Family moving boxes into new home.

Closing Costs: What They Are, And The Average Amount You’ll Pay

7-Minute Read
Published on November 15, 2021

When it comes to saving money to buy or refinance a home, you’ve probably been pretty focused on the down payment. But you’ll also need to plan for closing costs, which are due when you close on your mortgage.

Understanding what closing costs are, how much they cost on average and what’s included can help eliminate any unexpected last-minute financial obstacles when you close on your new home.

Here’s what you need to know so you can make sure you have enough money on hand to cover those expenses.

What Are Closing Costs?

Closing costs are fees paid to cover the property, insurance and mortgage costs incurred by your lender and other third parties while processing your loan during a purchase or refinance.

Lenders are required by law to provide a Loan Estimate within 3 business days of receiving your application. The estimate provides a detailed list of what you can expect to pay at closing. This document is a TILA-required lender disclosure that provides a good-faith estimate of the cost of the loan but it’s just an estimate. You’ll know exactly how much you’ll owe when you receive a Closing Disclosure 3 business days before you close.

See What You Qualify For


Type of Loan

Home Description

Property Use

Your Credit Profile

When do you plan to purchase your home?

Do you have a second mortgage?

Are you a first time homebuyer?

Your email address () will be your Username.
Contains 1 Uppercase Letter
Contains 1 Lowercase Letter
Contains 1 Number
At Least 8 Characters Long
Go Back

Congratulations! Based on the information you have provided, you are eligible to continue your home loan process online with Rocket Mortgage.

If a sign-in page does not automatically pop up in a new tab, click here

How Much Are Closing Costs?

Typically, buyers pay closing costs averaging 3% – 6% of the loan amount. So, if you’re applying for a $300,000 mortgage on a house, you might pay $9,000 – $18,000 in closing costs. If you're refinancing without discount points, expect to pay about 2% – 3% of your balance in closing costs.

The list of closing costs paid by the buyer is certainly longer, but the seller usually pays the real estate agent’s commission, which is typically at least 6% of the purchase price. So, in most cases, sellers pay as much and maybe more than buyers. Closing costs are paid in cash at the time of closing.

You’ll pay higher closing costs if you choose to buy discount points, but the trade-off is a lower interest rate on your loan.

Closing costs will add a significant amount to your total out-of-pocket spend, so it's important to factor them into your budget when you're thinking about how much house you can afford or how long it will take you to break even on your refinance. Getting approved online can help you figure out what the total costs of your loan might be, so you can prepare to cover any additional costs at closing.

Get approved to see what you can afford.

Quicken Loans® lets you do it all online.

Start My Approval

What Do Closing Costs Include For The Buyer?

The mortgage closing costs you’ll pay will vary depending on where you’re buying your home, the home itself and the type of loan you choose. Here’s a breakdown of common closing costs.

Property-Related Costs

  • Appraisal: An appraisal will almost always be mandated by the lender to make sure the home is worth the sale price. Most appraisers charge $300 – $500 for their services.
  • Escrow fees: You may have to pay portions of property taxes and insurance upfront into an escrow account.
  • Flood certification: If your house is situated on or near a flood plain, your lender may require documentation confirming the need for flood insurance, which involves paying around $15 – $20 for a certification from the Federal Emergency Management Agency (FEMA).
  • Property taxes: At closing, the buyer typically pays the city and county property taxes due from the date of closing through the end of the tax year.
  • Annual assessments: If you’re buying in a development with a homeowners association (HOA) that requires an annual fee, it may be due upfront at closing.
  • Survey fees: If a survey has to be done to determine your property lines and the exact dimensions of your land, you’ll pay the fee for the service at closing. The cost could run as high as $800, but it heavily depends on the complexity of the survey job.

Loan-Related Costs

  • Title/attorney fees: This includes necessary government filing fees, escrow fees, notary fees and other expenses related to transferring the deed. The cost of title and attorney fees varies significantly from state to state.
  • Lender fees: These cover items ranging from administrative costs to pulling your credit report to wire transfer fees. If a lender boasts unusually low rates, it’s possible they’ll try to make up the difference with additional lender fees, so be sure to compare apples to apples. What one lender calls an origination fee may be separated into a processing and an underwriting fee by another lender.
  • Application fee: This is charged by the lender and varies in price, up to $500. The application fee is nonrefundable, even if you aren’t approved for the loan.
  • Assumption fee: If you’re assuming a conventional loan from the seller, you’ll pay an assumption fee set by the lender, typically $800 – $1,000, or in some cases 1% of the loan amount. For FHA loans, the maximum allowed is $900, and for VA loans, the max is $300.
  • Prepaid interest: This is daily interest that accrues on the loan between the closing date and first monthly mortgage payment.
  • Loan origination fee: These origination fees are paid to the lender to obtain a mortgage and are expressed as a percentage of the loan amount.
  • Discount points: Discount points are fees paid directly to the lender by the buyer at closing in exchange for a reduced interest rate. This is also called “buying down the rate.” One point costs 1% of your mortgage amount (or $1,000 for every $100,000).
  • Title search fee: The search fee is paid to the title search company that researched the property’s history to make sure the title (ownership) is free and clear of all liens that could cause the sale to fall through. Typically, this runs $75 – $100.

