How Much Are Closing Costs on a House?

If you’re serious about buying a home in the near future, then it’s important to know you’ll need to pay closing costs in addition to your down payment to seal the deal.

What Are Closing Costs?

Closing costs are the fees you pay to finalize your mortgage and legally transfer ownership of the home. Some of these fees are relatively inexpensive, while others are a percentage of your total loan amount. But in the end, closing costs add up — so it’s important to be prepared to pay them.

What’s Included in Closing Costs?

Closing costs cover a wide range of services. They include property-related fees, such as the appraisal or survey, as well as costs associated with the loan, such as the application and underwriting fees. Closing costs also include taxes, insurance, and any third-party services — like the real estate agents’ commission or attorneys fees.

For a comprehensive rundown of closing costs, check out this complete list of closing costs.

How Much Are Closing Costs?

Homebuyers can expect closing costs to range from 2% to 5% of the total purchase price.

Two of the most important factors affecting how much you’ll pay are the total loan amount and your location. Here’s a look at how much closing costs can vary depending on your state:

How To Calculate Closing Costs

A closing cost calculator can estimate what you might expect to pay in closing costs.

Since closing costs usually cost anywhere from 2% to 5% of the total loan value, you also can multiply your loan amount by 0.02 and 0.05 to get a quick idea of the range.

For official numbers: Your lender will give you a loan estimate after you apply for a mortgage, and this three-page document will approximate your closing costs. Your final closing costs will be listed on your closing disclosure, which you’ll receive at least three days before your scheduled closing date.

Closing Costs FAQ

Here are the answers to some common questions about closing costs.

How can I reduce my closing costs?

There are a few ways to reduce your closing costs. You can ask for seller concessions, which are costs that the seller agrees to pay. You also can ask for lender credits, which reduce your closing costs but increase your interest rate. That means you would pay less upfront, but the loan would cost more overall.

Can closing costs be included in the loan?

Yes, you can ask for no-closing-cost loan, but don’t be misled by the name. What it means is your lender will recoup closing costs by adding them to your loan amount, or by charging you a higher interest rate. As with lender credits, you would pay less upfront, but the loan would cost more overall.

Are closing costs tax deductible?

Only a few closing costs are tax deductible, such as property taxes and mortgage points. Other costs — such as legal fees, title search fees, recording fees, credit check fees, and owner’s title insurance — are not tax deductible.