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 on a home. That’ll give you a rough sense of how much the closing costs might be.

When are closing costs paid?

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

How long does the closing process take?

The closing timeline varies by loan type, your lender and how fast you supply the required documentation to process your application. As of April 2025, it took the average borrower 40 days to close a conventional purchase mortgage, according to ICE Mortgage Technology. Conventional loans tend to have faster closing times than government-backed products, like FHA and VA loans. New purchase loans tend to take slightly less time than refinances.

Closing costs: What are they and how much are they?

Written by

Meaghan Hunt,

Edited by

Laurie Richards,

Reviewed by

Robert R. Johnson,

Expert verified

Published on May 23, 2025 | 4 min read

Bankrate is always editorially independent.

Key takeaways

Mortgage closing costs are the fees associated with buying a home, and most of them come due on closing day.
Closing costs typically range from 2 to 5 percent of the total loan amount, and they include fees for the appraisal, title insurance and origination of the loan.
To lower your closing costs, you can explore options such as negotiating seller concessions and shopping around for service providers.

What are closing costs?

Mortgage closing costs include expenses related to applying for the loan and finalizing a real estate sale. Some of the costs are related to the property, while others are related to the mortgage lender’s services and the paperwork involved in the transaction. You’ll typically pay most of these costs on closing day.

How much are closing costs?

Mortgage closing costs are typically about 2 to 5 percent of your total loan amount. For a $400,000 loan, for example, closing costs could range from $8,000 to as much as $20,000.

The total amount you’ll pay in closing costs depends on three key factors:

The price of the home
The home’s location
Whether you’re buying or refinancing

For 2021, the latest year available, the average closing costs for buying a single-family home were $6,905, according to the real estate data firm ClosingCorp. The average closing costs for a refinance came in at $2,375.

However, those costs vary widely across the country, partly due to state and local tax laws. For example, in the survey, homebuyers in Washington, D.C. paid the highest average closing costs for purchase, at $29,888. Delaware and New York came in second and third, respectively, with average closing costs of more than $16,000. The states with the lowest average closing costs were Missouri ($2,061), Indiana ($2,200) and Nebraska ($2,210).

Average closing costs by state

State	Closing costs for home purchase (including taxes)	Percentage of average home sale price (including taxes)
Washington, D.C.	$29,888	3.9%
Delaware	$17,859	5.4%
New York	$16,849	3.1%
Maryland	$14,721	3.7%
Washington	$13,927	2.4%
Pennsylvania	$10,634	4.3%
Connecticut	$8,821	2.1%
Florida	$8,554	2.3%
New Hampshire	$8,183	2.3%
Massachusetts	$7,964	1.3%
California	$7,953	1.0%
New Jersey	$7,915	1.7%
Vermont	$7,906	2.6%
Hawaii	$7,463	0.9%
Nevada	$6,383	1.5%
Virginia	$6,346	1.7%
Illinois	$5,929	2.1%
Michigan	$5,714	2.7%
Rhode Island	$5,568	1.4%
Utah	$4,837	1.0%
Arizona	$4,701	1.2%
Texas	$4,548	1.5%
Maine	$4,420	1.3%
Oregon	$4,327	0.9%
Ohio	$4,223	2.0%
Idaho	$4,082	1.0%
Minnesota	$4,011	1.4%
Tennessee	$3,911	1.4%
Colorado	$3,881	0.7%
Georgia	$3,762	1.3%
Louisiana	$3,711	1.7%
Alaska	$3,581	1.0%
New Mexico	$3,513	1.1%
Wisconsin	$3,459	1.5%
South Carolina	$3,447	1.2%
North Carolina	$3,406	1.1%
West Virginia	$3,406	1.8%
Montana	$3,337	0.8%
Iowa	$3,146	1.6%
Arkansas	$3,115	1.5%
South Dakota	$3,105	1.3%
Alabama	$2,986	1.4%
Oklahoma	$2,893	1.5%
Kentucky	$2,802	1.4%
Kansas	$2,793	1.0%
Nebraska	$2,781	1.2%
Mississippi	$2,756	1.0%
Wyoming	$2,589	0.7%
North Dakota	$2,501	1.0%
Indiana	$2,200	0.9%
Missouri	$2,061	0.8%

How to learn your closing costs

Before you close on the home, you’ll receive a mortgage loan estimate, which is a document outlining your mortgage terms and expenses. Some of these expenses are fixed, but the document will specify services you can comparison shop, like title insurance. At least three business days before the closing, you’ll receive a closing disclosure. This is a similar document that lists the final closing costs.

