How much are closing costs on a mortgage?

Closing costs typically range from 2% to 5% of the loan amount. On a $400,000 home with a $320,000 mortgage, expect to pay $6,400–$16,000 in closing costs. The national average is approximately $6,000–$8,000 in lender and third-party fees, though discount points, prepaid items (property taxes, homeowners insurance, prepaid interest), and escrow setup can push totals higher. Closing costs are highest in New York, Delaware, and Maryland; lowest in Indiana, South Dakota, and Missouri.

What are the main types of closing costs?

Closing costs fall into two main categories: lender fees (origination fee, discount points, underwriting fee) and third-party fees (title insurance, appraisal, attorney fees, recording fees). Lender fees go directly to the mortgage company. Third-party fees are paid to other service providers. You also prepay items at closing — typically 2–3 months of property taxes, 1 year of homeowners insurance, and prepaid interest from closing date to end of month.

Can you roll closing costs into a mortgage?

Yes, there are two main ways to reduce or roll closing costs. First, a 'no-closing-cost mortgage' rolls lender fees into the loan interest rate — you pay a slightly higher rate (often 0.125–0.25% higher) in exchange for zero upfront lender fees. Second, if you have enough equity (on a refinance), you can roll costs into the loan principal, increasing your loan balance. On a purchase, the seller can agree to 'seller concessions' — paying some or all of your closing costs as part of the negotiation. Seller concessions are limited by loan type (FHA: 6%; conventional: 3–9% depending on down payment).

What is a Loan Estimate and when do I get it?

Under RESPA rules, your lender must provide a Loan Estimate (LE) within 3 business days of receiving a complete mortgage application. The Loan Estimate shows an itemized list of all expected closing costs in a standardized format, making it easy to compare offers from multiple lenders. You receive a Closing Disclosure (CD) at least 3 business days before closing with the final, locked costs. Compare the CD to the LE — some fees cannot change (lender fees, title insurance), while others can increase by up to 10% (third-party services you didn't choose).

Who pays closing costs — buyer or seller?

Both buyers and sellers pay closing costs, but different ones. Buyers typically pay: lender fees, title insurance, appraisal, attorney fees (in attorney states), recording fees, and prepaid items. Sellers typically pay: real estate agent commission (3–5% of sale price), transfer taxes, their portion of prepaid taxes, and any seller concessions negotiated. In competitive markets, sellers rarely pay buyer closing costs. In buyers' markets or when negotiating, you can ask the seller to contribute up to the loan-type maximum.

Closing Costs 2026 — Mortgage Fees Explained and How to Reduce Them

Closing costs are fees and expenses paid at the end of a real estate transaction — when you “close” on the mortgage and take ownership. In 2026, closing costs average 2–5% of the loan amount: approximately $6,400–$16,000 on a $320,000 mortgage. Some costs go to the lender; others go to third-party service providers like title companies, appraisers, and attorneys.

Quick answer: On a $400,000 home purchase with 20% down ($320,000 mortgage), expect $6,400–$16,000 in closing costs. Your lender is required to give you a Loan Estimate within 3 days of application — compare this across at least 2–3 lenders since lender fees can vary by thousands of dollars.

Average Closing Costs in 2026

Home Price	Loan Amount (20% down)	Expected Closing Costs (2–5%)
$250,000	$200,000	$4,000–$10,000
$350,000	$280,000	$5,600–$14,000
$400,000	$320,000	$6,400–$16,000
$500,000	$400,000	$8,000–$20,000
$750,000	$600,000	$12,000–$30,000

Higher-cost areas (California, New York) and certain loan types (FHA, VA with funding fees) may cost more.

Every Closing Cost Fee Explained

Lender Fees (Charged by Your Mortgage Company)

Fee	Typical Cost	Description
Origination fee	0.5–1% of loan	Lender’s cost of processing the loan
Underwriting fee	$400–$900	Cost to evaluate your creditworthiness
Discount points	1% of loan per point	Prepaid interest to lower your rate
Application fee	$0–$500	Some lenders charge; many don’t
Rate lock fee	$0–$600	Locks your interest rate; many free
Credit report fee	$30–$60	Pulling your credit report

Points vs. no points: 1 discount point = 1% of the loan amount, paid upfront to reduce your interest rate by ~0.25%. On a $320,000 loan, 1 point = $3,200 to reduce rate from 7.0% to 6.75%. Break-even: about 4–5 years.

