Closing costs · Honest guide
How Much Are Closing Costs When Buying a House?
The standard answer is 2% to 5% of the price. The honest answer is that your state matters more than any formula: the same purchase can cost $1,551 in fees and taxes in South Dakota or $13,836 in Washington, D.C. And the biggest cash surprise at the table isn’t a fee at all. Here’s the full breakdown — plus the federal rules that legally cap how much your quoted fees can rise.
Last updated July 2026
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What closing costs are, the short version
Closing costs are everything you pay at settlement beyond your down payment — fees to your lender, to third parties like the title company and appraiser, and to the government in recording fees and transfer taxes. For buyers they typically run 2% to 5% of the purchase price, per Fannie Mae’s own guidance.
But averages hide the real story. The most current national data (LodeStar’s 2026 report) puts the average purchase closing cost at $4,528 including recording fees and taxes — and the range by state spans more than 10x, driven almost entirely by transfer taxes. Meanwhile the item that blindsides more buyers than any fee is prepaids and escrow reserves: a year of homeowners insurance, prepaid interest, and two to three months of tax and insurance reserves, often another $3,000–$6,000 in cash.
The good news this page will keep coming back to: you have real leverage. Federal disclosure rules legally cap how much many quoted fees can rise between your Loan Estimate and closing. Several services are shoppable. And the seller can legally pay a large share of your costs — 3% to 9% on conventional loans, 6% on FHA, and on VA loans, potentially all of them.
The facts
How much are closing costs, really?
The percentages, the dollar figures, and why every website seems to quote a different number.
Closing costs fall into four buckets: lender fees, third-party services (title, appraisal, attorney), government charges (recording, transfer taxes), and prepaids and escrow reserves. Buyers typically pay 2–5% of the price; sellers pay more — roughly 5–10% — because they usually cover the real estate commissions.
The 2026 numbers — and why sources disagree
The current data: LodeStar’s 2026 report (built on 2025 transactions) puts the national average purchase closing cost at $4,528 including recording fees and taxes (median $3,492), or $2,993 excluding them — about 1.04% of the sale price, on an average sale of $433,632. Critically, this excludes agent commissions and prepaids.
The stale number you’ll see everywhere: the widely quoted ~$6,905 figure from CoreLogic/ClosingCorp is 2021 data, endlessly re-published as if current. It isn’t.
Why the numbers differ: each source makes different choices about whether to count transfer taxes, prepaids and escrow, and agent commissions — and what year the data is from.
A realistic way to budget: treat $4,500–$7,000 as the national range for the fee-and-tax portion of a mid-priced purchase, then add prepaids and escrow reserves separately (often another $3,000–$6,000+), and adjust hard for your state — which is the next section.
The biggest variable
Why your state matters more than any formula
Closing costs vary by more than 10x across the country. One tax explains most of it.
Per LodeStar’s 2026 data, closing costs (with recording and taxes, excluding commissions) range from roughly 0.4% to 3.1% of the sale price depending on where you buy. On a $400,000 home, the difference between a no-transfer-tax state and a high-tax jurisdiction can exceed $15,000.
The extremes, in dollars
Highest: Washington, D.C. ~$13,836 average · Delaware ~$12,707 (and the highest as a share of price, ~3.07%) · New York ~$12,418 · Maryland ~$9,486 · Vermont ~$9,164. Pennsylvania and Washington State also rank near the top on transfer and recording taxes alone.
Lowest: South Dakota ~$1,551 (about 0.39% of price) · Iowa ~$1,640 · Missouri ~$1,740 — with Indiana, Wyoming, Kentucky and North Dakota consistently cheap too. The common thread: no transfer tax.
States with no state-level transfer tax: Alaska, Arizona, Colorado, Idaho, Indiana, Kansas, Louisiana, Mississippi, Missouri, Montana, New Mexico, North Dakota, Oregon (except Washington County), Texas, Utah and Wyoming. (Local or county taxes can still apply.) See our state-by-state guides for your market.
What actually drives the spread
Transfer and recordation taxes. Delaware’s combined realty transfer tax is 4%, customarily split 50/50 between buyer and seller. Pennsylvania is generally 2% — but Philadelphia charges 4.278% and Pittsburgh reaches ~5%. Washington, D.C. charges a recordation tax (buyer) and a transfer tax (seller) of 1.1% each below $400,000 and 1.45% each at or above it. Maryland stacks state transfer, county transfer and recordation taxes.
New York’s two special taxes. In NYC the mortgage recording tax runs 1.8% of the loan below $500,000 and 1.925% at or above it (the lender covers 0.25%, so your net is ~1.55–1.675%) — often the single largest line on the sheet. Then there’s the buyer-paid mansion tax on purchases of $1M or more, tiered from 1% to 3.9% — and it hits the entire price the moment you cross a threshold. Co-ops escape the mortgage recording tax; condos and houses don’t.
