How can I budget for closing costs?

Before you start looking at homes, get preapproved for a mortgage so you understand how much you can afford to spend. Knowing your price point can give you a rough sense of what closing costs might be. Since total closing costs are typically 2% to 5% of the loan amount, it might be a good idea to set aside enough funds to cover the high end of that range, on top of your down payment.

When are closing costs paid?

Most closing costs are paid at the closing, when you sign your final loan and purchase documents. But some of the fees, such as for an appraisal and credit check, are paid ahead of time.

How long does the closing process take?

Most purchase loans close in about 30 to 45 days from application, though the timeline depends on your loan type, your lender and how quickly you return the requested documents. ICE Mortgage Technology put the average purchase loan at 36.8 days in March 2026, the fastest since it began tracking in 2019. Conventional loans tend to close faster than government-backed loans like FHA and VA loans.

Why are closing costs so high?

Closing costs, which typically range from 2% to 5% of your mortgage loan, come down to two things: the mortgage amount and where you’re buying. Many of the biggest fees grow with the deal — loan origination is typically a percentage of your loan amount, and title insurance premiums are based on your purchase price or loan amount. Location matters because of taxes: LodeStar found that closing costs run highest, as a share of sales price, in states where transfer taxes make up the bulk of the bill, and lowest in states with little or no transfer tax. Beyond lender charges and third-party services like appraisals and inspections, mandatory escrow prepayments for taxes and insurance can add thousands before you’ve made a single mortgage payment.

Mortgage closing costs: What they are and how much you’ll pay

Written by

Linda Bell,

Edited by

Katie Lowery, CFHC,

Reviewed by

Robert R. Johnson,

Expert verified

Published on November 02, 2026 | 6 min read

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Picture of a house and keys next to a stack of coins.

Key takeaways

Closing costs are the fees you pay to get a mortgage and finalize the purchase, and most of them are due on closing day.
Costs typically range from 2% to 5% of the total loan amount, or about $8,000 to $20,000 for a $400,000 loan.
The biggest line items are lender origination fees, title services, the appraisal and the prepaid taxes and insurance that go into your escrow account, and buyers pay most of the fees.
Your Loan Estimate tells you which fees you can shop for and which are fixed. Comparing that document across at least three lenders is the one step that reliably lowers what you pay.

Closing costs may not be the most exciting part of buying your home, but they are an important expense to plan for. From origination fees and appraisals to title services, they can add up to thousands of dollars, with most being paid by buyers. Some costs are avoidable, others may be negotiable and some are required by your state or county.

Here are the fees to watch for and how to keep them in check.

How much are closing costs?

Buying a home comes with more expenses than just your down payment. Expect to pay about 2% to 5% of your total loan amount in mortgage closing costs. If you’ve taken out a $400,000 loan, that means your closing costs might range from $8,000 to $20,000. How much you’ll end up paying depends on factors like the home’s price, your loan type and where you buy.

According to a 2025 report from LodeStar, the average purchase closing cost total was $4,528 nationally, or about 1% of the average sales price of $433,632. But while LodeStar’s calculation accounts for some common fees, it leaves out origination and underwriting fees, real estate commissions, discount points and escrow prepaids. So, about 1% of the sales price covers title, settlement and government charges. The rest of the way to 2% to 5% of your loan amount is lender fees, points and prepaids, and that’s the part you have the most influence over.

Click the arrow below to compare average closing costs by state.

Remember, these figures don’t include lender fees or commissions. LodeStar found that closing costs run highest, as a share of sales price, in states where transfer taxes make up the bulk of the bill — Delaware, New York, Vermont, Pennsylvania and Washington, D.C. They run lowest in states with little or no transfer tax.

Washington, D.C., and Delaware are the most expensive areas for closing costs. The least expensive were South Dakota, Iowa and Missouri.

