Quick Answer
Closing costs for homebuyers typically range from 2% to 5% of the purchase price. On a $400,000 home, expect $8,000 to $20,000 in closing costs -- on top of your down payment. With a 10% down payment, your total cash to close would be approximately $52,000: $40,000 down payment plus $12,000 in average closing costs.
Closing costs cover lender fees, third-party services (appraisal, title insurance), prepaid items (property taxes, homeowners insurance), and government recording and transfer taxes. Some fees are negotiable, others are fixed, and several vary dramatically by state.
Key Takeaways
Buyer closing costs range from 2% to 5% of the home price -- on a $400,000 home, that is $8,000 to $20,000 on top of your down payment. Lender fees are the most negotiable -- always compare Loan Estimates from at least 3 lenders and use competing offers as leverage. State variation is the largest cost swing: transfer taxes, mandatory attorney fees, and title insurance regulation can change your total by thousands of dollars. FHA and VA loans add government fees (1.75% UFMIP or 1.25%-3.3% VA funding fee) that increase total closing costs even though down payments are lower. Five strategies can reduce your costs: compare lenders, shop title insurance, request seller concessions, consider no-closing-cost mortgages, and time your closing date. Use our Mortgage Payment Calculator to see how closing costs affect your total home purchase cost.
What Are Closing Costs?
Closing costs are one-time fees and prepaid expenses paid when a real estate transaction is finalized. They compensate the lenders, attorneys, title companies, appraisers, government agencies, and insurance providers involved in completing your home purchase.
Closing costs are separate from the down payment. Together, the down payment and closing costs make up your total "cash to close" -- the amount you need to bring to the closing table. Many first-time buyers save exactly enough for a down payment and are surprised by an additional $8,000 to $20,000 in fees.
Both buyers and sellers have closing costs, but they cover different items. This guide focuses on buyer closing costs. Sellers typically pay real estate agent commissions and their share of transfer taxes.
Your closing costs will be itemized on two key documents:
- Loan Estimate: provided within 3 business days of applying for a mortgage -- your first look at estimated costs
- Closing Disclosure: provided at least 3 business days before closing -- your final, itemized statement of actual costs
If you are budgeting for a home purchase, our First-Time Homebuyer Guide 2026 covers the full timeline from pre-approval to closing day.
Complete Closing Cost Breakdown for Buyers
Closing costs fall into four categories: lender fees, third-party fees, prepaid items, and government fees. Here is what each includes and what you can expect to pay.
Lender Fees
These are charges from your mortgage lender for processing and underwriting your loan. Lender fees are generally the most negotiable category.
| Fee | Typical Range | Notes |
|---|---|---|
| Origination fee | 0.5%-1.0% of loan | Covers loan processing. Most negotiable lender fee |
| Underwriting fee | $300-$900 | Covers application evaluation and documentation verification |
| Credit report fee | $30-$50 | Tri-merge credit report pull |
| Flood certification | $15-$25 | Verifies whether the property is in a flood zone |
| Rate lock fee | $0-$500 | Some lenders charge to lock your rate; many waive this fee |
Fee ranges are national estimates. Actual lender fees vary by institution and loan program.
Third-Party Fees
These fees go to independent service providers required to complete the transaction.
| Fee | Typical Range | Notes |
|---|---|---|
| Appraisal | $350-$700 | Required by lender. Paid to independent appraiser; not negotiable |
| Title search & insurance | $1,000-$3,000 | Verifies clear ownership. Lender's policy required; owner's optional but recommended. Shoppable |
| Attorney/settlement fee | $500-$2,000 | Mandatory in some states (NY, NJ, CT, MA, GA, SC, and others) |
| Home inspection | $300-$500 | Paid before closing. Not required by lenders but strongly recommended |
| Survey fee | $300-$600 | May be required depending on lender and property type |
Title insurance rates vary by 30% to 50% between providers. Get quotes from at least 2 to 3 companies.