Third-Party Fees (Charged by Non-Lender Service Providers)

Fee	Typical Cost	Description
Appraisal	$300–$600	Independent home value assessment
Title search	$200–$400	Search for liens or ownership claims
Title insurance — lender’s policy	$500–$1,500	Protects lender against title issues
Title insurance — owner’s policy	$500–$1,500	Optional; protects buyer (recommended)
Attorney fee	$500–$1,500	Required in attorney states (NY, MA, SC, etc.)
Survey	$300–$700	Verifies property boundaries
Pest inspection	$100–$200	Some lenders/loan types require
Recording fees	$50–$250	Government fee to record deed and mortgage
Transfer taxes	0.1–2.2% of home price	State/county tax on property transfer (varies widely)

Prepaid Items (Costs Paid in Advance, Not Lender Profits)

Prepaid Item	Typical Amount	Why It’s Paid
Homeowners insurance (12 months)	$800–$2,000	Lender requires proof of coverage
Property taxes (2–3 months)	Varies	Initial funding of escrow account
Prepaid mortgage interest	Varies	Interest from closing date to end of month
HOA transfer fee	$0–$500	If property is in an HOA

Escrow account: Most lenders collect 2–3 months of property taxes and insurance upfront to fund your escrow account — not a fee, but a real cash outflow at closing.

Lender Fees vs. Third-Party Fees — Which Can Change?

Under RESPA rules:

Lender fees (Section A of Loan Estimate): Cannot increase after the Loan Estimate
Title insurance/transfer taxes (Section B — services you cannot shop for): Cannot increase more than 10%
Third-party services you can shop for (Section C): Can change if you choose a different provider
Taxes, escrow, prepaids: Can change based on actual tax bills and insurance quotes

Key: Compare lender fees, not just the interest rate. Two lenders might offer the same rate but one charges $3,000 in origination fees and another charges $500.

How to Reduce or Avoid Closing Costs

1. Compare at least 3 lenders The CFPB recommends getting quotes from at least 3 lenders. Origination and underwriting fees vary by $1,000–$3,000 between lenders for the same loan.

2. Negotiate with the seller Ask the seller to contribute to closing costs (“seller concessions”). Limits:

FHA loans: up to 6% of purchase price
Conventional (10%+ down payment): up to 3%
Conventional (20%+ down): up to 6%
VA loans: up to 4% (concessions only)

3. No-closing-cost mortgage Roll lender fees into a slightly higher interest rate. Good if you don’t plan to stay in the home long enough to recoup the upfront cost of a lower rate.

4. First-time homebuyer programs Many state housing finance agencies offer down payment and closing cost assistance grants or low-interest second mortgages. Check your state’s housing finance authority.

5. Closing at end of month Prepaid interest covers the days from closing to month-end. Closing on the last day of the month minimizes prepaid interest (only 1 day of interest instead of 15–20 days).

6. Shop title insurance In most states, you can shop for title insurance (Section C on the Loan Estimate). Get quotes from multiple title companies — prices vary.

First-Time Buyer Closing Cost Assistance Programs

Many programs help first-time buyers with closing costs:

State HFA programs — check your state’s housing finance authority
FHA loans — allow seller concessions up to 6%
USDA loans — no down payment required; seller can pay all closing costs
VA loans — no down payment; VA limits certain lender fees

Closing Disclosure vs. Loan Estimate

	Loan Estimate	Closing Disclosure
When received	Within 3 days of application	3 business days before closing
Status	Estimated	Final/locked
Purpose	Compare lenders	Review before signing
Action if numbers changed	Question your lender	Demand explanation; delay closing if wrong

Written by WealthVieu

WealthVieu researches and writes data-driven personal finance guides using primary sources including the IRS, Bureau of Labor Statistics, Federal Reserve, and Census Bureau.

The content on Wealthvieu is for informational purposes only and should not be considered financial, tax, or investment advice. Consult a qualified professional before making financial decisions. Full disclaimer · Editorial policy