What Are Closing Costs and How Much Should You Budget?

Short answer: Closing costs typically run about 2-5% of the loan amount and cover a range of fees beyond your down payment — lender fees, title work, appraisal, insurance, and prepaid items like property taxes.

What’s typically included

• Lender/origination fees
• Appraisal and credit report fees
• Title search and title insurance
• Recording fees and transfer taxes (vary by state)
• Prepaid items: homeowners insurance, property taxes, and interest collected at closing

How buyers cover closing costs

Closing costs are usually paid out of pocket at closing, separate from your down payment. Some buyers negotiate for the seller to cover part of these costs (“seller concessions”), and some Down Payment Assistance programs can help with closing costs as well as the down payment itself.

Budgeting for closing costs

Because the exact amount depends on your loan amount, location, and program, it’s worth getting a specific estimate rather than assuming a flat percentage. Your Loan Estimate, provided early in the process, breaks these costs down in detail.

Get a real estimate for your situation

Talk to us about your specific purchase, and we’ll walk through what your actual closing costs are likely to look like.