Closing costs average 2–5% of the loan amount — but what exactly are you paying for? Here is every fee itemized, what's negotiable, and how to reduce your out-of-pocket costs.
Closing Costs — Overview
Every Closing Cost Itemized
| Fee | Typical Range | Negotiable? |
|---|---|---|
| Origination fee | 0.5%–1.5% of loan | Yes |
| Discount points | 1% per point (optional) | Yes |
| Appraisal fee | $400–$700 | No |
| Credit report fee | $25–$75 | No |
| Title search | $150–$500 | Shop it |
| Title insurance (lender) | 0.5%–1% of loan | Shop it |
| Title insurance (owner) | 0.3%–0.5% of price | Shop it |
| Attorney/settlement fee | $400–$1,200 | Shop it |
| Recording fees | $50–$250 | No (government) |
| Prepaid interest | Varies by close date | Close month-end |
| Property tax (2–3 mo) | Varies | No |
| Insurance (1 yr prepaid) | $1,000–$3,000 | Shop insurance |
| HOA transfer fee | $150–$500 (if applicable) | Sometimes |
Seller Concessions
Sellers can pay your closing costs as a "seller concession" — negotiated in the purchase offer. Limits: Conventional (3% for low down payment, up to 9% for 20%+ down), FHA (6%), VA (4% non-allowables), USDA (6%). In buyer-friendly markets, requesting 2–3% seller concession is common and often accepted.
How to Reduce Closing Costs
- Compare Loan Estimates from 3+ lenders — fees vary significantly
- Shop your own title company (RESPA allows this for Section C fees)
- Ask lenders to waive or reduce origination fees
- Negotiate seller concessions in your purchase offer
- Close at end of month to minimize prepaid interest
Frequently Asked Questions
Budget 2–5% of your loan amount for closing costs. On a $350,000 loan, that's $7,000–$17,500. The wide range depends on location, lender fees, and whether you buy discount points. Your Loan Estimate (required within 3 days of application) will give you a precise figure to compare between lenders. Don't forget: you also need down payment funds on top of closing costs.
Sometimes. For refinances, costs can often be rolled into the new loan balance. For purchases, you cannot finance standard closing costs into your mortgage — you must bring those funds to closing. However, you can negotiate seller concessions (seller pays closing costs) or use gift funds. VA loans allow some closing costs to be financed. Down payment assistance programs sometimes cover closing costs as well.