loan Estimate document. You should receive the Loan Estimate within three business days after applying.
In the days before the closing, the lender will provide a final summary of the closing costs in a Closing Disclosure document. Review these documents closely and ask questions about anything you don’t understand, especially if details in the Closing Disclosure don’t align with the Loan Estimate.
Meanwhile, you can use a closing costs calculator to estimate how much you'll pay.

Closing costs calculator

Who pays the closing costs?

Closing costs can vary widely for both buyers and sellers. For buyers, the state where the property is located, loan type, lender and whether they’re paying their own agent’s commission can all play a significant role. For sellers, location and market conditions — such as whether it’s a buyer’s or seller’s market — impact how much they’ll have to shell out.
» MORE: What are the closing costs for the home seller?
For example, buyers can ask sellers to pay some of their closing costs. When the seller agrees, it's called a seller concession. The seller is more likely to contribute if there are more homes for sale than would-be buyers in the local market, or the property has issues that make it challenging to sell. Your real estate agent can help you decide the best negotiating strategy.

Seller concessions

Lenders place limits on how much sellers can contribute toward the buyer's closing costs, depending on the type of loan. Here are the maximum amounts:
Conventional loan
If the buyer will live in the home:
  • Up to 3% of the sale price or the home's appraised value, whichever is less, if the buyer's down payment is less than 10%.
  • Up to 6% if the down payment is between 10% and 25%.
  • Up to 9% if the down payment is 25% or more.
If the home is an investment property, the limit is 2%, regardless of the down payment.
FHA loan: Up to 6% of the sales price.
USDA loans: Up to 6% of the sales price.
VA loan: Up to 4% of a home loan.
Did you know...
Seller concessions cannot be used for the down payment and cannot exceed the total amount of the closing costs.

Closing costs for the buyer

Here are some of the most common fees you'll run across, along with some cost estimates:

Appraisal fee

Cost estimate: $500-$800
The lender orders a home appraisal to make sure the loan amount doesn't exceed the property value. Fees vary by property, region and type of loan.

Discount points

Cost: One discount point equals 1% of the loan amount and typically reduces the interest rate by a quarter of a percentage point.
Discount points are optional fees you pay upfront to lower the interest rate.
» MORE: Should you buy discount points?

Escrow account funds

Cost estimate: Varies widely
Your lender will set up an escrow account, which the mortgage servicer will use to collect and pay your property taxes, home insurance and, if applicable, mortgage insurance premiums.
At closing, you'll contribute money to fund the account, usually enough to cover the estimated annual total of taxes and premiums, plus an additional two months worth of costs.
» MORE: What is a mortgage servicer?

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Flood determination and monitoring fees

Cost estimate: $50
These fees pay a company to determine if the property is in a flood zone and to alert the lender if the flood zone changes.

Government recording fees

Cost estimate: $125
These fees pay to update local property ownership records. They are non-negotiable and set by local governments, so expect variation based on location.

Loan-origination charges

Cost estimate: 1% of the loan amount
Lenders charge fees to cover the cost of underwriting and processing your loan. They may include an application fee, underwriting fee or lender "points."

Mortgage insurance or fees for government-backed loans

Government-backed mortgages have upfront fees that are paid at closing if they're not rolled into the loan.
  • FHA loans: Require an upfront mortgage insurance premium equal to 1.75% of the loan amount.
  • USDA loans: Have an upfront guarantee fee equal to 1% of the loan amount.
  • VA loans: Have a funding fee that ranges between 1.25% and 3.3% of the loan amount for a purchase or construction loan. The cost depends on the down payment and whether this is your first VA loan.

Pest inspection

Cost estimate: $100
In some areas, lenders require a termite inspection or wood-destroying insect organism report. This is separate from a general home inspection, which usually isn't required but highly recommended.

Prepaid expenses

You'll prepay for:
  • Home insurance: Typically you'll need to buy home insurance before closing. The average cost of home insurance is $2,490 a year, in 2026, according to a NerdWallet analysis, but prices vary depending on the location, property and coverage.
  • Property tax: You and the seller will each pay a prorated share of property taxes for the year, based on your time owning the home. Local government tax rates vary.
  • Interest: You'll prepay the interest that accrues on the mortgage between the closing date and the first monthly payment due date. Costs vary depending on your loan amount and interest rate.

Tax monitoring and research fees

Cost estimate: $150
These fees are for checking how much property tax you owe and making sure the taxes are paid.

Title-related costs

A rule of thumb is that title insurance fees are about 0.5% to 1% of the home price, but they vary by state. Fees may be included in the cost of the policies or itemized.
  • Lender's title insurance: The coverage compensates the lender if there's a mistake in the title search and someone makes an ownership claim on the property.
  • Owner's title insurance: The owner's policy protects the home buyer in case of an ownership claim on the property. Although not required, it's a good idea to buy an owner's policy. In some areas, it's customary for the seller to pay for the owner's policy.
  • Title search fee: The fee covers the cost of researching public records to make sure the person selling the property is the legal owner.
  • Other title fees: These may include title closing, notary fees and the cost of an attorney if one is required.

Closing costs for the seller

Sellers don't get away without paying some closing costs, even if they decline to pay a portion of the buyer's share. The most significant closing costs for sellers are:

Real estate agent commissions

Historically, the seller picked up the commission for their agent as well as the buyer's. However, a new system of paying real estate agents went into effect in August 2024, shifting the responsibility for paying the buyer’s agent commission to buyers.
Despite this, sellers may still pay some or all of the commission to the buyer's agent. Combined, the commissions are about 5% to 6% of the sale price of the home.

Property and transfer taxes

The seller will pay a prorated share of the property taxes and are usually on the hook for transfer taxes. These vary by jurisdiction.

Title insurance

In some areas, the seller pays for some of the title insurance costs.
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