How to use the closing cost calculator
- Enter the price, down payment and rate. The loan amount drives the lender fees and the prepaid interest.
- Review the typical fees. The defaults are common national figures. Replace them with numbers from your lender's Loan Estimate as soon as you have one.
- Check prepaids and escrow. Lenders usually collect the first year of homeowners insurance, a few months of property tax for the escrow account, and interest from closing day to the end of the month.
What are closing costs?
Closing costs are the fees and prepaid items you pay to finalize a home purchase, on top of the down payment. Buyers typically pay 2% to 5% of the purchase price. They fall into three groups:
| Group | Examples | Typical amount |
|---|---|---|
| Lender fees | Origination, discount points, underwriting, appraisal, credit report | 0.5% to 1.5% of the loan, plus points |
| Third-party and government | Title insurance, title search, settlement or attorney fee, recording, transfer taxes, inspection | Varies widely by state |
| Prepaids and escrow | Homeowners insurance, property tax reserves, prepaid interest | Depends on taxes, insurance and closing date |
Worked example
A $400,000 home with 10% down means a $360,000 loan. A 1% origination fee ($3,600) plus a $600 appraisal makes $4,200 in lender fees. Title at 0.5% ($2,000), inspection, settlement and recording add $3,750. Prepaids (3 months of tax at 1.1%, a year of insurance and 15 days of interest at 6.5%) add about $3,860. Total closing costs are about $11,800, or 2.95% of the price, and the cash to close including the $40,000 down payment is about $51,800.
Ways to lower closing costs
- Compare Loan Estimates from at least three lenders. Origination fees and points vary a lot.
- Shop for title insurance and settlement services where your state allows it. The Loan Estimate lists which services you can shop for.
- Ask for seller credits. In a slower market, sellers often agree to pay part of the buyer's closing costs.
- Close near the end of the month to reduce prepaid interest. Your first mortgage payment date does not change the total interest, only when you pay it.
- Look for assistance programs. Many states and cities offer closing cost grants for first-time buyers.
Already own a home and want to borrow against it instead? Try the HELOC calculator. Planning the monthly budget for your new home? Use the budget calculator.
Estimates for planning only, not financial or legal advice. Fees and transfer taxes depend on your state, county and lender.
Frequently asked questions
How much are closing costs for a buyer?
Buyers typically pay 2% to 5% of the purchase price. On a $400,000 home that is roughly $8,000 to $20,000, depending on the state, lender and loan type.
Are closing costs included in the down payment?
No. Closing costs are paid in addition to the down payment. Your cash to close is the down payment plus closing costs, minus any credits and earnest money already paid.
Can closing costs be rolled into the mortgage?
On a purchase, some programs and lenders allow part of the costs to be financed or covered by a slightly higher rate (lender credits). On a refinance, closing costs are often added to the new loan.
Who pays closing costs, the buyer or the seller?
Both pay some. Buyers usually pay lender fees and prepaids. Sellers usually pay the real estate commissions and, in many states, the transfer tax. Everything is negotiable in the purchase contract.
What is prepaid interest at closing?
Mortgage interest is paid in arrears, so at closing you prepay interest from the closing date to the end of that month. Closing later in the month means fewer days to prepay.
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Last updated October 2026.