Mortgage Closing Costs: Complete Breakdown for 2026

Closing costs are the fees and expenses you pay when finalizing your mortgage—and they typically run 2%-6% of your loan amount. On a $400,000 loan, that's $8,000 to $24,000 on top of your down payment.

Many homebuyers are shocked when they see their final [closing disclosure](/blog/homebuying-closing-process). This guide breaks down every line item, explains what's negotiable, and shows you how to reduce your costs.

What Are Closing Costs?

Closing costs are the fees required to complete your mortgage transaction. They cover:

Lender fees (origination, underwriting, processing)
Third-party services (appraisal, title, inspections)
Government fees (recording, transfer taxes)
Prepaid items (insurance, property taxes, interest)
Escrow setup (reserves for taxes and insurance)

Key point: You'll see these itemized on your Loan Estimate (within 3 days of applying) and your Closing Disclosure (at least 3 days before closing).

Total Closing Costs: What to Expect

By Loan Amount:

$200,000 loan: $4,000-$12,000
$300,000 loan: $6,000-$18,000
$400,000 loan: $8,000-$24,000
$500,000 loan: $10,000-$30,000

By Loan Type:

Conventional: 2%-5% of loan amount
FHA: 2%-6% (higher due to upfront MIP)
VA: 1%-5% (no down payment but still has closing costs)
USDA: 2%-5%

By Transaction Type:

Purchase: Full closing costs
Refinance: Slightly lower (no owner's title insurance)

Geographic variation: Closing costs vary significantly by state due to different taxes, title fees, and attorney requirements.

Complete Closing Costs Breakdown

Section A: Lender Fees

These fees go to your mortgage lender.

1. Loan Origination Fee

What it is: Fee for processing your loan
Cost: 0.5%-1% of loan amount
Example: $400,000 loan = $2,000-$4,000
Negotiable? Yes—shop lenders, compare

2. [Discount Points](/blog/mortgage-points-explained) (Optional)

What it is: Prepaid interest to lower your rate
Cost: 1% of loan per point
Example: 1 point on $400,000 = $4,000
Reduces rate by: ~0.25% per point
Negotiable? Yes—you choose whether to buy points

3. Application Fee

What it is: Fee to process your application
Cost: $0-$500
Negotiable? Yes—many lenders waive this

4. Underwriting Fee

What it is: Fee for evaluating and approving your loan
Cost: $400-$900
Negotiable? Sometimes—can be bundled with origination

5. Processing Fee

What it is: Administrative fee for handling your file
Cost: $300-$700
Negotiable? Sometimes—ask lender to waive

6. Rate Lock Fee

What it is: Fee to lock your interest rate
Cost: $0-$1,000+ (depending on lock period)
Standard locks (30-60 days): Usually free
Extended locks (90+ days): 0.125%-0.25% of loan
Negotiable? Limited—standard locks should be free

Total Lender Fees: $3,000-$8,000+ depending on choices and negotiation

Section B: Third-Party Fees

These fees go to outside service providers.

7. Appraisal Fee

What it is: Professional assessment of home value
Cost: $400-$800 (standard homes)
Cost: $800-$2,000+ (large or unique properties)
Paid: Usually at time of ordering
Negotiable? No—but you can shop appraisal companies

8. Credit Report Fee

What it is: Cost to pull your credit from all 3 bureaus
Cost: $25-$100
Negotiable? No

9. Title Search Fee

What it is: Research to verify property ownership
Cost: $200-$500
Negotiable? Limited—can shop title companies

10. Title Insurance (Lender's Policy)

What it is: Protects lender if title issues arise
Cost: $500-$2,000 (varies by state and loan amount)
Negotiable? Can shop title companies for better rates
Required: Yes

11. Title Insurance (Owner's Policy)

What it is: Protects YOU if title issues arise
Cost: $500-$2,000
Negotiable? Yes—can shop, negotiate, or ask seller to pay
Required: No, but strongly recommended

12. Settlement/Closing Fee

What it is: Fee for title company conducting closing
Cost: $500-$1,500
Negotiable? Sometimes—can shop title companies

13. Survey Fee

What it is: Professional property boundary survey
Cost: $300-$700
Required: Depends on lender and state
Negotiable? Can ask seller for existing survey

14. Pest Inspection

What it is: Termite/pest inspection (common in some states)
Cost: $75-$200
Required: Some states/lenders require
Negotiable? Can shop inspectors

15. Home Inspection (Optional but Recommended)

What it is: Professional home condition assessment
Cost: $300-$600
Negotiable? Can shop inspectors
Note: Typically paid separately, not at closing

16. Attorney Fees (Required in Some States)

What it is: [Real estate attorney](/blog/how-to-build-real-estate-team) to oversee closing
Cost: $500-$2,000
Required in: NY, NJ, MA, CT, and others
Negotiable? Can shop attorneys

