How to estimate your closing costs
Closing costs are the fees that finalize a purchase, separate from the down payment. They go to the lender, title company, government, inspectors, and other providers involved in the transaction.
- Enter price and down payment. Each fee is estimated from the loan amount and purchase price.
- Review the total. The right panel shows the dollar amount and its share of the purchase price.
- Fine-tune the line items. Open Fee Breakdown and replace any estimate with a real quote. Edited fees stay locked until you reset them.
The interest rate field only affects prepaid interest, which is the daily interest between closing and the end of that month. Everything else follows the price and loan amount.
What is included in closing costs?
- Loan fees - The lender's charges for processing the mortgage. Origination is usually the largest, and discount points are optional.
- Title and legal - Title search, title insurance, settlement or escrow fees, and attorney charges protect both you and the lender from ownership disputes.
- Prepaid expenses - Homeowners insurance, a few months of property tax, and daily interest from closing to month end.
- Inspections and appraisal - The appraisal confirms value for the lender; inspections and pest checks protect you.
- Government and recording - Local fees to record the deed transfer and mortgage documents.
Ways to reduce closing costs
- Shop services - Title insurance, settlement, and inspections vary widely. Get at least three quotes.
- Negotiate seller concessions - In a buyer-friendly market, sellers may cover a portion of your fees.
- Close near month-end - Fewer days of prepaid interest means a smaller check at closing.
- Skip discount points - Points only pay off if you keep the loan long enough to recoup them.
- Ask about lender credits - Some lenders cover part of the fees for a slightly higher rate. Useful when cash at closing is tight.
Frequently asked questions
How much are closing costs on a house?
Most buyers pay between 2% and 5% of the purchase price. On a $400,000 home that is roughly $8,000 to $20,000, depending on the lender, state, and loan type. The estimate here lands near the middle of that range with typical national averages.
Who pays closing costs?
The buyer usually pays most of them, but not all. Sellers commonly cover the real estate commission and sometimes agree to credits toward the buyer's fees. Lender fees, title insurance, prepaid interest, and recording charges typically stay with the buyer unless negotiated otherwise.
Can closing costs be negotiated?
Yes. You can compare lender loan estimates, ask for seller concessions, shop title insurance and settlement services, and request lender credits in exchange for a slightly higher rate. Getting three quotes on title and inspection work alone can save several hundred dollars.
What is prepaid interest at closing?
It is the daily interest from your closing date to the end of that month, paid upfront because your first mortgage payment arrives the following month. Closing later in the month reduces this line item, which is why timing a closing near month-end can lower the total.
Why do closing costs change with the down payment?
Several fees are based on the loan amount, such as origination and prepaid interest. A larger down payment shrinks the loan and those fees. Other charges, like title insurance and property tax prepaids, follow the home price instead and barely move.
Are closing costs included in the mortgage?
Usually not. They are paid at closing from your own funds, though some loans allow the seller or lender to cover part of them. Rolling fees into the loan raises the balance and interest, so compare the long-term cost before choosing that route.
Estimates use national averages and are not a Loan Estimate. Actual fees depend on your lender, state, title company, and loan program. Compare the official Loan Estimate before committing.