Prepaid Items and Escrow
Prepaid items are not fees -- they are advance payments for recurring costs that your lender collects at closing and holds in escrow. These costs are explained in detail in our PITI Explained guide.
| Item | Typical Amount | Notes |
|---|---|---|
| Homeowners insurance | $1,000-$3,000/year upfront | 12 months of premium paid at closing |
| Property taxes | 2-6 months of taxes | Deposited into escrow. Varies significantly by state and property value |
| Prepaid interest | Per-diem interest | Interest from closing date to end of month. Close late in the month to minimize this cost |
| Escrow reserves | 2-3 months of T&I | Lender may require a buffer in escrow account |
Government Fees
Government fees cover recording your deed and mortgage in public records, plus any transfer taxes imposed by your state or local jurisdiction.
| Fee | Typical Range | Notes |
|---|---|---|
| Recording fees | $50-$250 | County charge for deed and mortgage recording |
| Transfer taxes | $0-$15,000+ | Largest cost variable. $0 in some states (TX, MO), 1%-2% in others (NY, DC, WA) |
| FHA UFMIP | 1.75% of loan amount | FHA loans only. Can be financed into the loan |
| VA funding fee | 1.25%-3.3% of loan amount | VA loans only. Can be financed. Disabled veterans exempt |
Transfer Taxes Are the Wild Card
Transfer taxes are the single largest source of closing cost variation between states. Some states charge nothing, while New York City imposes a 1% transfer tax on sales under $500,000 and a 1.425% tax on higher amounts -- plus a "mansion tax" of 1% or more on properties above $1 million. Always check your state and local transfer tax rates early in the process.
Closing Costs by Home Price
The following table shows estimated buyer closing costs at 3% of the home price -- a mid-range national estimate -- alongside the down payment and total cash needed to close.
| Home Price | Est. Closing Costs (3%) | Down Payment (10%) | Total Cash to Close |
|---|---|---|---|
| $200,000 | $6,000 | $20,000 | $26,000 |
| $300,000 | $9,000 | $30,000 | $39,000 |
| $400,000 | $12,000 | $40,000 | $52,000 |
| $500,000 | $15,000 | $50,000 | $65,000 |
| $600,000 | $18,000 | $60,000 | $78,000 |
| $750,000 | $22,500 | $75,000 | $97,500 |
3% is a mid-range national estimate. Actual closing costs range from 2% in low-cost states to 5% or more in high-cost states. Down payment shown at 10%; your actual down payment depends on loan type. See our Down Payment Guide for a complete analysis.
Budget Rule of Thumb
Plan your total cash to close as down payment + 3% to 5% of the home price for closing costs. If you are buying a $400,000 home with 10% down, budget $52,000 to $60,000 total -- not just the $40,000 down payment. For help determining how much house fits your budget, see our How Much House Can I Afford? guide.
How Closing Costs Vary by State
Where you buy has a major impact on what you pay at closing. State-level variation is primarily driven by four factors:
- Transfer taxes -- the single largest variable, ranging from $0 to over 2% of the sale price
- Attorney requirements -- mandatory in approximately 20 states, optional in others
- Title insurance regulation -- some states set rates, others allow competition
- Property tax rates -- affect the amount held in prepaid escrow
State Closing Cost Comparison on a $400,000 Home
| State | Estimated Closing Costs | Key Cost Driver |
|---|---|---|
| Missouri | $6,000-$8,000 | No transfer tax, no mandatory attorney |
| Indiana | $6,500-$8,500 | No transfer tax, low recording fees |
| Texas | $8,000-$10,000 | No state income tax but higher title costs |
| California | $10,000-$14,000 | County transfer taxes vary by jurisdiction |
| Connecticut | $14,000-$18,000 | Mandatory attorney, 0.75% transfer tax |
| New York | $16,000-$24,000 | Mansion tax (1%+ above $1M), mandatory attorney, high recording fees |
Estimates based on a $400,000 home with a conventional loan. Actual costs depend on your specific lender, title company, property, and local requirements. Your Loan Estimate will itemize the specific costs for your transaction.
Closing Costs by Loan Type: FHA, VA, and Conventional
The type of mortgage you choose affects both your down payment and your closing costs. Government-backed loans (FHA and VA) offer lower down payments but add program-specific fees that can increase your total cost at closing.
| Fee | Conventional | FHA | VA |
|---|---|---|---|
| Origination fee | 0.5%-1.0% | 0.5%-1.0% | 0.5%-1.0% |
| Appraisal | $350-$700 | $400-$700 (stricter standards) | $425-$700 (VA-specific appraiser) |
| UFMIP / Funding fee | None | 1.75% of loan amount | 1.25%-3.3% of loan amount |
| Title insurance | Required | Required | Required |
| Transfer taxes | Varies by state | Varies by state | Varies by state |
| Discount points | Optional | Optional | Optional |
| Total estimate (3.5% down) | 2%-4% | 3%-5% (UFMIP adds ~1.75%) | 2%-5% (funding fee adds 1.25%-3.3%) |
Percentage ranges are of the home purchase price. FHA UFMIP and VA funding fee can both be financed into the loan to reduce cash at closing. Disabled veterans are exempt from the VA funding fee.
