What are closing costs and how much will you pay?

When buying a home, it’s important to be ready to pay closing costs in addition to your down payment. How much you’ll pay in closing costs depends on how much you’re borrowing, the location of your new home, and the type of mortgage you’re using to buy it. They include origination fees and discount points paid to your lender, insurance and tax payments, and the cost of legally transferring ownership of the property.

How much are closing costs? They typically range from 3% – 6% of your loan amount. Depending on your home’s value and how much you borrow, that can be a significant amount, so it’s important to be prepared to pay closing costs.

What are closing costs on a house?

Closing costs are fees required to fund your mortgage and to transfer legal ownership of the home from the seller to the buyer. Closing costs typically include origination fees, home inspection and appraisal fees, title search and insurance fees, and recording fees.

The exact closing costs you’ll pay depend on your mortgage type and your location.

Buyers typically pay more in selling costs than sellers. Sellers usually pay the commissions earned by both the buyer's and the seller's real estate agents in the transaction, typically about 6% of the purchase price.

How much are closing costs?

For buyers, closing costs typically range from 3% – 6% of the loan amount. For example, if you take out a mortgage for $200,000, you can expect your closing costs will be between $6,000 and $12,000.

Closing costs are paid in addition to your down payment.

It's possible to save money on closing costs by asking your lender to waive or reduce some fees. The buyer can shop for some of the services required to close, such as title search and title insurance, allowing you to find the lowest available price.

Average closing costs by state

Below is a state-by-state breakdown of average closing costs, based on the average home price for each state. Closing costs are based on Rocket Mortgage® data from August 15, 2024, to August 15, 2025.

How to estimate closing costs

Because closing costs are significant, it’s important to budget for them. Estimating closing costs with accuracy, however, is difficult because there are a lot of variables.

Rocket Mortgage provides an easy-to-use down payment and closing costs calculator. To use the calculator, fill out the fields on the left and select the appropriate down payment percentage on the right. The calculator will tell you how much you can expect to need up front to buy a home.

Mortgage prequalification is an easy way to provide financial information and get an estimate of how much you may be able to borrow to buy a home, with no effect on your credit score.

When you're ready to start shopping for a home, apply for mortgage preapproval. Your lender will review your finances and provide a letter estimating how much you can borrow. A preapproval letter shows agents and sellers you're ready to buy.

What’s included in the closing costs for a buyer?

How much you'll pay in closing costs will depend on several factors, including the location of the home, which lender you're working with, how much you're borrowing, and what type of loan you're using.

When you apply for a mortgage, your lender will provide within 3 business days a Loan Estimate. This standardized document will list all your estimated closing costs.

At least 3 business days before you close, your lender will send you a Closing Disclosure that again lists all your closing costs you need to cover and how much you owe. This estimate often is the final amount you need to pay, though some costs may fluctuate a bit before you finally close.

Here are some of the most common closing costs home buyers need to pay.

Application fee

This fee varies by lender but can be as high as $500. The application fee may be a separate fee or a deposit applied to other closing costs.

Appraisal fee

Your lender will order a home appraisal to determine the home's value. Lenders won't let you borrow more than a home is worth. If the appraisal comes in low, you may need to cover the difference in cash, re-negotiate the price with the seller, or walk away from the deal if you have an appraisal contingency. Appraisal fees usually range from $300 – $600.

Attorney fees

In some states, a real estate attorney is required to close a sale. The attorney's fee typically covers the cost of coordinating the closing and drawing up paperwork for the title transfer. Fees vary by location.

Closing fee

Your closing fee goes to the escrow company or attorney who conducts the closing. In some states, an attorney must sign off on every mortgage closing. This cost varies by state or county and whether an attorney is needed.

Courier fee

The courier fee covers the cost of transporting mortgage documents. Expect to pay around $30 in courier fees, if your lender charges them.

Credit reporting fee

The credit reporting fee covers the cost of pulling your credit report and credit score. Most credit reporting fees range between $10 and $100.

Discount points

You can reduce your loan's mortgage rate by buying mortgage discount points. One discount point usually costs 1% of your loan amount and reduces your interest rate by 0.25%. You usually can buy fractions of a point, depending on the lender. The cost of discount points will appear on the Loan Estimate under origination charges.

Escrow funds

Sometimes referred to as reserve fees or prepaids, escrow funds are advance payments for property taxes, homeowners insurance premiums, and mortgage insurance. Your lender estimates the annual cost of these bills and adds a prorated monthly amount to your mortgage payment. Those funds are held in an escrow account, and the lender pays those bills on your behalf. When you buy a home, the fund may need a deposit to ensure it has enough to pay the bill on time and in full.

