Home Buying Costs

Closing Costs: Understand What You'll Pay When Buying a Home

Learn what closing costs are, what fees may appear on your mortgage paperwork, how much you may need at closing, and how to review your costs before signing the final documents.

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What Are Closing Costs?

Closing costs are the upfront costs associated with completing a home purchase and, when applicable, obtaining a mortgage. They can include charges from the lender, title and settlement providers, government agencies and other parties involved in the transaction.

Closing costs are separate from your down payment. Your final amount can depend on the property's price and location, your loan type, lender charges, services you choose, taxes, insurance, prepaid expenses and the terms negotiated with the seller.

Separate from the down payment Closing costs are transaction and loan-related expenses rather than the portion of the purchase price you put down.

Costs vary by transaction Location, loan terms, property characteristics and selected services can all affect your final amount.

Review before closing Your mortgage disclosures provide an opportunity to compare estimated and final costs before the transaction closes.

Plan Before Closing Know your cash-to-close

Common Expenses

What Can Be Included in Closing Costs?

Your transaction may contain many individual charges. Some are tied to obtaining the mortgage, while others relate to transferring and settling the property transaction.

Loan Origination Charges

Charges associated with making or processing the mortgage can appear in the loan-cost portion of your disclosures. Depending on the loan, points may also be included.

Loan related

Title & Settlement Services

Title search, title-related services, settlement or closing services and other transaction services may contribute to the final cost.

Property related

Government Charges

State and local government charges can include recording fees and other costs associated with recording the deed or mortgage.

Government

Appraisal & Credit Fees

A mortgage transaction may include charges related to evaluating the property and obtaining or reviewing credit information.

Mortgage process

Prepaid Expenses

Certain costs may be collected in advance, such as prepaid interest or an initial homeowners insurance premium, depending on the transaction.

Paid upfront

Initial Escrow Funding

If your loan uses an escrow account, an initial amount may be collected to establish the account for future property taxes, insurance or other eligible expenses.

Escrow

Planning Benchmark

2%–5%

Freddie Mac says closing costs typically range around 2%–5% of the purchase price, but your actual costs can be higher or lower.

Don't Budget From a Percentage Alone

A percentage is useful for an early planning estimate, but it is not a quote. Your lender's Loan Estimate and later Closing Disclosure provide transaction-specific figures.

Example: $300,000 home A 2%–5% planning range would be approximately $6,000–$15,000, before considering transaction-specific adjustments.

Credits can change the amount Seller concessions or lender credits may offset certain costs, subject to loan rules and transaction terms.

Cash to close is different The amount you bring to closing can include the down payment and other transaction adjustments in addition to closing costs.

Before Closing

Start With Your Loan Estimate

When you apply for a mortgage, the lender generally provides a standardized Loan Estimate within three business days of receiving the application. It provides important information about the loan, including estimated closing costs.

Use this document as an early checkpoint. Compare loan offers, review fees, understand the estimated cash required and ask your lender about anything that does not make sense.

Compare lenders Review comparable loan estimates rather than focusing only on the advertised interest rate.

Review loan costs Look at origination charges, points and other loan-related expenses.

Understand lender credits A lender credit may offset some closing costs but can be tied to a higher interest rate.

Final Review

Understand Your Closing Disclosure

Your Closing Disclosure provides the final details of the mortgage transaction. For most covered mortgage loans, the lender must provide it at least three business days before closing.

Compare the loan

Check the final loan amount, interest rate and estimated monthly payment against your previous Loan Estimate.

Review closing costs

Look carefully at the individual charges and compare them with the estimates you previously received.

Check cash to close

Confirm the final amount you are expected to bring to the closing table and understand any adjustments.

Ask questions

If an amount is unexpected or unclear, contact your lender or settlement professional before signing.

Know the Difference

Closing Costs vs. Cash to Close

These terms are related but they are not interchangeable. Understanding the distinction can prevent surprises when you prepare your funds.

Item	What It Means	Why It Matters
Closing Costs	Upfront costs associated with obtaining the loan and completing the real estate transaction.	Helps you understand the cost of completing the purchase beyond the property's purchase price.
Down Payment	The portion of the home's purchase price you pay upfront rather than financing through the mortgage.	Reduces the amount you need to borrow.
Cash to Close	The total amount you are required to pay at closing after applicable credits, deposits and other adjustments.	This is the practical amount you need available for the closing transaction.

Manage Your Costs

Ways to Potentially Reduce or Manage Closing Costs

You may have several ways to manage upfront expenses, but each option has trade-offs. Compare the total financial impact rather than simply choosing the smallest amount due at closing.

Compare Multiple Loan Offers

Comparing Loan Estimates from different lenders can help you identify differences in rates, lender charges, credits and other costs.

Ask About Lender Credits

Lender credits can offset certain closing costs, but they are often associated with a higher interest rate. Compare the long-term cost.

Discuss Seller Contributions

Depending on the transaction and applicable loan rules, the seller may agree to pay certain buyer costs as part of negotiated terms.

Shop Select Services

Some services may allow you to compare providers. Ask your lender which services you can shop for and what requirements apply.

Closing Checklist

Before You Sign, Check These Items

A final review can help you identify unexpected charges and understand exactly what you are agreeing to.

Confirm the final loan amount and interest rate.

Compare the Closing Disclosure with your latest Loan Estimate.

Review origination charges and points.

Check title, recording and other government-related charges.

Review prepaid interest, insurance and initial escrow amounts.

Verify any seller credits or lender credits you expected.

Confirm the final Cash to Close amount.

Ask questions about anything that differs from your expectations.

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CLOSING COSTS — FAQs

Frequently Asked Questions

Closing Costs Questions, Answered

Closing costs are upfront costs associated with obtaining a mortgage and completing a real estate transaction. They can include lender charges, title and settlement services, government charges, prepaid expenses and initial escrow funding.

Closing costs vary substantially by location, loan, property and transaction. Freddie Mac says buyers should generally expect closing costs around 2% to 5% of the purchase price as a planning range, but your actual amount may be different.

Yes. The down payment is the portion of the purchase price paid upfront. Closing costs are separate transaction and financing expenses. Your final Cash to Close can include both and may also reflect deposits, credits and other adjustments.

A Loan Estimate is a standardized three-page form that provides important details about a mortgage you applied for, including estimated loan terms, monthly payments and estimated closing costs. For covered mortgage applications, the lender generally must provide it within three business days of receiving the application.

A Closing Disclosure is a five-page form containing final details about a mortgage, including loan terms, projected payments and closing costs. For most covered mortgage loans, the lender must provide it at least three business days before closing.

Cash to Close is the amount you are expected to pay at closing after applicable transaction calculations and adjustments. It is different from Total Closing Costs because the amount you actually bring to closing can also reflect the down payment, deposits, credits and other items.

In some transactions, a seller may agree to contribute toward certain buyer costs. Whether this is allowed and how much can be contributed depends on the transaction, loan program and applicable rules.

Yes, lender credits can offset certain closing costs. However, lender credits are typically provided in exchange for a higher interest rate than you otherwise might have received. Compare the upfront savings with the long-term borrowing cost.

Compare the final Closing Disclosure with your latest Loan Estimate and ask your lender or settlement professional to explain significant or unexpected changes before closing.

Plan With Confidence

Know Your Closing Costs Before You Close

A clear understanding of your loan costs, prepaid expenses, credits and Cash to Close can make the final stage of buying a home much easier to navigate.

Continue Your Home Buying Journey

Educational content only. Closing costs and mortgage terms vary by transaction, lender, location and borrower circumstances.