Complete guide
Reviewed July 2026Closing costs are the fees you pay to finalize a home purchase, on top of your down payment. They are easy to underestimate — a well-priced offer can still fall through if a buyer forgets to set aside several thousand dollars for the closing table. As a rule of thumb, buyer closing costs run about 2% to 5% of the purchase price, so on a $400,000 home you should budget roughly $8,000 to $20,000.
That single percentage hides three very different buckets: lender fees for originating your loan, third-party fees for services like the appraisal and title work, and prepaid or escrow items such as property taxes and homeowners insurance collected in advance. Knowing which is which tells you what you can shop for and what is essentially fixed.
This calculator estimates your total closing costs and breaks them into those buckets so you can budget accurately and spot fees worth negotiating. Below we itemize every common line, show a worked example, and cover the legitimate ways buyers reduce what they pay at closing.
What closing costs include
Your Loan Estimate and Closing Disclosure group fees into categories. Broadly they fall into three buckets, and only some are negotiable.
The three buckets
- Lender fees: loan origination (often 0.5%–1% of the loan), underwriting and processing, and any discount points you choose to buy.
- Third-party services: appraisal, home inspection, title search and title insurance, survey, credit report and recording fees.
- Prepaids and escrow: upfront property taxes and homeowners insurance, plus prepaid interest from closing to your first payment.
Total closing costs ≈ Purchase price × 2%–5% Detailed: Lender fees + Third-party services + Prepaids/escrow Origination fee ≈ Loan amount × 0.5%–1%
Worked example
- Home price $400,000, loan amount $360,000 (10% down).
- Lender fees: origination ~0.75% of loan = $2,700, plus underwriting/processing ~$1,300 = $4,000.
- Third-party: appraisal $600, inspection $500, title search + insurance $2,000, survey/recording ~$700 = $3,800.
- Prepaids/escrow: ~6 months property tax + a year of insurance + prepaid interest ≈ $4,700.
- Total ≈ 4,000 + 3,800 + 4,700 = $12,500, about 3.1% of the price — right in the typical range.
Line-by-line: who pays and how much
Federal rules let you shop for many third-party services, and your Loan Estimate marks which ones. Recording and transfer taxes are set by local government and are not negotiable, while prepaids simply reflect your own tax and insurance costs.
| Fee | Typical range | Shoppable? |
|---|---|---|
| Loan origination | 0.5%–1% of loan | Yes — compare lenders |
| Appraisal | $400–$700 | Sometimes |
| Home inspection | $300–$600 | Yes |
| Title search + insurance | $700–$2,500+ | Often |
| Escrow / settlement fee | $350–$1,000+ | Sometimes |
| Recording & transfer | Varies by locale | No — set by government |
| Prepaid taxes + insurance | $1,000–$5,000+ | No — based on your bills |
How to pay less — and use this calculator
- Compare Loan Estimates from at least three lenders — origination fees and rates vary widely for the same borrower.
- Shop title and settlement services separately; you are not obligated to use the lender's suggested provider.
- Ask the seller for concessions (a credit toward your closing costs) as part of your offer.
- Consider lender credits: a slightly higher rate in exchange for the lender covering some closing costs.
- Time your closing near month-end to reduce prepaid daily interest.
- Enter your purchase price and loan amount to get a percentage-based estimate.
- Refine it with your actual Loan Estimate figures once you have one.
- Separate shoppable fees from fixed ones and compare quotes on the shoppable lines.
- Add prepaids using your local property-tax rate and an insurance quote for accuracy.
- Keep a cushion — final numbers can shift slightly between the Loan Estimate and Closing Disclosure.
Frequently asked questions
Glossary
- Closing costs
- Fees paid to finalize a home purchase, typically 2%–5% of the price, separate from the down payment.
- Loan Estimate
- A standardized early disclosure of your loan terms and estimated closing costs.
- Closing Disclosure
- The final statement of loan terms and closing costs, provided at least three business days before closing.
- Origination fee
- A lender charge for processing the loan, often 0.5%–1% of the loan amount.
- Prepaids
- Upfront property taxes, insurance and interest funded into escrow at closing.
- Title insurance
- A policy protecting against defects in the property's ownership title.
- Seller concession
- A credit the seller agrees to put toward the buyer's closing costs.
- Lender credit
- Money the lender applies to closing costs in exchange for a higher interest rate.
Key takeaways
Buyer closing costs are typically 2%–5% of the price, on top of the down payment.
They fall into lender fees, third-party services and prepaid escrow items — only some are shoppable.
Compare Loan Estimates, shop title and settlement services, and ask for seller concessions to pay less.
Enter your purchase price and loan amount above to estimate your total closing costs, then refine with your Loan Estimate for an exact figure.