FHA mortgage insurance

With an FHA loan, you pay an up-front and an annual mortgage insurance premium (MIP). The up-front MIP rate for an FHA loan is currently 1.75% of your base loan amount. The annual MIP fee ranges from 0.15% – 0.75% of your loan value, and the cost is added to your monthly mortgage payment. If you make a down payment of at least 10%, you can stop paying the annual MIP after 11 years. If your down payment is less than 10%, you pay the annual MIP for the entire loan term.

Flood certification

If you’re buying a house in a flood zone, you'll need to pay $15 – $25 for a flood certification from the Federal Emergency Management Agency. If the certification shows the home you're buying is in a flood zone, your lender will require you to buy flood insurance in addition to your homeowners insurance.

HOA transfer fee

If your property is part of a homeowners association, the transfer fee covers the cost of moving the HOA fees from the seller to the buyer. It covers the administrative costs associated with the change in ownership. Most of the time, the seller covers this cost. However, you might need to pay your transfer fee if you’re buying in a very competitive market. The amount you’ll pay depends on the HOA’s policies.

Homeowners insurance

Most mortgage lenders require you to have homeowners insurance as a condition of the loan.

Homeowners insurance compensates you if your home is damaged. It typically protects against natural disasters, fire, theft, and vandalism. You also may have the option to include liability coverage and personal property coverage in your policy.

Many lenders require you to pay for a year’s worth of homeowners insurance at closing. Expect to pay about $50 per month for every $100,000 in home value.

Lead-based paint inspection

If you’re buying a home built before 1978, it might have lead-based paint, which poses a significant health risk. This fee covers a test for lead in the home. Expect to pay around $300 for a lead-based paint inspection.

Lender’s title insurance

Lender’s title insurance reimburses the lender for its losses if you lose your home to a title claim. Lender’s title insurance, which typically costs between 0.5% – 1% of the mortgage, is separate from owner’s title insurance.

Loan origination fee

The loan origination fee covers the lender's cost of processing and underwriting your loan. You can expect to pay about 1% of your loan’s value.

Owner’s title insurance

Owner’s title insurance is optional, but it protects you if there's a previously unknown claim to ownership or a lien on the property. Typically, title insurance costs an average of 0.5% – 1% of the home’s purchase price.

Title search fee

A title search looks for claims against a property you want to buy. Liens, bankruptcies, or unpaid back taxes may block the seller from selling the home. In most states, title insurance companies do the title search, while states require a real estate attorney to handle it. Expect to pay $75 – $200 for a title search.

Transfer tax

A transfer tax is paid to your local government to update your home’s title and transfer it from the seller to you. Like most local taxes, this fee will vary depending on where you live.

Pest inspection fee

In some states, a pest inspection is required before closing. A pest inspection also is required if you’re buying a home with a VA loan. Other loans require a pest inspection if the appraiser or home inspector finds a problem.

The average pest inspection costs around $100, but the final price depends on the size of the house and the type of pest being inspected for. Depending on the situation, the buyer, seller, or lender may pay the pest inspection fee.

Prepaid daily interest charges

Your lender will ask you to pay up front any interest that will accrue on your loan between closing and the date of your first mortgage payment. This amount will depend on your loan amount, interest rate, and closing date.

PMI

Your lender will require you to pay for private mortgage insurance if you put down less than 20% on a conventional loan. PMI protects the lender if you default on your loan. The exact amount you’ll pay each month for PMI depends on your lender, but most homeowners pay $30 – $70 per $100,000 borrowed. You can request that your lender cancel PMI once you have 20% equity in your home.

Property tax

Property taxes are levied by state and local governments to pay for public services such as schools, roads, parks, police, and firefighters. The amount you’ll pay in property taxes depends on where you live and your home’s value. Your lender may require you to pay up to a year’s worth of property taxes at closing. You can estimate your property taxes using public records and your appraisal value.

Rate-lock fee

Paying your lender a mortgage rate lock fee will freeze the interest rate you've been offered on your on your loan for a specific time. This can protect you from paying more interest if you think rates will increase before you close on your loan. Expect to pay between 0.25% – 0.50% of your loan’s value. Some lenders offer this service for free, depending on the length of the rate lock.

Recording fee

The recording fee usually costs around $125 but varies by location. It is paid to your local city or county government to update land ownership records.

Survey fee

You may need a land survey before you can close a home sale. The survey fee goes to the survey company that verifies and confirms the property lines. Home buyers can expect to pay $400 – $1,000 for a land survey.

Tax monitoring and tax status research fees

Tax monitoring and status research are paid to a company that verifies that your calculated property taxes are correct. The company will notify your lender if you miss any property tax payments during the life of your loan. The amount of this fee depends on where you live and which company your lender uses.