Financing Government Fees
Both FHA and VA allow their program-specific fees to be rolled into the loan. This reduces your cash at closing but increases your loan balance and monthly payment. On a $386,000 FHA loan (3.5% down on $400,000), financing the 1.75% UFMIP adds approximately $6,755 to your loan balance. For a detailed comparison of FHA requirements, see our FHA Loan Requirements 2026 guide. To understand how PMI affects conventional loans, see Understanding PMI.
5 Strategies to Reduce Your Closing Costs
Not all closing costs are fixed. Here are five proven strategies that can save you hundreds to thousands of dollars at the closing table.
Strategy 1: Compare Loan Estimates from Multiple Lenders
The single most effective way to reduce closing costs is to shop multiple lenders. Get Loan Estimates from at least 3 lenders -- the standardized 3-page form makes apples-to-apples comparison straightforward.
Focus on Section A (origination charges) and Section B (services you cannot shop for) on page 2 of the Loan Estimate. Lender fees -- origination, underwriting, and processing -- are the most negotiable. Use competing Loan Estimates as leverage to negotiate lower fees. According to the Consumer Financial Protection Bureau, borrowers who compare multiple lenders typically save significantly on their mortgage.
To understand how lender fees affect your true borrowing cost, see our guide on APR vs. Interest Rate.
Strategy 2: Shop for Title Insurance
Title insurance can vary by 30% to 50% between providers. In most states, the buyer can choose the title insurance company -- you are not required to use the one your real estate agent or lender suggests.
- Get quotes from at least 2 to 3 title companies
- Ask about bundled discounts if you purchase both lender's and owner's title policies from the same provider
- Some states regulate title insurance rates, which limits shopping opportunities -- check your state's rules
Strategy 3: Ask the Seller for Closing Cost Concessions
Seller concessions are payments the seller makes toward your closing costs, typically deducted from the sale proceeds. Each loan type limits how much the seller can contribute:
- Conventional loans: up to 3% of the sale price (with less than 10% down), 6% (with 10%-25% down), or 9% (with 25%+ down)
- FHA loans: up to 6% of the sale price
- VA loans: up to 4% of the sale price
In a buyer's market, sellers may agree to contribute 1% to 3% toward your closing costs to complete the deal. In a competitive seller's market, concessions are less common but still worth requesting, especially if the property has been listed for an extended period.
Strategy 4: Consider a No-Closing-Cost Mortgage
Some lenders offer to cover your closing costs in exchange for a higher interest rate, typically 0.25% to 0.50% higher than the standard rate. This reduces cash needed at closing but increases your monthly payment for the life of the loan.
This option is best for buyers who plan to sell or refinance within 5 to 7 years. The breakeven point is when the cumulative cost of the higher rate exceeds the closing costs you avoided paying upfront. Beyond that point, you would have been better off paying closing costs at the start.
Use our Mortgage Payment Calculator to model the monthly payment difference between a standard-rate mortgage with closing costs and a higher-rate no-closing-cost option.
Strategy 5: Time Your Closing Strategically
Closing at the end of the month reduces your prepaid interest charge. Prepaid interest covers the days from your closing date to the end of that month.
- Closing on the 28th of a 30-day month: 2 days of prepaid interest
- Closing on the 15th: 15 days of prepaid interest
On a $400,000 loan at 6.5%, each day of prepaid interest costs approximately $71. Closing 13 days earlier adds roughly $923 to your closing costs. However, do not delay a closing solely for this savings -- the cost of a delayed closing (rate lock expiration, seller frustration) can exceed the prepaid interest savings.
Closing Costs vs. Down Payment: Understanding the Difference
These two expenses are often confused, but they serve entirely different purposes:
- Down payment: the portion of the home price you pay in cash. This becomes your immediate equity in the home. For example, 10% down on a $400,000 home = $40,000 in equity from day one
- Closing costs: one-time transaction fees paid to service providers (lenders, attorneys, title companies, government agencies). This money does not become equity in your home
Both are due at closing, paid together as your "cash to close" total.
