What Are Closing Costs and How Much Will You Pay?

When buying a home, there’s one big expense beyond your down payment that can catch you off guard—closing costs. These fees cover everything from lender charges to title insurance and can add up quickly. So how much will you actually pay? Who covers these costs? And is there a way to lower them?

In this Redfin article, we’ll break down what closing costs are, how much they typically run, and who foots the bill. Whether you’re buying a house in Reno, NV, or a condo in Kansas City, MO, here’s what you need to know before closing day.

Key takeaways

• Closing costs are fees associated with buying and selling a home, like taxes and insurance.
• Closing costs for buyers range from 2%–5% of the purchase price.
• Closing costs are due on the day of closing when the home is transferred from seller to buyer. 

What are closing costs?

Closing costs are the fees and expenses you’ll pay when finalizing a home purchase. They typically include taxes, title insurance, appraisal fees, and lender charges. For buyers taking out a mortgage loan, closing costs are listed on the closing disclosure statement. You should receive it from the lender at least three days before closing.

How much are closing costs?

Closing cost amounts vary depending on the buyer’s loan program, but they typically range from 2%–5% of the purchase price. The buyer’s down payment must also be paid at closing, but it is listed separately from the closing costs.

What are the average closing costs by state?

Who pays closing costs?

Closing costs are paid according to the terms of the purchase contract made between the buyer and seller. Typically, most of the closing costs will be paid by the buyer. The buyer will receive the closing disclosure and will be expected to pay the charges. However, there are instances when the seller may have to pay some fees at closing too. 

You can also negotiate with the seller to cover some of the closing costs, also called seller concessions. Keep in mind that the seller can only offer so much in closing costs. This depends on the buyer’s loan type, down payment amount, and more. Let’s take a look.

Seller concessions by loan type

VA funding fee: For buyers using a VA loan, an additional closing cost to consider is the VA funding fee, which ranges from 0.5% to 3.3% of the loan amount. This fee helps keep VA loans available with no down payment or mortgage insurance requirements.

How do you estimate closing costs?

Several factors influence your closing costs. As a result, these costs aren’t set in stone and vary from one home purchase to the next. Here are some factors that impact your closing costs:

• The purchase price of the home
• Your down payment amount
• The type of loan you choose 
• Any adjustments you negotiate with the seller 

Typically, closing costs run between 2% and 5% of the price of your home. On a home purchased for $300,000, closing costs could range from $6,000 to $15,000, which is a significant range. 

As an example, the median sale price for a single-family home in January 2025 was $418,489. So the average closing costs for such a home could range between $8,369 and $20,924 (2-5% of the purchase price). This amount covers taxes, bank fees, and third-party fees such as the title company’s charges.

Estimate your closing costs by preparing for an amount at the higher end of the range. This will hopefully leave you with extra money if your closing costs are less expensive.

What is included in closing costs?

Closing costs include a variety of fees — and not every buyer will pay the same closing costs. Some costs differ by lender, loan type, and the state you live in. Prior to closing, at least 3 days before, you’ll receive a closing disclosure that details all the fees you’ll be expected to pay. Here are the most common closing costs:

Application fee: Not every lender charges an application fee, but some do. It can be upwards of $500 and may be a standalone fee or a deposit used toward other closing costs. 

Appraisal costs: Home appraisals can cost $300–$500 depending on your location and home price. If you pay for the home appraisal at the time of service, it will not be included as part of your closing costs.

Attorney fees: Depending on the state you live in, you may need to have a real estate attorney. They draw up the paperwork for a title transfer and coordinate the closing. These fees vary.

Closing fees: You’ll pay closing fees to the escrow company or attorney that holds the closing meeting. These fees vary depending on if you have an attorney present.

Courier costs: Courier fees cover the costs associated with delivering mortgage documents. It’s usually around $30. 

Credit reporting fee: Between $10 – $100, credit reporting fees cover the cost of your credit score and credit report. 

Earnest money: In most areas, you will pay an earnest money deposit when you reach mutual acceptance on your home purchase. Earnest money is typically 1%–3% of the home’s price. The amount you pay in earnest money will be subtracted from your closing costs — reducing the total amount you owe at closing.

Escrow funds: Also called prepaids or reserve funds, escrow holds funds for mortgage insurance, home insurance, and property taxes. Your lender holds this money in an escrow account and uses the funds toward your mortgage payments. Depending on the lender, you may need to put a few months of expenses into the escrow account. 

FHA mortgage insurance: If you have an FHA loan, you’ll need to pay a mortgage insurance premium (MIP). You’ll need to pay an upfront amount and a monthly fee for the duration of the loan – unless you have a 10% down payment. The upfront payment is anywhere from 0.15 – 0.75 percent of your loan amount. 

Flood certification: If you’re buying a home in a flood zone, you’ll likely need to pay $15 – $25 for a flood certification.

Homeowners association dues and HOA transfer fee: If the home you are purchasing has a homeowners association, you will pay one month’s dues upfront at closing. Homeowners association dues vary by property and cover maintenance fees and operations costs. There is also an HOA transfer fee, which covers the cost of moving HOA fees from the seller to the buyer. The seller usually pays the transfer fee, but sometimes the buyer will end up paying this cost. 

Home inspection: Home inspections are typically paid in-person and are not included as part of your closing costs. Inspections typically cost between $300–$500, which varies based on the property and your local rates.

Homeowners insurance: Your homeowner’s insurance premium for the year may be included in your closing costs. Most lenders require you to have homeowners insurance as part of your loan agreement. 

Lead-based paint inspection: Homes built before 1979 may have lead-based paint, which can cause health problems. About $300, this cost covers the inspection costs for lead testing.

