Closing costs surprise many first-time buyers. They are separate from your down payment and typically total 2%–5% of the purchase price.
What is included
Common items include loan origination and underwriting fees, appraisal, credit report, title search and title insurance, escrow or attorney fees, recording fees and prepaid items such as homeowners insurance and property taxes collected in advance for your escrow account.
Loan Estimate and Closing Disclosure
Lenders must give you a Loan Estimate within three business days of applying and a Closing Disclosure at least three business days before closing. Compare the two and ask about any increases in fees that cannot legally change.
Ways to lower closing costs
Shop for lenders and title providers, ask for seller concessions, negotiate lender credits in exchange for a slightly higher rate, and time your closing near the end of the month to reduce prepaid interest.
Try the numbers
Use our Closing Costs Calculator to see this in practice. With its default example (Home price: $400,000; Down payment: 20%; Lender fees (% of loan): 1%), it shows total cash to close: $89,700. Adjust the inputs to match your situation.
Key takeaways
- Budget 2%–5% of the price for closing costs.
- Compare your Loan Estimate and Closing Disclosure line by line.
- Seller credits and lender credits can reduce cash needed.
This article is for general education and is not personalized financial, tax or legal advice. Rules and limits change; confirm current figures with official sources such as IRS.gov, SSA.gov and StudentAid.gov, or consult a qualified professional. © 2026 FinanzCalc.