Attorney states. Twenty-plus states require or strongly customarily use an attorney at closing — including NY, NJ, MA, CT, DE, GA, and the Carolinas — adding $500–$1,500+ other states skip. Whether it’s legally required or just customary varies, so confirm locally.
Title insurance regulation. Some states set title rates by regulation (Texas, New Mexico, Florida); others let you shop. The Urban Institute found lender’s title and related fees run about $358 in Missouri versus roughly $3,496 in Pennsylvania — nearly ten times more.
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Line by line
Every closing cost, itemized
What each item costs in 2026 — and which ones you can negotiate or shop.
Lender fees — negotiable, and legally capped once quoted
Origination fee: typically 0.5–1% of the loan. Underwriting, processing and application fees: often bundled into origination, commonly $300–$900 each when separate. Credit report: $30–$100. Discount points: 1 point = 1% of the loan, buying down your rate — divide the cost by the monthly savings to find your break-even in months, and skip points if you’ll move or refinance before then. These all appear in Section A of your Loan Estimate — the single best place to compare lenders head to head.
Third-party services — several are shoppable
Appraisal: a standard single-family appraisal averages around $357 nationally, but FHA, VA, USDA and complex or rural properties commonly run $500–$900+ — budget $500–$800 to be safe. Home inspection: $300–$500, paid before closing (real cash, even if technically not a “closing cost”). Title search and insurance: combined premiums typically 0.5–1% of the price, one time. The lender’s policy is required and protects only the lender; the owner’s policy is optional and protects you — don’t waive it lightly, since roughly 30–40% of title claims involve issues no records search reveals. Survey: $300–$600 where required. Attorney: $500–$1,500+ in attorney states. Settlement/escrow fee: $500–$2,000, sometimes split with the seller by custom.
Government charges — small fees, huge taxes
Recording fees: $25–$250 in most places (Washington State’s ~$300 is an outlier). Transfer taxes, deed stamps, documentary stamps: the biggest state variable of all — see the state section above. These are also zero-tolerance items on your Loan Estimate: once quoted, they cannot legally increase.
⚠️ Prepaids and escrow reserves — the #1 budget shock
These aren’t fees at all, and that’s exactly why nobody warns you about them. Prepaid interest from your closing date to month’s end. Twelve months of homeowners insurance, paid upfront. Two to three months of property tax and insurance reserves to seed your escrow account — federal rules (RESPA, 12 CFR 1024.17) cap the cushion at two months. You’d owe every dollar of this anyway; you’re just prefunding it. But it’s often $3,000–$6,000+ in cash, and it’s the reason buyers who budgeted “2–5% in fees” get blindsided at the table.
The financeable exceptions: FHA’s 1.75% upfront MIP, the VA funding fee (2.15% first use with less than 5% down — see our VA loan guide), and USDA’s 1% guarantee fee can all be rolled into the loan instead of paid in cash.
Your legal protections
The federal rules that cap your fees
Most buyers never hear about TRID tolerances. They’re the closest thing to a price guarantee in the mortgage world.
Under the CFPB’s “Know Before You Owe” rules (TRID), your lender must give you a Loan Estimate within 3 business days of applying, and a Closing Disclosure at least 3 business days before closing. Between those two documents, the law limits how much quoted fees can rise — and forces refunds when they rise too much.
✅ The three tolerance levels
Zero tolerance — cannot increase at all: the lender’s own fees (origination, underwriting), fees paid to lender affiliates, fees for required services you can’t shop for, and transfer taxes.
10% cumulative tolerance: recording fees and required third-party services where you used a provider from the lender’s written list. Individual items can move, but the group total can’t rise more than 10%.
No tolerance: prepaid interest, insurance premiums, escrow deposits, property taxes, services you shopped for off the lender’s list, and optional items like the owner’s title policy — these can change, but must still be quoted in good faith.
The cure: if fees at closing exceed the tolerances, the lender must refund the excess within 60 days. This isn’t theoretical — an ICE Mortgage Technology analysis of nearly 90,000 loans found fee cures on more than one in three loans, averaging about $1,225 per loan. That is exactly why you compare your Closing Disclosure to your Loan Estimate line by line.
Two fine-print realities
“Changed circumstances” can reset tolerances — new information, a borrower-requested change, or locking your rate lets the lender issue a revised Loan Estimate, but only within tight timing rules. And the 3-day Closing Disclosure rule is not a right to cancel: only three things restart the clock (the APR rising more than 1/8% on a fixed loan, a loan-product change, or a new prepayment penalty). It’s a review window, not an escape hatch — purchase buyers have no rescission right.
Negotiable money
Who pays what — and how much the seller can cover
Customs vary by state. Caps are set by loan program. Everything in between is negotiation.
Who customarily pays each item varies by state and even county — in New York the seller pays the transfer tax while the buyer pays the mortgage recording tax; in California the split flips between north and south. It’s all negotiable in the contract. And in 2026’s more balanced market (a 4.6-month supply of inventory per NAR’s June data), seller concessions are genuinely back on the table.
