You've saved for a down payment, gotten pre-approved, and found your dream home. But there's one more major expense many first-time buyers don't fully plan for: closing costs. These fees typically add 2–5% of the purchase price on top of your down payment — and they're due at the closing table.
Average Closing Costs in 2026
According to CoreLogic data, the national average for closing costs (including taxes) is approximately $6,900 on a median-priced home. But the actual amount varies enormously:
| Home Price | Closing Costs (2–5%) | Total Cash Needed (with 10% down) |
|---|---|---|
| $250,000 | $5,000–$12,500 | $30,000–$37,500 |
| $350,000 | $7,000–$17,500 | $42,000–$52,500 |
| $500,000 | $10,000–$25,000 | $60,000–$75,000 |
| $750,000 | $15,000–$37,500 | $90,000–$112,500 |
Complete Breakdown: What's Inside Closing Costs
Lender Fees (the biggest chunk)
- Loan origination fee: 0.5–1% of loan amount ($1,750–$3,500 on $350K loan)
- Appraisal fee: $400–$700
- Credit report fee: $25–$75
- Underwriting fee: $400–$900
- Discount points (optional): 1% of loan per point — pays to lower your interest rate
Title & Escrow Fees
- Title search: $200–$400
- Title insurance (lender's policy): $500–$1,500
- Title insurance (owner's policy): $500–$2,000 (optional but recommended)
- Escrow/settlement fee: $500–$1,500
- Attorney fees (required in some states): $500–$2,000
Government Fees & Taxes
- Recording fees: $50–$250
- Transfer taxes: Varies wildly — $0 in some states, 1–2% in others (New York, DC)
- Property tax prepayment: 2–6 months prepaid at closing
Prepaid Items (not technically "fees" but due at closing)
- Homeowner's insurance: First year's premium ($1,500–$3,000)
- Prepaid interest: Interest from closing day to end of month ($500–$2,000)
- Escrow reserve: 2–3 months of taxes and insurance held by lender
Closing Costs by State: Why Location Matters
Some states have significantly higher closing costs due to transfer taxes, attorney requirements, or recording fees:
- Highest closing costs: New York, Delaware, Maryland, District of Columbia, Pennsylvania
- Lowest closing costs: Missouri, Indiana, Iowa, Nebraska, Wisconsin
- States requiring attorneys at closing: NY, NJ, CT, MA, GA, SC — adds $500–$2,000
Who Pays Closing Costs: Buyer vs. Seller
Both parties pay closing costs, but the split varies:
- Buyer pays: Lender fees, title insurance, appraisal, prepaid items — typically 2–5% of purchase price
- Seller pays: Real estate agent commissions (5–6%), their portion of transfer taxes, and any negotiated concessions
- Negotiable: In a buyer's market, sellers may agree to pay some or all of the buyer's closing costs (called "seller concessions" — typically capped at 3–6% of purchase price)
7 Ways to Reduce Your Closing Costs
- Shop at least 3 lenders. Origination fees and rates vary significantly. You'll receive Loan Estimates within 3 business days of applying — compare them carefully.
- Negotiate with the seller. Ask for seller concessions, especially in a buyer's market or if the home has been listed for a while.
- Close at end of month. Closing on the 28th instead of the 5th saves 23 days of prepaid interest ($500–$1,500).
- Skip discount points. Unless you plan to stay 7+ years, the upfront cost of buying down your rate usually doesn't pay off.
- Ask about lender credits. Some lenders offer credits toward closing costs in exchange for a slightly higher interest rate — good if you're cash-strapped.
- Explore first-time buyer programs. Many states and cities offer closing cost assistance grants for first-time homebuyers.
- Review the Closing Disclosure carefully. You'll receive this 3 days before closing. Compare every line to your Loan Estimate — fees shouldn't change significantly.
Plan Your Total Home Buying Budget
Closing costs are a critical part of the total cost of buying a home. Use our Rent vs Buy Calculator to see the complete financial picture, including closing costs, over your expected stay. And check your readiness with the Financial Health Score before committing to a purchase.