Common Budgeting Mistake
Saving exactly your down payment amount and being surprised by $8,000 to $20,000 in additional closing costs is one of the most common first-time homebuyer mistakes. Always budget down payment + 3% to 5% of the home price for closing costs. For a $400,000 home with 10% down, that means saving $52,000 to $60,000 -- not just $40,000.
You can reduce your down payment (FHA allows as little as 3.5%), but closing costs are harder to eliminate entirely -- some fees are non-negotiable. For a complete analysis of down payment options by loan type, see our How Much Down Payment for a House guide.
If you are evaluating whether buying makes financial sense compared to renting, our Rent vs. Buy Decision Guide factors in closing costs as part of the total cost of homeownership.
Frequently Asked Questions
Buyer closing costs typically range from 2% to 5% of the home purchase price. On a $400,000 home, expect $8,000 to $20,000 in closing costs in addition to your down payment. The exact amount depends on your state, lender, loan type, and the specific fees charged by your title company and other service providers.
Both buyers and sellers pay closing costs, but they cover different items. Buyers pay lender fees, title insurance, prepaid taxes and insurance, and government recording fees. Sellers typically pay real estate agent commissions, their portion of transfer taxes, and any seller concessions toward the buyer's costs.
Yes, some closing costs are negotiable. Lender origination fees, underwriting fees, and processing fees can often be reduced by comparing Loan Estimates from multiple lenders. Title insurance is shoppable in most states. Government fees and prepaid items (taxes, insurance) are generally fixed and non-negotiable.
In some cases, yes. FHA loans allow the 1.75% UFMIP to be financed into the loan. VA loans allow the funding fee to be financed. Some conventional lenders offer "no-closing-cost" mortgages that cover fees in exchange for a higher interest rate. However, financing closing costs increases your loan balance and monthly payment.
States with high transfer taxes and mandatory attorney requirements have the highest closing costs. New York, Connecticut, New Jersey, Delaware, and Washington DC typically have closing costs of 4% to 5% or more of the home price. States without transfer taxes (Missouri, Indiana) or attorney requirements tend to have lower costs at 2% to 3%.
FHA loans have similar base closing costs to conventional loans but add the Upfront Mortgage Insurance Premium (UFMIP) of 1.75% of the loan amount. On a $400,000 loan, that adds $7,000 to closing costs. The UFMIP can be financed into the loan to reduce cash at closing. See our FHA Loan Requirements 2026 guide for details.
Five strategies: (1) Compare Loan Estimates from 3 or more lenders to negotiate lender fees, (2) shop for title insurance from multiple providers, (3) ask the seller for closing cost concessions, (4) consider a no-closing-cost mortgage if you plan to move within 5 to 7 years, and (5) close at the end of the month to reduce prepaid interest.
The down payment is the cash portion of the home price you pay, which becomes your immediate equity. Closing costs are one-time transaction fees paid to lenders, attorneys, title companies, and government agencies -- this money does not become equity. Both are due at closing. Budget your total cash-to-close as: down payment + 3% to 5% of the home price for closing costs.
Ready to Calculate Your Total Home Purchase Cost?
Enter your home price, down payment, interest rate, and local tax and insurance costs into our free Mortgage Payment Calculator. See your full monthly payment breakdown, total cost over the life of the loan, and amortization schedule -- so you can budget for both your down payment and closing costs with confidence.
Sources
- Consumer Financial Protection Bureau -- Closing on a Mortgage(opens in new tab)
- CFPB -- What Is a Loan Estimate?(opens in new tab)
- U.S. Department of Housing and Urban Development -- Buying a Home(opens in new tab)
- HUD -- FHA Single Family Insurance Programs(opens in new tab)
- U.S. Department of Veterans Affairs -- VA Loan Funding Fee and Closing Costs(opens in new tab)
- Fannie Mae -- Originating & Underwriting Mortgage Products(opens in new tab)
- National Association of REALTORS -- Housing Statistics(opens in new tab)
Important Disclaimer
Disclaimer: This content is for educational and informational purposes only and does not constitute financial, tax, or legal advice. Closing costs vary significantly by state, lender, loan type, and property. The ranges in this guide are national estimates for educational purposes. Your actual closing costs will be itemized on the Loan Estimate (provided within 3 business days of applying) and the Closing Disclosure (provided at least 3 business days before closing). Review these documents carefully and ask your lender to explain any fees you do not understand. Individual circumstances vary, and you should consult with a qualified mortgage professional before making home buying decisions. Data current as of February 2026.
Content reviewed by the Digital Calculator Team. Learn more about our accuracy standards.