Home buying costs
How Much Are Closing Costs When Buying a House?
By the HomeCalc USAReviewed against our editorial policyLast updated US units and pricing
Buyers in the US typically pay 2% to 5% of the loan amount in closing costs. On a $400,000 purchase with 20% down ($320,000 loan), expect roughly $6,400 to $16,000, split between lender fees, title and escrow charges, government recording and transfer taxes, and prepaid taxes and insurance.
Skip the arithmetic: use the Closing Cost Calculator.
Key takeaways
- Closing costs are not one fee. They are four groups: lender charges, third-party services, government charges, and prepaids/escrow deposits.
- Only the first group is genuinely negotiable with the lender; transfer taxes and recording fees are fixed by state and county law.
- Your Loan Estimate arrives within three business days of application, and the Closing Disclosure at least three business days before closing — compare them line by line.
- Prepaids are not a fee. Escrow deposits and prepaid interest are your own money moved forward, not a cost of borrowing.
- Transfer taxes swing the total hard: zero in much of the West, but over 1% of price in parts of New York, Delaware and Pennsylvania.
What buyers actually pay for
Typical buyer-side line items on a $320,000 loan.
| Category | Typical items | Typical cost |
|---|---|---|
| Lender fees | Origination, underwriting, application, rate lock, discount points | $1,500–$5,000 |
| Third-party services | Appraisal, credit report, flood cert, pest inspection | $700–$1,500 |
| Title and settlement | Lender's title policy, owner's policy, settlement/closing fee | $1,200–$4,000 |
| Government | Recording fees, state and county transfer tax | $100–$5,000+ |
| Prepaids and escrow | Prepaid interest, 12 months homeowners insurance, 2–6 months tax | $2,000–$6,000 |
Worked example: $400,000 purchase, 20% down
Loan amount is $320,000. A 1% origination charge is $3,200. Appraisal and credit run about $800. Lender's title insurance plus a settlement fee comes to roughly $1,900, with an optional owner's policy adding $1,200 in states where the buyer pays it.
Recording is a few hundred dollars. In a state with no transfer tax that is the end of the government column; in one charging 1% of price it adds $4,000.
Prepaids depend on your closing date: closing on the 28th means two days of prepaid interest, closing on the 2nd means nearly a full month. Add a year of homeowners insurance (roughly $1,800 nationally, far more on the Gulf Coast) plus a few months of property tax into escrow.
Total lands near $11,000 without transfer tax and near $15,000 with it — 3.4% and 4.7% of the loan respectively, both inside the normal range.
Who pays what, and what is negotiable
- Seller concessions: sellers can contribute toward buyer closing costs, limited by loan type (3% to 9% for conventional depending on down payment, 6% for FHA, 4% for VA).
- Lender credits: taking a slightly higher rate in exchange for a credit that offsets closing costs — worth it on a short expected hold, expensive on a long one.
- Shopping the service list: your Loan Estimate marks which services you may shop for, usually title, settlement and pest inspection.
- VA loans bar buyers from paying certain fees, and the funding fee replaces mortgage insurance.
- Transfer taxes, recording fees and state-mandated attorney involvement are not negotiable — they are statutory.
Why estimates and the final Closing Disclosure differ
- Rate lock changes: relocking or extending after a rate move adds a fee.
- Closing date slips: prepaid interest and the escrow deposit recalculate with the date.
- Insurance binder: the actual premium can exceed the quoted placeholder, especially in wildfire and hurricane zones.
- Tax proration: a mid-cycle closing splits the current bill between buyer and seller, and a recent reassessment changes the amount being split.
- Survey or HOA documents ordered late in the process appear only on the final disclosure.
Frequently asked questions
Are closing costs based on the purchase price or the loan amount?
Both. Lender fees and prepaid interest scale with the loan amount, while transfer taxes and title insurance are usually priced off the purchase price. The common 2%–5% rule of thumb is quoted against the loan amount.
Can closing costs be rolled into the mortgage?
On a purchase, generally no — except through a lender credit or seller concession. Refinances routinely roll costs into the new balance because there is existing equity to absorb them.
Do closing costs include the down payment?
No. The down payment is separate equity you contribute. Cash to close is the down payment plus closing costs, minus any credits and your earnest money deposit.
Which states have the highest closing costs?
States with high transfer taxes and attorney-closing requirements — New York, Delaware, Pennsylvania, Maryland and Washington DC — run highest. Missouri, Indiana and Wyoming sit near the bottom.
Sources and references
- Consumer Financial Protection Bureau — Understanding closing costs — Loan Estimate and Closing Disclosure timing and tolerance rules.
- CFPB — Loan Estimate explainer — Which fees can change before closing and by how much.
- US Department of Veterans Affairs — VA loan fees — Fees VA buyers are not allowed to pay.