VA funding fee

You may need to pay a VA funding fee at closing if you buy a home using a VA loan. The VA funding fee pays administrative costs for the VA loan program.¹

The amount of the funding fee is based on the down payment, whether the loan is being used to purchase or refinance a home, and whether it’s the first time you’ve used your VA benefits.

• If you put down less than 5% on your loan and you’re a first-time VA user, your VA funding fee is 2.15% of your total loan amount.
• If you make a 5% down payment, your funding fee is 1.5% of your loan amount.
• A 10% down payment reduces your VA funding fee to 1.25%.
• If you’re refinancing from a different type of loan into a VA loan, the funding fee is 2.15% if it’s your first use and 3.3% for a subsequent use.
• VA Streamline refinances, also called Interest Rate Reduction Refinance Loans, or IRRRLs, have a 0.5% funding fee.²

The funding fee can be waived if you’re receiving VA disability payments or applying as the surviving spouse of a veteran who died while in service or from a service-related disability. If you’re a Purple Heart recipient on active duty, you’re also exempt from the VA funding fee.

How to reduce closing costs

While closing costs are an unavoidable part of the mortgage process, that doesn’t mean you can’t take steps to keep them as low as possible. Here are a few strategies to consider.

Shop around for lenders

Not all lenders charge the same fees or the same amounts for the same services. However, closing costs are just one factor to consider when choosing a lender.

Here are a few things you should always compare:

• The annual percentage rate, or APR. This figure includes both your loan's interest rate and lender fees to measure the total cost of the loan.
• Costs such as application and loan origination fees.
• Any lender credits that offset some of your closing costs.
• The total up-front costs associated with your loan.
• Whether paying points to lower the interest rate makes sense for you.

Rocket Mortgage understands that closing costs can be a significant barrier to homeownership, especially for first-time buyers. That’s why we offer programs such as RentRewards, which gives clients in rental agreements a credit toward closing costs.³

Ask the seller to contribute

Negotiating seller concessions can reduce your out-of-pocket costs without changing your loan terms. This works best in a buyer’s market with a motivated seller, or when your offer solves a buyer’s problem, such as needing a quick closing or a flexible `move-out window.

There are a couple of things to keep in mind, however. Remember that:

• There are limits on seller concessions. These vary based on many factors, such as the amount of your down payment and the type of loan.
• You can negotiate help with typical buyer fees, such as title, escrow, and lender fees.
• Some things are not allowed as seller concessions, such as cash back at closing, covering your minimum down payment, or amounts that exceed program caps.

FAQ

Here are answers to common questions about closing costs.

How long does closing take?

On average, closing takes about 30 – 45 days from when you submit your mortgage application. It can take less time or longer, depending on whether documentation is missing, the seller wants to close quickly, or the lender requires more information and inspections.

What if I can’t afford closing costs?

Consider looking into a closing-cost assistance program. Sometimes you also can persuade a motivated seller to pay some of your closing costs.

Can my closing costs be wrapped into my mortgage loan?

Depending on your lender and your financial situation, you may be able to take your closing costs and roll them into the loan balance. This saves you money up front, but likely will cost you more in interest over time.

The bottom line: Prepare to pay for closing costs before shopping for a house

Closing costs are unavoidable, so it’s essential to budget for them. At a typical cost of 3% – 6% of your loan amount, they can be significant. Shopping for lenders, negotiating with sellers, and exploring closing cost assistance programs are all ways to save money on closing costs.

If you’re ready to keep your closing costs as low as possible, talk with a Rocket Mortgage Home Loan Expert. They can help you compare your loan options and control your closing costs.

¹ The VA Streamline program may have stricter requirements in some states. In order to qualify for the VA Streamline program, you must have a VA loan. The VA Streamline is only available on primary residences. Cash-out transactions are not allowed. In order to qualify for a VA Streamline, a 0.5% minimum reduction in interest rate on the previous fixed-rate loan must occur if the new loan will be a fixed rate or a 2% minimum reduction in interest rate on previous adjustable rate mortgage loan must occur; a minimum of 6 months of consecutive mortgage payments must be paid on the current loan at the time of application. Some states may require an appraisal. Additional restrictions/conditions may apply.

² Refinancing may increase finance charges over the life of the loan.

³ Clients who are current renters will receive a lender credit toward closing equivalent to 10% of the total amount of their 12-month rental payment, up to $5,000. Current renters are defined as individuals who are currently under a lease agreement. Offer only valid on primary residences. Offer valid only through retail channels and on loans that are locked on or after February 11, 2025. Offer not available for Non-Occupant Co-Clients. Offer not available for partnerships. Offer not valid on Jumbo loans, Schwab products or previously locked or closed loans. Offer is nontransferable. Offer is not valid with any other discounts or promotions. Additional restrictions/conditions apply. Rocket Mortgage reserves the right to modify/cancel this offer at any time. This is not a commitment to lend.