Total Third-Party Fees: $2,500-$8,000+ depending on location and services

Section C: Government Fees and Taxes

17. Recording Fees

What it is: Fee to record deed and mortgage with county
Cost: $50-$500
Negotiable? No—set by county

18. Transfer Tax (varies by location)

What it is: Tax on transfer of property ownership
Cost: 0%-2% of purchase price (highly variable)
Example: 1% on $500,000 = $5,000
Who pays: Varies by state (buyer, seller, or split)
Negotiable? No tax amount, but who pays can be negotiated

19. HOA Transfer Fee (if applicable)

What it is: Fee to transfer HOA membership
Cost: $200-$500
Negotiable? No—set by HOA

Total Government Fees: $500-$5,000+ (highly location-dependent)

Section D: Prepaid Items

These aren't fees—they're expenses you'd pay anyway, just collected upfront.

20. [Homeowners Insurance](/blog/homeowners-insurance-complete-guide) (1st Year Premium)

What it is: Full first year of home insurance
Cost: $800-$3,000+ (varies widely)
Negotiable? Shop insurance providers aggressively
Paid at closing: Full year upfront

21. Property Taxes (Prepaid)

What it is: Portion of property taxes owed
Cost: Varies by location and time of year
Calculation: Prorated based on closing date
Negotiable? No—based on actual tax amount

22. Prepaid Interest

What it is: Interest from closing date to end of month
Cost: Varies by closing date
Example: Close on 15th = ~15 days of interest
Calculation: (Loan amount × rate) ÷ 365 × days
Strategy: Close at month-end to minimize this

23. Mortgage Insurance Premium (if applicable)

What it is: Upfront PMI or MIP payment
FHA upfront MIP: 1.75% of loan amount
Example: $400,000 FHA loan = $7,000
Conventional PMI: Usually monthly, not upfront
Negotiable? No—set by FHA/lender

Total Prepaid Items: $2,000-$12,000+ depending on insurance, taxes, and loan type

Section E: Escrow/Reserves

Money held by lender to pay future taxes and insurance.

24. Property Tax Reserves

What it is: 2-6 months of property taxes held in escrow
Cost: Varies by location and tax amount
Example: $6,000/year taxes = $1,000-$3,000 reserve
Negotiable? No—lender requirement

25. Homeowners Insurance Reserves

What it is: 2-6 months of insurance held in escrow
Cost: Varies by insurance cost
Example: $1,200/year insurance = $200-$600 reserve
Negotiable? No—lender requirement

26. HOA Dues Reserves (if applicable)

What it is: Prepaid HOA dues
Cost: Varies
Negotiable? No

Total Escrow/Reserves: $1,000-$5,000+

Sample Closing Cost Breakdown

Scenario: $400,000 purchase, $320,000 loan (20% down), [conventional mortgage](/blog/conventional-loan-requirements)

Category	Items	Cost
Lender Fees	Origination, underwriting, processing	$3,500
Third-Party	Appraisal, title, settlement	$3,200
Government	Recording, transfer tax	$2,000
Prepaids	Insurance, taxes, interest	$4,800
Escrow	Tax/insurance reserves	$2,500
Total Closing Costs		$16,000

Total cash needed: $80,000 (down) + $16,000 (closing) = $96,000

What Closing Costs Are Negotiable?

Highly Negotiable:

Loan origination fee - Shop lenders
Application fee - Should be waived
Processing fee - Can negotiate or waive
Title insurance - Shop companies
Settlement fee - Shop companies
Attorney fees - Shop attorneys

Sometimes Negotiable:

Underwriting fee - Ask, might bundle with origination
Discount points - Your choice whether to buy
Survey fee - Use existing survey if available
Owner's title insurance - Ask seller to pay

Not Negotiable:

Appraisal fee - Can shop but cost is what it is
Credit report - Minimal anyway
Recording fees - Set by government
Transfer taxes - Set by government (but who pays can be negotiated)
Property taxes - Based on actual tax amount
HOA fees - Set by HOA

How to Reduce Closing Costs

Strategy 1: Shop Lenders Aggressively

Get Loan Estimates from 3-5 lenders
Compare total costs, not just interest rates
Negotiate based on competing offers
Potential savings: $1,000-$5,000

Strategy 2: Shop Third-Party Services

Title companies vary widely in cost
Attorneys (where required) have different rates
Home insurance—get multiple quotes
Potential savings: $500-$2,000

Strategy 3: Negotiate [Seller Concessions](/blog/seller-concessions-guide)

Ask seller to cover some/all closing costs
Common in buyer's markets
Limit: 3%-9% depending on loan type and down payment
Potential savings: $3,000-$10,000+

Strategy 4: Close at Month-End

Reduces prepaid interest
Closing on last day of month = 1 day of interest vs. 30
Potential savings: $200-$1,000

Strategy 5: Skip Optional Items

Owner's title insurance (risky—not recommended)
Home warranty (can buy later if desired)
Discount points (if not keeping loan long-term)
Potential savings: $500-$5,000

