How much are closing costs typically?
In the US, buyer closing costs typically run 2–5% of the loan amount, or 1.5–3.5% of the home price. On a $400,000 home with a $320,000 loan, expect $7,000–$15,000 in closing costs. Costs vary significantly by state — DC and New York are highest, midwest states are lowest. Get a Loan Estimate from your lender for exact numbers.
What is a Loan Estimate (LE)?
A standardized 3-page document your lender must provide within 3 business days of your application. It shows your loan terms, monthly payment, all estimated closing costs, and cash to close — broken into the same categories this calculator uses. Federal law (TRID rule) requires lenders to be accurate within tight tolerances, so the LE is highly reliable for planning.
Who pays closing costs — buyer or seller?
Both have their own closing costs. Buyers typically pay lender fees, third-party services, government fees, and prepaid items — 2–5% of loan amount. Sellers typically pay agent commission (5–6% of sale) and some transfer taxes — 6–10% of sale price total. In buyer's markets, sellers may agree to cover some buyer closing costs as a concession.
Can I roll closing costs into the loan?
Sometimes. With a refinance, yes — closing costs can typically be added to the new loan balance. For a purchase, it's harder: most loan types don't allow rolling closing costs into the loan, but you can ask the seller for a concession that covers them. VA and USDA loans allow the funding fee to be rolled in.
What's the difference between closing costs and a down payment?
Down payment is the portion of the home price you pay upfront — it goes toward your equity. Closing costs are fees paid to complete the transaction — they're transaction expenses, not equity. On a $400K home with 20% down: $80,000 is your down payment, $10,000–$15,000 is your closing costs. Both come out of your pocket at closing.
Are closing costs negotiable?
Many are. Lender fees (origination, application, underwriting, processing) are often negotiable — shopping lenders gives you leverage. Title insurance can sometimes be shopped depending on state. Third-party services like appraisal are mostly fixed. Government fees and transfer taxes are non-negotiable. Get itemized estimates and ask about each line.
What are seller concessions?
When the seller agrees to pay some of the buyer's closing costs. Common in buyer's markets and as a negotiating tactic when buyers ask for repair credits. Loan programs cap concessions at 3–6% of price depending on loan type and down payment. Concessions effectively reduce your cash-to-close but don't reduce the home price for mortgage purposes.
What is prepaid interest?
Mortgage interest from your closing date to the end of that month. Your first regular mortgage payment is due on the 1st of the following month — but interest accrues from day one of the loan. The prepaid interest charge covers those initial days. Closing late in the month dramatically reduces this charge: closing on the 28th vs the 1st of a 30-day month saves you roughly 25 days of interest.
What is an escrow account?
A holding account managed by your lender for property tax and homeowner's insurance. At closing, you fund 2–6 months of tax reserves and 12 months of insurance. Going forward, your monthly mortgage payment includes 1/12 of annual tax and insurance, paid into the escrow. The lender pays the bills when due, protecting their collateral.
Why do closing costs vary so much by state?
Mostly because of transfer taxes and title insurance. States like DC, NY, Delaware, and Maryland impose substantial transfer taxes (1–3% of price); states like Missouri and Indiana have minimal transfer taxes. Some states require attorneys at closing (more cost); others don't. Recording fees vary too. The state comparison table above shows the spread.
When do I learn the exact closing costs?
Three days before closing, you'll receive the Closing Disclosure (CD) — a 5-page document showing final numbers. Federal law requires this 3-day review window. Compare it to your initial Loan Estimate; lender fees and some other items must be within 10% of the estimate, while items like origination charges cannot increase at all. Question any unexpected increases.
How accurate is this closing cost calculator?
The math is precise for your inputs. Accuracy depends on how well you know your local rates and lender fees. The state comparison shows typical averages — your specific costs can vary based on county, city, lender, and program. Use this for planning; get a Loan Estimate from a lender for exact numbers before closing.