State	Avg. sales price	Avg. total closing costs	Closing costs as % of sales price
Washington, D.C.	$616,476	$13,836	2.24%
Delaware	$415,814	$12,707	3.06%
New York	$534,697	$12,418	2.32%
Maryland	$469,782	$9,486	2.02%
Vermont	$390,822	$9,164	2.34%
Pennsylvania	$359,521	$8,366	2.33%
Florida	$462,390	$8,128	1.76%
Virginia	$523,332	$7,294	1.39%
New Hampshire	$501,296	$6,445	1.29%
Hawaii	$913,449	$5,977	0.65%
California	$747,854	$5,577	0.75%
New Jersey	$615,580	$5,382	0.87%
Washington	$609,890	$5,261	0.86%
Tennessee	$433,721	$5,184	1.20%
Illinois	$353,221	$4,974	1.41%
Georgia	$395,899	$4,944	1.25%
Massachusetts	$612,580	$4,759	0.78%
Connecticut	$487,089	$4,222	0.87%
Nevada	$511,891	$4,159	0.81%
Utah	$578,787	$4,143	0.72%
Michigan	$359,012	$3,907	1.09%
Texas	$402,804	$3,754	0.93%
Rhode Island	$551,287	$3,719	0.67%
Maine	$424,302	$3,662	0.86%
Arizona	$480,399	$3,507	0.73%
Louisiana	$298,903	$3,492	1.17%
Oregon	$517,921	$3,398	0.66%
Idaho	$524,073	$3,351	0.64%
Minnesota	$395,314	$3,282	0.83%
West Virginia	$278,279	$3,238	1.16%
Ohio	$301,017	$3,187	1.06%
Montana	$470,721	$3,173	0.67%
Wyoming	$469,306	$3,046	0.65%
New Mexico	$363,174	$2,980	0.82%
Oklahoma	$274,110	$2,979	1.09%
Alaska	$406,786	$2,946	0.72%
Alabama	$319,589	$2,867	0.90%
Wisconsin	$357,202	$2,789	0.78%
South Carolina	$403,313	$2,753	0.68%
Colorado	$546,627	$2,737	0.50%
Arkansas	$305,565	$2,666	0.87%
Kentucky	$288,452	$2,608	0.90%
North Carolina	$422,364	$2,462	0.58%
Kansas	$301,116	$2,435	0.81%
Mississippi	$246,219	$2,366	0.96%
Nebraska	$325,800	$2,299	0.71%
North Dakota	$327,746	$2,228	0.68%
Indiana	$287,866	$1,980	0.69%
Missouri	$301,167	$1,748	0.58%
Iowa	$276,382	$1,541	0.56%
South Dakota	$354,327	$1,386	0.39%

Source: Lodestar

What’s included in closing costs?

Closing costs can feel like a long list of unfamiliar fees, but nearly all of them fall into one of four buckets:

Lender fees: Your lender charges these to set up, process and approve your loan. You may also have the option to buy discount points, which are upfront payments that lower your interest rate.
Third-party services: These pay outside professionals for the home appraisal, title search, title insurance policy, survey and closing agent.
Government charges: Your city, county or state charges these to record the sale and the mortgage in public records. Many states and counties also charge a transfer tax when the property changes hands.
Prepaids: These fees cover bills that aren’t due yet. You’ll pay interest from your closing date to your first payment, plus several months of property taxes and homeowners insurance that go into an escrow account.

Not every upfront cost associated with buying a home is considered a closing cost. For example, your down payment will go toward the purchase price of your home and is separate from closing costs.

Two of these four buckets are negotiable. Your lender sets its own fees, and you can compare them and shop for most third-party services. Government charges are set by statute and prepaids are set by your tax bill and your insurer, so neither moves much.

Who pays closing costs?

If you’re the buyer, you’re likely to pay most of the closing costs. Sellers cover some, and in a slower market, they’ll sometimes cover more.

Closing costs paid by the buyer

Buyers may be able to negotiate with the seller to cover some of their costs, called “seller concessions.” The shoppable column below tells you where you have room to move. Some fees you influence by comparing lender offers, some by sourcing the provider yourself and some not at all, because a statute sets them.

Fee	Category	Shoppable?	What it covers
Origination fee	Lender	Yes, compare lenders	Your lender’s charge to set up and process the mortgage. Varies widely between lenders.
Credit check fee	Lender	No	Pulling and reviewing your credit history. Your lender orders it.
Discount points	Lender	Optional	Upfront payments that buy down your interest rate. You choose whether to pay them.
Appraisal fee	Third-party	No	An independent estimate of the home’s market value. Your lender chooses the provider and orders the appraisal, often before closing.
Attorney fee	Third-party	Yes, where permitted	Legal work on the transaction. Some states require an attorney at closing.
Survey fee	Third-party	Usually yes	Confirming property boundaries and flagging encroachments.
Title search and insurance	Third-party	Usually yes	Checking ownership records for liens and claims, then insuring your lender against anything missed. Your lender requires its own policy.
Recording fee	Government	No	Recording the deed and mortgage in public records. Set by your county.
Transfer tax	Government	No	A tax on the property changing hands. State and local rules determine who pays it — the buyer, the seller or both.
Prepaid homeowners insurance	Prepaids	Yes	Your first year’s premium, usually paid in full at closing, plus a few months held in escrow. You choose the insurer, so this is the one prepaid you control.
Prepaid taxes, interest and HOA dues	Prepaids	No	Interest from your closing date to your first mortgage payment, several months of property taxes held in escrow, plus any upfront dues or transfer fees owed to a homeowners association. Your closing date, your tax bill and your HOA set these.