Other Insurance-Related Costs

  • Homeowners insurance: Your lender might require you to prepay a year of homeowners insurance upfront. Homeowners insurance costs are prorated for the remainder of the year in which you bought the home.
  • Mortgage insurance application fee: If your down payment is less than 20%, the lender may require private mortgage insurance (PMI). This fee varies by loan.
  • Upfront mortgage insurance: PMI can be rolled into your monthly payments, but it can also be paid at closing. Paying upfront usually saves borrowers money.
  • FHA, VA and USDA fees: Fees on FHA, VA and USDA loans differ from those charged on conventional loans. FHA loans require an upfront mortgage insurance premium (MIP) of 1.75% and a monthly fee. VA home loans require an upfront, one-time VA funding fee, determined by the loan amount, the buyer’s service history and other factors. VA home loan applicants can pay all or part of the fee in cash or roll it into the loan amount to reduce out-of-pocket expenses.
  • Lender and owner title insurance: Lender policies protect the mortgage lender’s interest. Buyer policies protect the buyer’s interest. The average title insurance policy carries a one-time premium of about $1,000, paid by the buyer.

Want a more individualized report of your approximate closing costs? After you apply, your lender will get a loan estimate to you within a few days. If you need some more specific figures in front of you to decide whether to buy, this could be a good way to see what you can expect to pay.

Get approved to buy a home.

Quicken Loans® lets you get to house hunting sooner.

Start My Approval

What Do Closing Costs Include For The Seller?

Like home buyers, sellers also have to pay closing costs. Here are a few of the costs you’ll have to pay when selling your home:

  • Escrow fees
  • Attorney fees
  • HOA fees up to the date of closing
  • Property taxes up to the date of closing
  • The commission for the buyer’s agent
  • The commission for their listing agent
  • Title insurance

Seller Concessions: What’s Negotiable?

Closing costs are negotiable to an extent and it all depends on the market’s conditions at the time of the offer.

In a buyer’s market, a seller might be willing to pay some of the buyer’s closing costs in order to seal the deal for the house. However, in a seller’s market, these seller concessions are nearly unheard of.

The best thing you can do is let your real estate agent know that you’re interested in negotiating. They’ll be able to guide you through the process and increase the likelihood of reaching an agreement faster.

How To Get Help With Mortgage Closing Costs

There are lots of first-time home buyer assistance programs out there that provide help with down payment and closing costs.

For example, Fannie Mae’s HomePath Ready Buyer Program gives first-time home buyers the opportunity to earn a credit worth 3% of a home’s purchase price if they complete a home buyer education course and buy a HomeReady home.

If you need help with closing costs, check with your state or local housing agencies to find out what may be available. HUD maintains a list of programs organized by state. Many offer low-interest loan programs or grants for first-time buyers.

Speak With Your Lender

If you’re worried about paying for closing costs upfront, let your lender know. You may be able to roll your closing costs into your mortgage rate by taking lender credits. These credits give you a slightly higher interest rate in exchange for the ability to pay off the costs over the life of the loan rather than upfront.

FAQs About Closing Costs

Still not quite sure what to expect to pay in closing costs or how these extra fees work? Here are a few frequently asked questions to help.

What types of fees are covered in closing costs?

Closing costs may include appraisal fees, loan origination fees, discount points, title searches, credit report charges and more.

Are closing costs mandatory?

Yes. All buyers will need to pay closing costs if they’re financing a home purchase with a mortgage loan.

How can I estimate my mortgage closing costs?

Most buyers have to pay 3% – 6% of the loan amount in closing fees. Think about how much you’ll borrow and multiply that amount by 0.03 or 0.06. This number will give you a rough estimate of what you’ll have to pay at closing.

What if I don’t have the money on-hand to cover closing costs?

You may be able to roll your closing costs into your mortgage or negotiate with the seller to get them to cover a portion of your costs. Speak with your real estate agent and lender to learn more.

The Bottom Line: Closing Costs Are A Big Part Of Your Home Buying Expense

When you’re planning on buying or selling a home, you can expect to pay closing costs before the sale is complete. Though sellers’ closing costs come out of the sales proceeds, buyers must pay their closing costs upfront and in cash. As long as you prepare for those costs, you’ll be in great shape.

Ready to move forward on your mortgage? Apply online to see what you qualify for and what you can expect to pay on your loan.

Apply Online with Rocket Mortgage

Get approved with Rocket Mortgage® – and do it all online. You can get a real, customizable mortgage solution based on your unique financial situation.

Apply Online

Kevin Graham

Kevin Graham is a Senior Blog Writer for Rocket Companies. He specializes in economics, mortgage qualification and personal finance topics. As someone with cerebral palsy spastic quadriplegia that requires the use of a wheelchair, he also takes on articles around modifying your home for physical challenges and smart home tech. Kevin has a BA in Journalism from Oakland University. Prior to joining Rocket Mortgage, he freelanced for various newspapers in the Metro Detroit area.