Closing costs are the fees and prepaid expenses you pay to finalize a purchase, typically 2% to 5% of the price on top of your down payment. They include lender fees, the appraisal, title insurance, government recording fees and transfer taxes, plus prepaid interest, insurance and property tax deposits. Some are negotiable, and the seller can pay part of them.
What’s included
| Category | Examples | Shop around? |
|---|---|---|
| Lender charges | Origination or underwriting fees, discount points | Yes: compare lenders |
| Third-party services | Appraisal, credit report, survey, pest inspection | Some |
| Title | Title search, lender’s and owner’s title insurance, settlement fee | Often yes |
| Government | Recording fees, transfer taxes | No |
| Prepaids | Interest until your first payment, first year of homeowners insurance | No, but insurance can be shopped |
| Escrow deposit | A cushion of property tax and insurance for your escrow account | No |
Why they vary so much by state
Transfer taxes are the biggest swing. Some states charge none; others charge 1% or more of the price, and who pays (buyer or seller) depends on local custom. Title insurance rates and whether you need an attorney at closing also differ. See closing costs by state.
How you’ll know the real number
Within three business days of applying for a mortgage, your lender must send a Loan Estimate listing expected closing costs. At least three business days before closing, you get a Closing Disclosure with the final numbers. Some fees can’t increase between the two; others can rise a limited amount. The Closing Disclosure, explained covers what to check.
How to lower them
- Compare lenders on total fees, not just the rate, with compare mortgage offers.
- Shop the services your Loan Estimate says you can shop for, like title and settlement.
- Ask the seller to pay part: getting the seller to pay closing costs explains how and the limits for each loan type.
- Lender credits: accept a slightly higher rate in exchange for the lender covering some costs, useful if cash is tight.
- Close near the end of the month to reduce prepaid interest, though the first payment comes sooner.
- Check down payment assistance; some programs cover closing costs too.
Budget for the full cash to close
Your total cash at closing is the down payment plus closing costs, minus your earnest money deposit and any credits. Add it up with the cash to close calculator, and see first-year costs with the true cost to buy.
Common questions
How much are closing costs for a buyer?
Typically 2% to 5% of the price, depending on your loan, your state’s transfer taxes and title costs.
Can closing costs be rolled into the loan?
For a purchase, usually not directly, but you can use seller concessions or lender credits to cover them.
Which closing costs can I shop for?
Your Loan Estimate lists services you can shop for, often title and settlement services. Lender fees can be compared by getting several Loan Estimates.
Updated October 2026. Educational content. OfferBacked is not currently a lender and doesn’t issue pre-approvals or loans.