Closing costs paid by the seller

Sellers usually pay out of their sale proceeds rather than bringing cash to the table. Sellers can also agree to pay some of the buyer’s closing costs outright as a credit.

Fee	Category	Shoppable?	What it covers
Prorated property taxes	Government	No	Splits the year’s property tax bill between buyer and seller based on the closing date.
Transfer taxes	Government	Depends on location	The same tax described above. In many states, the seller pays all or part of it.
Attorney fee	Third-party	Yes, where permitted	Legal work on the transaction. Some states require an attorney at closing.
Real estate commissions	Third-party	Negotiable	Pay for the listing agent and, depending on what the parties agreed to, the buyer’s agent. Commission terms have been negotiated case by case since August 2024, so who pays what now varies by transaction.

Compare your Loan Estimates before you commit

Every lender has to give you the same three-page form within three business days of applying. That’s the point of the Loan Estimate: it’s standardized, so offers line up side by side. To compare offers, read page 2: Section B lists the services you can’t shop for, and Section C lists the ones you can.

Three rules govern what happens between your Loan Estimate and closing day:

Some can’t increase at all: Your lender’s own charges, discount points, transfer taxes and fees for services you can’t shop, like the credit report and the appraisal.
Some can increase up to 10%, as a group: Recording fees, plus any Section C service where you used a provider from your lender’s written list.
Some can change by any amount: Prepaid interest, insurance premiums, escrow deposits and any provider who wasn’t on your lender’s list.

If something material changes on your loan file, your lender can reset those limits, but it must document the reason and send you a revised Loan Estimate.

Your Closing Disclosure arrives at least three business days before closing with the final version of the same numbers. Put the two side by side and look for anything that moved. If a protected fee went up, be sure to ask why — your lender may owe you the difference.

Learn more: How to get the best mortgage rate

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How to lower your closing costs

You won’t avoid closing costs entirely, but you can lower what you pay. These are ordered by how much they typically move.

Compare lenders and negotiate fees: Look for a mortgage lender that doesn’t charge an origination fee, or one that’ll discount it. Once you have three Loan Estimates in hand, you can show each lender the best offer and ask them to match it. If you’re getting your mortgage at your bank, you can also try asking for a discount or fee waiver, since you’re already a customer.
Negotiate seller concessions: To encourage a sale, or in a buyer-friendly market, a seller might agree to pay some of your costs. This is often the single largest reduction a buyer can get. Keep in mind that lenders and loan programs limit how much sellers can contribute, and the limit depends on your loan type and down payment, so confirm it with your lender before you write it into an offer.
Shop around when possible: Section C of your Loan Estimate names the services you can source yourself, typically the title insurance, title search and survey. Comparing providers can reduce your costs, though using your lender’s written list means that fee loses its 10% protection.
Apply for down payment assistance: Down payment assistance and grants aren’t always limited to your down payment. Depending on the program, some can help with closing costs, particularly if you’re a first-time homebuyer.
Use a no-closing-cost loan, but run the numbers: Don’t let the name fool you — you’ll still pay closing costs with a no-closing-cost loan. But instead of paying that amount now, you’ll finance it with your mortgage and pay interest on it or pay a slightly higher interest rate. Find your break-even point, or the amount of time it takes for the cost of the loan to make sense. If skipping $6,000 upfront costs you an extra $100 a month, you break even at five years. Stay in the house longer than that, and the loan costs you more.

Learn more: Estimate your costs with Bankrate's mortgage calculator

Frequently asked questions

Before you start looking at homes, get preapproved for a mortgage so you understand how much you can afford to spend. Knowing your price point can give you a rough sense of what closing costs might be. Since total closing costs are typically 2% to 5% of the loan amount, it might be a good idea to set aside enough funds to cover the high end of that range, on top of your down payment.
Most closing costs are paid at the closing, when you sign your final loan and purchase documents. But some of the fees, such as for an appraisal and credit check, are paid ahead of time.
Most purchase loans close in about 30 to 45 days from application, though the timeline depends on your loan type, your lender and how quickly you return the requested documents. ICE Mortgage Technology put the average purchase loan at 36.8 days in March 2026, the fastest since it began tracking in 2019. Conventional loans tend to close faster than government-backed loans like FHA and VA loans.
Closing costs, which typically range from 2% to 5% of your mortgage loan, come down to two things: the mortgage amount and where you’re buying. Many of the biggest fees grow with the deal — loan origination is typically a percentage of your loan amount, and title insurance premiums are based on your purchase price or loan amount. Location matters because of taxes: LodeStar found that closing costs run highest, as a share of sales price, in states where transfer taxes make up the bulk of the bill, and lowest in states with little or no transfer tax.

Beyond lender charges and third-party services like appraisals and inspections, mandatory escrow prepayments for taxes and insurance can add thousands before you’ve made a single mortgage payment.