# How much are closing costs on a house?

> Closing costs are lender fees, third-party services, government fees and prepaid bills. Your Loan Estimate lists every one.

Source: https://www.walletprep.com/learn/closing-costs/ · Updated 2026-10-04 · Housing

Closing costs are the fees and prepaid bills you pay to get a mortgage and transfer the home to you, on top of your down payment. Your exact figure is on page 2 of your Loan Estimate, and in the example below they come to $9,816 on a $315,000 loan.

## Key facts
- **They come in a few groups.** Closing costs include origination and lender charges, points if you choose them, third-party services like an appraisal and title insurance, government fees, and prepaid items such as interest, homeowners insurance and an initial escrow deposit.
- **Two forms show the numbers.** The lender must send a Loan Estimate within three business days of your application and a Closing Disclosure at least three business days before closing. Compare the two line by line.
- **Some costs are capped and some are not.** Fees paid to the lender can't go up at all without a change in circumstances. Recording fees and some third-party fees can rise up to 10% in total. Prepaid interest, insurance and escrow deposits can change by any amount.
- **No-closing-cost loans still cost money.** A loan sold as having no closing costs either charges a higher interest rate to cover them or adds them to your loan amount. You pay either way, just over time.

## What closing costs include
Origination charges are what the lender charges to make the loan. They may be called an application, underwriting or processing fee. The labels differ between lenders, but the total is what matters.
Points are an optional fee to lower your interest rate. One point is 1% of the loan amount, so one point on a $315,000 loan is $3,150. Points appear on page 2 of the Loan Estimate, in section A, next to origination charges.
Third-party services are things the lender requires but someone else provides, such as the appraisal, a credit report, title services and the lender's title insurance. Government fees cover recording the deed and mortgage, plus any transfer taxes your state or city charges.
Prepaid items are bills you pay in advance at closing. These usually include interest from your closing day to the end of that month, the first year of homeowners insurance and an initial deposit into your escrow account for future taxes and insurance.

## Why your number depends on where you live
Transfer taxes, recording fees and title insurance rates vary a lot by state and county. Property tax also drives the size of your escrow deposit. Two buyers with the same loan can have very different closing costs in different places.
For that reason, a single national percentage is a weak guide. Use the real figures on your Loan Estimate. Before you apply, ask a local lender or your agent what buyers in your area usually pay.

## Which costs can change before closing
Federal rules sort closing costs into three groups. Fees paid to the lender or its affiliate for required services can't increase at all. Recording fees and required services from a provider on the lender's list can rise, but by no more than 10% in total. Prepaid interest, insurance premiums, escrow deposits and services you shopped for on your own can change by any amount.
These limits don't apply after a change in circumstances, like a new loan type, a different down payment, a low appraisal or a change in your credit. You would get a revised Loan Estimate. If costs rise past the limits without a change in circumstances, you are owed a refund of the extra.

## How to lower your closing costs
Compare origination charges and Services You Cannot Shop For across several Loan Estimates. Shop the services the lender lets you choose, especially title and settlement services.
You can also trade cost for rate. Lender credits lower what you pay at closing in exchange for a higher interest rate. That can help if cash is tight, but you pay more each month for as long as you keep the loan.
In some markets, sellers agree to pay part of the buyer's closing costs. Ask your agent whether that is realistic for the home you want. Some state and local homebuyer programs also help with closing costs, so check your state housing agency.

## The last three days before closing
Your Closing Disclosure arrives at least three business days before closing. Use that time to compare it with your Loan Estimate. Check the rate, the loan amount, the monthly payment and each fee. Ask the lender about anything that changed.
You will usually pay your cash to close with a cashier's check or a wire transfer. Before you wire, confirm the instructions by phone with your settlement agent, using a number you found yourself. Scammers target buyers in exactly these days.