Strategy 6: Ask for Lender Credits

Accept slightly higher rate for credits toward closing costs
Example: 0.25% higher rate = $2,000-$4,000 credit
Makes sense if you plan to refinance soon
Potential savings: $2,000-$5,000 upfront

Strategy 7: Look for First-Time Homebuyer Programs

Many states offer assistance with closing costs
[Down payment assistance](/blog/down-payment-assistance-programs) programs
Grants (don't need repayment)
Potential savings: $2,000-$10,000+

Strategy 8: Time Your Closing Strategically

Close early in month if property taxes just paid
Less prepaid tax escrow required
Potential savings: $500-$2,000

Strategy 9: Use Existing Survey

Ask seller for recent survey
Lender may accept if recent and accurate
Potential savings: $300-$700

Strategy 10: Bundle Services

Some title companies offer package deals
Attorney + title work bundled
Potential savings: $200-$500

FHA, VA, and USDA Closing Costs

FHA Loans

Upfront MIP: 1.75% of loan amount (can be financed)
Higher costs overall: Due to MIP
Example: $400,000 loan = $7,000 upfront MIP
Seller concessions: Up to 6%

VA Loans

No down payment but still have closing costs
VA funding fee: 2.15%-3.3% (can be financed, waived for disabled veterans)
Example: $400,000 loan = $8,600 funding fee
Seller concessions: Up to 4%
What VA won't allow borrower to pay: Some fees lender must cover

USDA Loans

Upfront guarantee fee: 1% of loan amount (can be financed)
Example: $400,000 loan = $4,000 fee
Seller concessions: Up to 6%
Rural areas only

Closing Cost Assistance Programs

Down Payment Assistance (DPA) Programs

Often cover closing costs too
Grants or forgivable loans
Income and location restrictions
Search: "[Your State] down payment assistance"

State Housing Finance Agencies

First-time buyer programs
Competitive interest rates
Closing cost assistance
Income limits apply

Employer Programs

Some employers offer homebuying assistance
Relocation packages
Check with HR

Nonprofit Organizations

NACA, Habitat, local community groups
Counseling and financial assistance
Worth researching in your area

How to Read Your Loan Estimate

Your Loan Estimate (received within 3 days of applying) shows estimated closing costs.

Section A: Loan Costs

Origination charges (lender fees)
Services you cannot shop for
Services you can shop for

Section B: Other Costs

Taxes and government fees
Prepaids
Initial escrow payment
Other costs

Section C: Total Costs

Closing costs subtotal
Lender credits (if any)

Key: Compare Loan Estimates from multiple lenders using the same format.

How to Read Your Closing Disclosure

Your Closing Disclosure (received at least 3 days before closing) shows final costs.

Compare to Loan Estimate:

What changed?
Why did it change?
Are increases legitimate?

Categories that can change:

Prepaid interest (closing date changed)
Property taxes (closing date changed)
Services you shopped for (you chose different provider)

Categories that SHOULDN'T change significantly:

Lender fees (should match estimate)
Services you can't shop for

Red flags:

Fees 10%+ higher than Loan Estimate
New fees not disclosed
Unclear charges

Your right: You can reject the loan if costs changed significantly.

Common Closing Cost Mistakes

Not shopping lenders - Costs vary dramatically
Focusing only on interest rate - Total costs matter
Not negotiating seller concessions - Free money left on table
Skipping owner's title insurance - Risky savings
Not comparing Loan Estimate to Closing Disclosure - Miss errors/overcharges
Closing early in month - Pay more prepaid interest unnecessarily
Not asking about lender credits - Trade higher rate for lower upfront costs

Bottom Line

Typical closing costs:

2%-6% of loan amount
$8,000-$24,000 on a $400,000 loan

Biggest costs:

Lender fees: $3,000-$8,000
Title/settlement: $1,500-$4,000
Prepaids: $2,000-$8,000
Escrow reserves: $1,000-$5,000
FHA/VA upfront fees: $4,000-$8,600

How to save:

Shop 3-5 lenders before applying
Negotiate seller concessions
Shop title companies and insurance
Close at month-end
Consider lender credits if refinancing soon
Check for assistance programs

Closing costs are one of the biggest surprise expenses for homebuyers. But they don't have to be. Armed with this breakdown, you can shop smarter, negotiate harder, and potentially save thousands.

Don't accept the first Loan Estimate you receive. Don't assume all fees are set in stone. And definitely don't skip comparing your Closing Disclosure to your Loan Estimate—that's where mistakes and overcharges hide.

Take control of your closing costs, and you'll start your homeownership journey with more money in your pocket.

[[Down Payment Assistance Programs](/blog/first-time-homebuyer-grants-2026) in 2026: Complete Guide](/blog/down-payment-assistance-programs)
Property Taxes Explained: How They Work and How to Reduce Them
How to Challenge Your Property Tax Assessment (And Win)

Mortgage Closing Costs Breakdown

Key Takeaways