Lender’s title insurance: You’ll have to pay for your lenders’ title insurance, which protects the lender if you lose your home to a title claim. It usually costs 0.5% to 1% of the mortgage amount, and is a one-time payment. 

Loan discount points: If you purchased points to lower your interest rate, you will pay a one-time fee for them at closing. A discount point can lower your interest rate by 0.25%–0.5% — and, just like interest rates, the price of points changes daily.

Loan origination fee: Your lender may charge you a fee for creating your loan. Not every lender will charge you an origination fee, so be wary of lenders who charge high fees. Ask your lender what the fee covers and if it’s negotiable.

Loan processing fee: Lenders may charge a fee for processing your loan. This fee covers any additional costs incurred for underwriting or services performed to finalize your loan. Similar to the origination fee, ask your lender what the fees cover and if it can be waived.

Owners title insurance: While optional, title insurance can protect you against any title claims against your property. Like the lender’s title insurance, it costs about 0.5% to 1% of the mortgage and is a one-time fee.

Pest inspection: Some states may require you to have a pest inspection. In some instances, you may also want a pest inspection, such as if there were issues during the home inspection or the area is prone to termite damage. The cost is around $100. 

Prepaid daily interest: You may need to pay interest that accrues on your loan between closing and the date of your first mortgage payment. 

Private mortgage insurance (PMI): Private mortgage insurance is required if your down payment is less than 20%. FHA and VA loans may also require you to pay an upfront fee for private mortgage insurance at closing in exchange for allowing you to have a lower down payment. PMI is typically included as part of your monthly loan payment. However, some loans allow you to pay your private PMI upfront as a one-time fee at closing. 

Property taxes: Most lenders require you to pay a year’s worth of property taxes at the time of closing. This can vary so be sure to ask your lender what you’re expected to pay.

Rate lock: Your lender may charge you a rate lock fee, which is when you lock in your mortgage rate. Many lenders offer this for free, but for those that charge it can be 0.25% to 0.50% of the loan amount. 

Recording fee: Around $125, a recording fee covers the cost of updating public land ownership records. It’s paid to your local government so the fee varies from county to county.

Survey fee: Some states require a land survey before closing on a home to determine the property lines. The survey fee covers this cost and can range from $400 to $1,000 depending on the size of the home. 

Tax monitoring and tax status research: These fees cover the cost of verifying that your property taxes are accurate.

Title search: A title search is important because it can identify liens, unpaid taxes, or bankruptcies against the home before buying. You can expect to pay upwards of $200. 

Transfer tax: Paid toward your local government, transfer taxes allow them to update your home’s title to your name.

Closing costs for sellers

There are still closing costs that a seller may be responsible for – even though most costs fall to the buyer. Here are some closing costs sellers may pay:

Real estate commission: While real estate commissions are negotiable since the NAR settlement, some sellers still may offer to pay the buyer’s agent commission.

Property and transfer taxes: Sellers usually pay a share of the property taxes in addition to transfer taxes. The amount depends on the area. 

Title insurance: In some areas, it’s common for sellers to pay the title insurance costs. 

When are closing costs due?

With most home loans, closing costs are due on closing day, the day the property is officially transferred to the buyer. Some closing costs are due prior to closing such as home inspection and land survey fees. In that case, any unpaid closing costs will be paid on the closing date.

Can you reduce closing costs?

There are a few ways to reduce closing costs, but it depends on your finances and more. Here are some options to consider:

Compare loans: Certain loan types, such as FHA and VA, charge higher fees at closing. Before you decide on a loan, get a breakdown of all fees.

Choose a lender with low fees: Fees vary from lender to lender. Compare lenders and fees to decide what’s right for you.

Negotiate with the seller: You can sometimes negotiate with the seller to pay a portion of your closing costs. Your real estate agent will be able to help you come up with a strategy.

Don’t pay to lower your interest rate: Depending on your situation, you may want to avoid paying additional costs at closing by paying for points to lower your rate.

Opt for a less expensive home: Make sure the home you buy fits your budget. Simply buying a less expensive home will lower your closing costs.

FAQs about closing costs

What does a closing disclosure include? 

A closing disclosure itemizes your loan terms and breaks down the purchase price, principal interest, payment amounts, and any fees associated with securing your loan. You want to ensure you understand the fee breakdown and run through it yourself to double-check the numbers. No matter how professional and experienced your lender’s team is, mistakes can happen.

How do closing costs affect a home purchase? 

There are several ways closing costs can affect your home purchase. In order to secure a mortgage, you’ll need to pay the appraisal cost, which can be anywhere from $300 – $650. Similarly, you’ll need to cover the costs of a home inspection, or possibly a specialty inspection depending on where you live. If you don’t pay these costs it could impact your ability to close on the home. 

Is it possible for closing costs to change? 

Yes, your closing costs can change at the last minute. For example, a title search could show a lien on the property, or interest rates could have risen before you locked in your interest rate.

Can homebuyers receive assistance for closing costs?

Many first-time homebuyer programs can assist homebuyers with down payment and closing costs. Many of these programs specifically serve first-time homebuyers, especially buyers with moderate and lower incomes. You can also use monetary gifts from friends and family to pay closing costs as a homebuyer. Ask your lender about any gift letter requirements and limits on amounts.

What seller credits are available to reduce closing costs?

For some home purchases, certain repairs identified in home inspection reports don’t get completed. The seller may offer an allowance for the new owner to complete the work after closing. These items will show up on your closing disclosure statement as a credit from the seller. In effect, such credits lower the purchase price and reduce closing costs.

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