Who pays closing costs?

While the buyer tends to pay many closing costs, the seller is responsible for paying some, too. Buyers can try to negotiate with the seller to cover some of their costs — called “seller concessions” — though that’s typically only feasible if the seller doesn’t have competing offers.

In addition, there are limits on seller concessions, depending on the buyer’s loan type. If you are purchasing a property with a conventional loan, you may negotiate up to 9 percent of the purchase price or appraised value, whichever is lower. FHA loans and USDA loans allow for up to 6 percent, while VA loans have a maximum of 4 percent total. Jumbo loans vary based on the lender.

Closing costs paid by the buyer

Here are closing costs you can typically expect to pay if you’re buying a home:

Appraisal fee: This fee covers the cost for a licensed appraiser to determine the home’s value. The average appraisal fee for a single-family home is about $350, according to Angi. While this is considered a closing cost, you typically pay it well before closing day.
Attorney fee: You may choose to use an attorney during your closing, or your state may require one.
Credit check fee: Chances are, if you’re in the process of purchasing a home, you’ve checked your credit score and report already. But your lender will want to pull its own inquiry, and there is typically a fee associated with doing so.
Discount points: By purchasing discount points (also called mortgage points), you can buy down your mortgage rate. You’ll usually pay 1 percent of the loan principal for one point off the interest rate, which is usually equal to a 0.25 percent rate reduction.
Origination fee: Lenders can charge an origination fee for creating the loan, which is generally 0.5 percent to 1 percent of the amount you’re borrowing. This fee might include other costs, such as the application fee and the underwriting fee.
Per-diem interest: The per-diem interest rate on a mortgage is the daily interest that’s charged between the closing date and the start of the billing cycle.
Prepaid homeowners insurance premiums, mortgage insurance premiums, property taxes and homeowners association (HOA) fees: Your lender may require a year of advance insurance and property tax premiums to be held in escrow. If your property is located in a community with a homeowners association, you may owe a prepaid amount at closing, too.
Property survey fee: Your lender may require this to confirm that your property boundaries match the title. The cost depends on the property size, the survey type and your location.
Real estate agent commissions: The buyer’s agent and the seller’s agent typically split a commission of about 5 percent of the sale price.
Recording fee: This fee goes to a government agency that records the real estate transaction and makes it a public record. It’s often around $125.
Title insurance policy: Lenders require borrowers to obtain title insurance in case problems arise with ownership after the sale. This policy protects the lender, and the cost is usually about 0.50 percent of the amount of the mortgage. You may also buy your own title insurance for an additional cost.
Title search fee: Unless you’re buying a new construction home, your lender will have a title company search property records to ensure there aren’t any issues with the title of the home, such as a tax lien. The fee for a title search is around $200.
Transfer tax: Many states impose a transfer tax when real estate changes hands. Often, the seller pays this tax, but in some places, the cost is shared with the buyer.

Closing costs paid by the seller

Often — though not always — the seller covers the transfer tax. Many states impose a transfer tax when real estate changes hands. The seller also pays some of the same fees buyers do, such as an attorney’s fee and prorated property taxes.

Who pays real estate agent commissions?

In the wake of a 2024 settlement, sellers may not be responsible for covering commissions for their real estate agent and the buyer’s agent. Buyers might now need to cover the fees for their own agent, though this will vary by case.

How to lower your closing costs

You can’t get away with not paying any closing costs, but there are ways you can lower the amount. Here are a few ways to reduce closing costs:

Look for lenders that offer discounts: Consider working with a mortgage lender that doesn’t charge an origination fee or that’ll offer you a discount. 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.
Apply for down payment assistance: Particularly if you’re a first-time homebuyer, explore down payment assistance and grants that can help cover closing costs.
Use a no-closing-cost loan: Don’t let the name fool you — you’ll still pay closing costs with a no-closing-cost loan. Instead of paying them upfront, you’ll finance them with your mortgage (and pay interest on them) or pay a slightly higher interest rate.
Negotiate seller concessions. To encourage a sale, a seller might agree to pay some of your costs.
Shop around when possible: You’re allowed to shop for certain closing costs, like title insurance, title searches and home appraisals. Getting comparison pricing can help you reduce your closing costs.