Closing Costs Explained: What You'll Actually Pay

Your down payment isn’t the only cash you need. Closing costs are 3-6% of your loan amount — and they’re due at settlement.

What Are Closing Costs?

Closing costs are fees for services required to complete your loan. They cover:

• Lender fees
• Third-party services
• Government recording
• Title insurance

Typical Cost Breakdown

On a $350,000 loan (~$10,500 - $21,000 total):

How to Reduce Closing Costs

1. Negotiate with Lender

Ask for a “no-cost” or “low-cost” loan. They may cover costs in exchange for a slightly higher rate.

2. Seller Concessions

In a buyer’s market, sellers may cover part of your closing costs. Negotiate in your offer.

3. Compare Lenders

Closing costs vary between lenders. Get Loan Estimates from 3+ lenders.

4. Timing

Closing at the end of the month reduces prepaid interest.

5. Discount Points

Paying points upfront lowers your rate. Run the math to see if it makes sense.

What’s NOT Included

These are separate from closing costs:

• Down payment (3-20%+ of purchase price)
• Moving expenses
• Furniture/appliances
• Initial repairs (if needed)

Estimate Your Costs

Rule of thumb: Budget 3% of purchase price for closing costs on conventional loans. FHA/VA may be slightly higher.

Example:

• Home price: $300,000
• Down payment (10%): $30,000
• Closing costs (3%): $9,000
• Cash to close: $39,000

Don’t Forget Escrow

You’ll also need to set up an escrow account for:

• Property taxes (1-2% of home value annually)
• Homeowners insurance ($1,000 - $2,000/year)
• Mortgage insurance (if applicable)

Lenders require 2-6 months of these in advance.

Get Your Estimate

When you’re ready, we’ll provide a Loan Estimate showing your exact closing costs — so there are no surprises.

Get Pre-Qualified →