What closing costs include
Closing costs are the fees paid to complete a home purchase. For buyers they usually total 2% to 5% of the loan. They include lender fees, appraisal, title insurance, recording fees and prepaid items such as the first year of home insurance and initial escrow deposits.
The formula
Cash to close = down payment + closing costs − credits
Worked example
On a $320,000 loan, closing costs of 2% to 5% come to $6,400 to $16,000, on top of the down payment.
How to use this calculator
Enter the home price and your down payment, then each cost you have been quoted: lender origination, title and settlement, appraisal, inspection, recording and other fees, and prepaid tax and insurance. The closing cost calculator adds them up and shows the estimated closing costs, their share of the home price and the cash to close with your down payment. Early on, use rough figures to set a savings goal. Replace them with real quotes as they arrive.
More examples: cash to close on a $400,000 home
A $400,000 home with 20% down needs an $80,000 down payment and leaves a $320,000 loan. If closing costs are 3% of the loan, they come to $9,600. With a $3,000 seller credit, cash to close is $80,000 + $9,600 − $3,000 = $86,600.
The table shows the same purchase across the common range, with no credits.
| Closing costs as a share of the loan | Closing costs | Cash to close with $80,000 down |
|---|---|---|
| 2% | $6,400 | $86,400 |
| 3% | $9,600 | $89,600 |
| 4% | $12,800 | $92,800 |
| 5% | $16,000 | $96,000 |
The gap between the low and high end is $9,600 on this loan, which is why itemized quotes matter more than a percentage.
Fees and prepaids are different
Closing costs fall into two groups. Fees pay for a service, such as the lender’s work, the appraisal and the title search. Prepaids are your own future bills collected early, such as home insurance and the deposits that start your escrow account. You would owe the prepaids anyway, so compare lenders on the fees.
What changes the result
- Loan size: several fees rise with the loan amount, so a larger loan usually means higher costs in dollars.
- Location: title charges, recording fees and transfer taxes vary by state and county.
- Lender: lender fees differ from one lender to the next.
- Discount points: each point costs 1% of the loan, or $3,200 on a $320,000 loan, and is paid at closing.
- Credits: a seller credit or a lender credit lowers the cash you bring.
Common mistakes
- Saving for the down payment and treating closing costs as an afterthought.
- Taking the first quote without comparing the fees of at least one other lender.
- Accepting a lender credit without noticing the higher rate that comes with it.
- Skipping a careful read of the Closing Disclosure. You receive it at least three business days before closing, which is your time to question any figure.
- Leaving the inspection out of your budget.
Related calculators
Work out the other half of your cash to close with the down payment calculator. Check what your state or county may charge with the transfer tax calculator, and see whether buying points pays off with the mortgage points calculator.
Frequently asked questions
Who pays closing costs?
Buyers and sellers each pay their own. A seller can agree to give the buyer a credit toward them.
Can closing costs be added to the loan?
On a purchase, generally not. A lender may instead offer a credit toward them in exchange for a higher rate.
When do I learn the exact amount?
Your lender sends a Closing Disclosure at least three business days before closing.
How much are closing costs on a $400,000 house?
It depends on the loan. With 20% down the loan is $320,000, and closing costs at the common 2% to 5% come to $6,400 to $16,000. A smaller down payment means a larger loan and usually higher costs.
Is the down payment part of closing costs?
No. They are separate amounts. Together, minus any credits, they make up your cash to close.
How can I lower my closing costs?
Compare fees from more than one lender, ask the seller for a credit, and ask your lender which fees it can reduce. A lender credit also lowers the cash you need, in exchange for a higher rate.
Are the results from this closing cost calculator final?
No. They are estimates based on the figures you enter. The Closing Disclosure from your lender shows the final numbers.