Home Closing Costs: An Itemized Estimate and the Cash Needed to Close
October 29, 2026
Closing costs are the fees and prepaid items you pay when the home purchase is completed, in addition to the down payment. Buyers typically pay 2% to 5% of the purchase price. Knowing the components helps you budget for them and compare lender quotes. The lender's Loan Estimate, which you receive within three business days of applying, itemizes most of these costs.
Example: a $350,000 home with a 20% down payment of $70,000 and a loan of $280,000 at 6.5%.
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Origination fee (1% of the loan): $2,800. Appraisal: $600. Credit report, flood certification, and other lender fees: $150. Title search and lender's title insurance: $1,500. Owner's title insurance (optional but advisable): $1,200. Attorney or settlement fee: $1,000. Recording fees and transfer taxes: $800. Prepaid interest for 15 days (the stub period until the first full month): $280,000 × 6.5% ÷ 365 × 15 = $748. Initial escrow deposit for taxes and insurance: $1,425. Total: $10,223, or 2.9% of the price. The cash needed to close is the $70,000 down payment plus $10,223 = $80,223, less any earnest money already paid and any seller credits.
Not included: moving costs, immediate repairs, furniture, and home inspection fees (typically $300 to $600), which are paid separately before closing.
| Item | Amount |
|---|---|
| Origination fee (1%) | $2,800 |
| Appraisal | $600 |
| Credit report, flood certification, other | $150 |
| Title search and lender's title insurance | $1,500 |
| Owner's title insurance | $1,200 |
| Attorney / settlement fee | $1,000 |
| Recording and transfer taxes | $800 |
| Prepaid interest (15 days) | $748 |
| Initial escrow deposit | $1,425 |
| Total closing costs | $10,223 |
Ways to Reduce Them
Compare Loan Estimates from at least three lenders, focusing on section A (origination charges) and the APR. Negotiate or shop for the services that you can choose, such as title insurance and the settlement agent. Ask the seller for a credit toward closing costs (commonly 2% to 3%, with limits depending on the loan type). Time your closing near the end of the month to cut prepaid interest. Consider a no-closing-cost loan, in which the lender pays the costs in exchange for a higher interest rate, if you won't hold the loan for long. Roll-in options increase the loan balance and total interest.
Compare the Trade-Offs With Points
Paying discount points (1 point = 1% of the loan, $2,800 here) lowers the rate, and makes sense only if you keep the loan longer than the break-even period. With a $2,800 cost and monthly savings of about $50, the break-even is 56 months. Keep the cash needed for the down payment and an emergency fund; don't deplete all reserves to close.
Before Closing Day
Review the Closing Disclosure at least three business days before closing and compare it to the Loan Estimate. Look for fee increases beyond the allowed tolerances. Bring a cashier's check or arrange a wire after verifying wire instructions by phone, since wire fraud is a risk. This article is general information, and fees vary by location.
Frequently Asked Questions
How much are closing costs?
Typically 2% to 5% of the purchase price.
What is cash to close?
Down payment plus closing costs, minus credits and deposits already paid.
Can the seller pay my closing costs?
Often, as a negotiated credit within limits set by the loan type.
What is prepaid interest?
Interest for the days between closing and the start of the first full mortgage period.
When do I get the Closing Disclosure?
At least three business days before closing.