How Much Are Closing Costs? Average Costs and Fees in 2026
Closing costs typically range from 2% to 5% of your loan amount, adding thousands to the cash you’ll need at closing. But not all closing costs are set in stone. In some cases, you may not have to pay them yourself.
Here’s what goes into closing costs, how much you’ll pay and how to reduce them.
- Closing costs typically range from 2% to 5% of your loan amount, and most are paid when you finalize your mortgage.
- They include lender fees, third-party services and prepaid expenses like property taxes and homeowners insurance.
- You may not have to pay them all yourself — sellers, lenders or assistance programs can help cover some costs.
In real estate, closing costs are fees paid to all of the parties involved in helping you buy and finance a home. While fees associated with the mortgage process make up most of the costs, you’ll also see fees for things like home inspections and homeowners association (HOA) transfers. You may also pay specific fees related to the mortgage program you choose.
The majority of the fees are paid at the closing table before you become an official homeowner. Before you make it that far, though, you’ll receive a loan estimate that will include a detailed breakdown of your closing costs.
How much are average closing costs?
You’ll typically pay between 2% and 5% of your loan amount toward closing costs when you buy a home. The cost varies based on:
- Whether you’re purchasing or refinancing. Refinance closing costs tend to be lower than purchase mortgage costs.
- How much you’re borrowing. The smaller the mortgage, the larger closing costs tend to be as a percentage of the loan amount.
| Loan amount | Typical percentage of the loan amount |
|---|---|
| Under $100,000 | 4.6% |
| $200,000 to $300,000 | 2.1% |
| $400,000 to $500,000 | 1.6% |
| $600,000 to $700,000 | 1.4% |
How much are closing costs in my area?
Typical closing costs vary significantly by location because real estate is regulated locally, and a handful of state-specific taxes and fees can add (or remove) thousands of dollars in line items. A few fees — especially transfer taxes — can drive most of the difference.
For example, a homebuyer purchasing a $450,000 home in Oregon could expect to pay $6,179 in closing costs, but in Delaware, buyers should expect to pay $29,048 — that’s a whopping 129.8% difference.
A great resource that lets you look up what your costs would look like, based on data about your state, is Fannie Mae’s closing costs calculator.
Throughout the rest of this article, we’ll focus on the national average for the closing costs we discuss.
Typical closing costs: Overview
| Fee category | Typical cost range | Typical percentage of loan amount | |
|---|---|---|---|
| Origination fees | $1,545 to $2,258 | 0.5 to 1% of loan balance | |
| Settlement and title fees | $2,451 to $3,816 | 0.5% to 1% | |
| Taxes and government fees | $1,880 to $2,845 | 0.38% to 0.71% | |
| Third-party fees | $207 to $517 | 0.04% to 0.13% | |
| HOA, escrows and prepaids | $4,392 to $11,716 | 0.88% to 2.93% |
Origination fees
| Fee | Typical cost | What it’s for | |
|---|---|---|---|
| Bundled origination costs | 0.5% to 1% of the loan balance | These are the fees that cover the underwriting and processing of your loan | |
| Application fee | $80 |
Settlement and title fees
| Fee | Typical cost | What it’s for |
|---|---|---|
| Lender’s title insurance | $1,626 | Covers your lender if an issue with your home’s legal ownership (“title”) arises after you’ve purchased the house |
| Owner’s title insurance | $487 | Covers your losses if a title issue comes up after you’ve purchased the house |
| Settlement and closing fee | $725 | Covers the cost of the closing agent or attorney to coordinate the transaction, prepare documents and finalize the transfer of ownership |
| Document delivery and preparation fee | $102 | Cover the cost of preparing, handling and delivering legal documents related to your mortgage and home purchase |
| Notary fee | $38 | Pays for a licensed notary to verify your identity and witness the signing of important closing documents |
Taxes and government fees
These fees are charged by a local recorder’s office to create a public record home title transfer into your name.