## A worked example: cash to close on a $350,000 home
Jordan is buying a $350,000 home with 10% down, a $315,000 loan. His Loan Estimate lists these closing costs. The figures are an example; yours depend on your lender and state.

- Origination charges: $1,575
- Services you can't shop for: $750
- Title and settlement services: $2,100
- Taxes and government fees: $1,400
- Prepaid insurance and interest: $2,641
- Initial escrow deposit: $1,350
- Total closing costs: = $9,816
- Down payment: $35,000
- Cash to close: = $44,816

1. Prepaids are a year of homeowners insurance, $1,800, plus 15 days of interest: $315,000 × 6.5% ÷ 365 × 15 = $841. Together, $2,641.
2. The escrow deposit covers 2 months of insurance, $300, plus 3 months of property tax at $350, $1,050. That is $1,350.
3. All closing costs total $9,816, about 3.1% of the loan. Add the $35,000 down payment and Jordan needs $44,816 at closing.

## Common mistakes
- **Picking a lender by rate alone.** A lower rate can come with points or higher origination charges. Compare the rate and page 2 of each Loan Estimate together, for the same loan amount and type.
- **Draining savings to close.** Moving in brings its own costs, like movers, repairs and furniture. Plan to have an emergency fund left after you pay your cash to close.
- **Skipping the Closing Disclosure review.** Fees can change, and mistakes happen. Read the Closing Disclosure the day it arrives so you have time to ask questions before you sign.

## Questions people ask
### Who pays closing costs, the buyer or the seller?
The buyer pays most mortgage-related closing costs. The seller usually pays their own costs, such as their agent's fees. Who pays transfer taxes depends on local custom and your contract, and a seller can agree to cover part of your costs.

### Can closing costs be rolled into the mortgage?
On a purchase, some lenders let you cover costs with lender credits for a higher rate. On a refinance, costs are often added to the loan. Either way you pay them over time, with interest.

### When do I pay closing costs?
At the closing, usually by cashier's check or wire transfer. Some costs, like the appraisal or a credit report, may be paid earlier. The Closing Disclosure shows what you have already paid and the final amount due.

### Are closing costs tax deductible?
Most are not. Points paid on a loan to buy your main home can be deductible if you itemize and meet the IRS tests. Check IRS Publication 936 or ask a tax professional.

## Do this today
Add a closing cost line to your down payment savings goal. Ask one local lender what buyers in your area usually pay, or pull the figures from a Loan Estimate, and add that amount to your target.

## Sources
- [CFPB: What costs come with taking out a mortgage?](https://www.consumerfinance.gov/ask-cfpb/what-costs-come-with-taking-out-a-mortgage-en-153/)
- [CFPB: Can my final mortgage costs increase from what was on my Loan Estimate?](https://www.consumerfinance.gov/ask-cfpb/can-my-final-mortgage-costs-increase-from-what-was-on-my-loan-estimate-en-172/)
- [CFPB: What is a Loan Estimate?](https://www.consumerfinance.gov/ask-cfpb/what-is-a-loan-estimate-en-1995/)
- [CFPB: What is a Closing Disclosure?](https://www.consumerfinance.gov/ask-cfpb/what-is-a-closing-disclosure-en-1983/)
- [CFPB: How should I use lender credits and points?](https://www.consumerfinance.gov/ask-cfpb/how-should-i-use-lender-credits-and-points-also-called-discount-points-en-136/)
- [CFPB: Is there such a thing as a no-cost or no-closing cost loan?](https://www.consumerfinance.gov/ask-cfpb/is-there-such-a-thing-as-a-no-cost-or-no-closing-loan-or-refinancing-en-141/)
- [CFPB: Loan Estimate explainer](https://www.consumerfinance.gov/owning-a-home/loan-estimate/)
- [IRS: Publication 936, Home Mortgage Interest Deduction](https://www.irs.gov/publications/p936)

_General education, not personalized financial, tax or legal advice. Figures are examples. Check current rates and limits before you act._