Closing costs are the final financial surprise for many home buyers. Budget 2–5% of the purchase price — on a $400,000 home that's $8,000–$20,000 due at closing on top of your down payment.
Complete closing cost breakdown
| Cost | Typical amount | Negotiable? |
|---|---|---|
| Origination fee (lender) | 0.5–1% of loan | Yes — shop lenders |
| Discount points | Optional, 1% per point | Yes — skip if not staying long |
| Appraisal | $400–$700 | Somewhat |
| Home inspection | $400–$600 | No |
| Title search | $200–$400 | Fixed |
| Owner's title insurance | 0.5–1% of purchase price | Sometimes seller pays |
| Lender's title insurance | 0.2–0.5% of loan | Required |
| Attorney fee (required in some states) | $500–$1,500 | Fixed |
| Recording fees | $100–$250 | Fixed |
| Transfer taxes | Varies by state (0–2%) | Fixed by law |
| Prepaid interest (days to month-end) | $500–$2,000 | Fixed |
| Homeowners insurance (1 year prepaid) | $1,200–$3,000 | Shop and compare |
| Escrow setup (2–3 months taxes + insurance) | $2,000–$5,000 | Required by most lenders |
How to reduce closing costs
- Request seller concessions: Ask the seller to contribute 2–3% of the purchase price toward your closing costs. Common in buyer's markets. The seller may prefer to lower the price — but concessions are better for you if you're cash-constrained.
- Shop your own title insurance: In states where you can choose the title company, you can often save $300–$800.
- Compare Loan Estimates from 3+ lenders: Origination fees and lender-specific charges vary significantly. A LendingTree comparison can save $1,000–$3,000 in lender fees.
- Close at end of month: Prepaid interest is charged for days between closing and first full month. Close on the 28th–31st to minimize prepaid interest to a few days.
The Loan Estimate: your most important document
Within 3 business days of application, every lender must give you a Loan Estimate — a standardized 3-page document showing all costs. Compare Section A (lender fees), Section B (services you cannot shop), and Section C (services you can shop) across lenders. This is the tool that makes fee comparison accurate.
Within 3 business days of application, every lender must give you a Loan Estimate — a standardized 3-page document showing all costs. Compare Section A (lender fees), Section B (services you cannot shop), and Section C (services you can shop) across lenders. This is the tool that makes fee comparison accurate.
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