| Fee | Typical cost | What it’s for |
|---|---|---|
| Transfer taxes | $1,465 | A state or local tax on transferring ownership of the property, typically based on the home’s sale price |
| Recording fee | $179 | Covers the cost to file your deed and mortgage with the local government, making the transaction part of the public record |
| Tax stamp | $636 | A tax on the mortgage or deed that’s paid to the state or county, often calculated based on the loan amount or property value |
| Assessment tax | $3 | A small local fee used to fund specific public services or district-level improvements tied to the property |
Third-party fees
| Fee | Typical cost | What it’s for | |
|---|---|---|---|
| Credit report fee | $80 | Covers the cost of pulling your credit reports to evaluate your creditworthiness for the loan | |
| Home appraisal fee | $558 | Pays for a professional appraisal to determine the home’s market value and ensure it supports the loan amount | |
| Inspection fees (such as home and pest) | $120 | Covers a home inspection that assesses the property’s condition and identifies any structural or other physical issues with the home | |
| Survey fee | $105 | Pays for a survey to confirm property boundaries, lot size and any encroachments or easements | |
| Flood certification | $8 | Determines whether the property is located in a flood zone and if flood insurance is required | |
| Municipal lien certificate fee | $5 | Covers a search for any unpaid local charges such as property taxes, utilities or municipal liens tied to the property | |
| Wire transfer fee | $4 | Covers the cost of transferring funds electronically to complete the mortgage transaction |
Escrows, prepaids and HOA
| Fee | Typical cost | What it’s for |
|---|---|---|
| Home warranty fee | $76 | Covers a service contract that helps pay for repairs or replacement of major home systems and appliances for a set period after purchase |
| Mortgage interest (to cover the time between your closing and the end of the month) | Varies based on your interest rate and what day of the month you close on | Prepaid interest that covers the days from your closing date through the end of the month before your first mortgage payment is due |
| Prepaid homeowner’s insurance | $2,800 per year | Covers your first year (or several months) of homeowners insurance, which is required by your lender to protect the property |
| Prepaid property taxes | $2,000 per year | Covers upcoming property tax bills, and is often collected upfront and placed into an escrow account |
| Homeowners association (HOA) fees | $3,500 per year | Pays any upfront dues required by the HOA, which may include monthly fees, transfer fees or initial contributions at closing. |
| Mortgage points | One point typically equals 1% of the loan amount | Optional and function as prepaid interest |
Who pays for closing costs?
Although closing costs are charged to you, the buyer, they can be paid by others involved in the purchase, or with a gift from a relative.
Closing costs that can be paid by the seller
Conventional, FHA and VA loan programs allow the seller to pay a percentage of your home’s sales price toward closing costs. The table below shows the maximum percentage allowed for each program.
| Loan program | Maximum percentage of sales price seller can pay |
|---|---|
| Conventional |
|
| FHA | 6% |
| VA | No limit on standard closing costs and up to 4% in additional concessions |
Closing costs that can be paid by your lender
If you’re short on closing cost cash, ask your lender about a no-closing-cost mortgage. In exchange for a higher rate, the lender pays your closing costs with a lender credit, which allows you to keep extra cash on hand. The drawback: You’ll pay more interest over the life of the loan.
Closing costs paid with a gift
Lending guidelines allow you to get a financial gift from a relative or friend to cover closing costs. You’ll need a gift letter and paperwork showing the money’s path from the donor to you. There’s one exception: If you’re buying an investment property, all the closing costs must come from your own funds.
Closing costs paid with down payment assistance programs
Your local government or nonprofit housing agency may offer down payment assistance (DPA) programs to help with your down payment and closing costs. Income limits usually apply, so check with your loan officer for eligibility requirements.
How to pay closing costs
To cover all these costs, you’ll either need to provide a cashier’s check at closing or wire funds to the escrow account. If you’re unsure what payment methods will work, check with your escrow company or loan officer.
Real estate wire fraud schemes are a multibillion-dollar problem — perpetrated by savvy hackers impersonating agents, loan officers and escrow officers — that trick borrowers into wiring closing funds to the wrong account.
Always confirm the wire instructions on the phone with your loan officer and escrow officer. Never respond to an email notifying you of “new wiring instructions.”
How to reduce mortgage closing costs
- Shop and haggle. Closing costs can vary by thousands depending on your lender. Comparing multiple loan offers can help you reduce them.
- Make a bigger down payment. A larger down payment translates to a smaller mortgage, which reduces origination and discount fees that are directly tied to a percentage of your loan amount.
- Ask for seller concessions. You may be able to negotiate for the seller to cover part (or all) of your closing costs. The amount they can contribute depends on your loan type, but this can significantly reduce your out-of-pocket expenses.
- Compare Loan Estimates. Review Loan Estimates from multiple lenders to spot differences in fees and interest rates. Even small variations can add up, and comparing offers can help you find the most cost-effective option.
- Choose fewer discount points. Mortgage points are optional upfront fees used to lower your interest rate. Skipping or reducing points means lower closing costs. And though avoiding points may result in a higher rate, academic and industry research has shown that points may not be financially worth it.
- Close at the end of the month. Closing later in the month reduces the amount of prepaid interest you’ll owe at closing, which can lower your upfront costs.
Frequently asked questions
No, but you’ll need to pay both your down payment and your closing costs together at closing. Even though your down payment is included in the total amount you’ll need at your closing, your mortgage closing costs are itemized separately on your closing disclosure.
Closing costs are paid on your scheduled closing date. The lender won’t wire funds until the attorney or escrow agent provides signed documents and proof they’ve received the amount due.
Use this formula for a rough idea of how much your closing cost bill will be:
Loan amount x 2% (0.02) = Low estimate
Loan amount x 5% (0.05) = High estimate
The example below shows how you’d estimate the range of closing costs on a $400,000 loan amount based on a 2% to 5% average closing cost range:
- $400,000 x 0.02 = $8,000
- $400,000 x 0.05 = $20,000
What it means: You’ll need to budget between $8,000 and $20,000 for closing costs on a $400,000 mortgage.
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