💰 Seller concession caps, by program
Conventional: 3% if you put down less than 10%, 6% with 10–25% down, 9% with more than 25% down (investment properties: 2%). Concessions can’t exceed your actual costs and can’t fund your down payment or reserves.
FHA: up to 6% of the sales price; anything beyond reduces the loan amount dollar for dollar, and it can’t fund the 3.5% minimum down payment.
VA — the widely misunderstood one: sellers can pay all of a veteran’s normal closing costs with no limit, plus up to 4% in true concessions (prepaids, the funding fee, points, paying off buyer debt). The two buckets are separate.
USDA: up to 6%.
Lender credits work the other way: a slightly higher rate in exchange for cash toward closing — sensible if you expect a short stay or plan to refinance.
The post-NAR-settlement wrinkle
Since August 2024, buyer-broker compensation is negotiated separately and no longer advertised on the MLS by the listing side — so it may land as a buyer cost or a seller concession, and you should budget for (or negotiate) it explicitly. VA buyers got a fix: the VA now allows veterans to pay reasonable buyer-broker fees (a 2024 variance that specialized VA-lending sources report was made permanent in April 2026 — confirm with your lender). The fee can’t be financed into the VA loan and doesn’t count against the 4% cap.
The real numbers
Worked examples: what you’d actually wire
Same buyer, different states — and the one formula that ends the confusion.
First, the distinction that trips everyone: “cash to close” is not “closing costs.” Cash to close = down payment + closing costs + prepaids and escrows − earnest money already paid − seller credits − lender credits. It’s the single number on your Closing Disclosure that you actually wire. Market backdrop for these examples: NAR’s June 2026 median existing-home price of $440,600 and Freddie Mac’s 30-year rate of 6.49% (July 9, 2026).
Three scenarios, side by side
A — $300,000 home, conventional 5% down, low-cost state (Missouri/Indiana): fees and taxes ≈ $5,000 (origination, appraisal, title, settlement, recording — no transfer tax) + prepaids/reserves ≈ $3,500. Cash to close ≈ ~$23,500 including the $15,000 down payment, before credits.
B — $600,000 NYC condo, $570,000 loan: lender fees, title, settlement and attorney ≈ $9,000 + mortgage recording tax ≈ $9,500 + owner’s title ≈ $3,000 + prepaids ≈ $5,000. Closing costs and prepaids alone ≈ $27,000+ — more than $15,000 above the identical deal in a no-transfer-tax state. Cross $1M and the mansion tax adds 1% of the entire price.
C — $300,000 home, FHA 3.5% down: the 1.75% upfront MIP (~$5,066) is financed, not cash. Fees and taxes ≈ $5,500 + prepaids ≈ $4,000 on top of the $10,500 down payment. With the full 6% FHA seller concession (up to $18,000 here), a motivated seller could cover essentially all of it.
Can you roll closing costs into the loan?
On a purchase, generally no — the main exceptions are the financeable FHA, VA and USDA upfront fees. A “no-closing-cost” purchase loan just means a higher rate via lender credit. Financing closing costs is routine only on refinances. What does work on a purchase: seller concessions, lender credits, gift funds (allowed for closing costs), assistance programs, and closing near month-end to shrink prepaid interest. Of the 2,679 homebuyer assistance programs nationwide, 1,993 (74%) provide down payment or closing cost help — start with your state’s Housing Finance Agency via our state guides. And one warning: don’t finance furniture, open a credit card, or make large undocumented deposits before closing — either can blow up your approval at the last minute.
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Quick answers
Closing costs: common questions
How much are closing costs on a house?
Typically 2% to 5% of the purchase price for buyers, per Fannie Mae’s guidance. The most current national data (LodeStar, 2026) shows an average of $4,528 including recording fees and taxes — but the state range spans more than 10x, from about $1,551 in South Dakota to $13,836 in Washington, D.C. Add prepaids and escrow reserves (often another $3,000–$6,000) on top.
Who pays closing costs — the buyer or the seller?
Both, but different items. Buyers typically pay 2–5% (lender fees, title, appraisal, recording, prepaids); sellers pay 5–10%, mostly real estate commissions. Customs on items like transfer taxes vary by state and are negotiable in the contract — and the seller can legally cover much of the buyer’s side through concessions.
Can I roll closing costs into my mortgage?
On a purchase, generally no. The exceptions are the financeable government upfront fees: FHA’s 1.75% upfront MIP, the VA funding fee, and USDA’s 1% guarantee fee. “No-closing-cost” purchase loans really mean a higher interest rate in exchange for a lender credit. Rolling costs into the loan is routine only on refinances.
What’s the difference between closing costs and cash to close?
Cash to close is the number you actually wire: down payment + closing costs + prepaids and escrows − earnest money already paid − seller credits − lender credits. Closing costs are just one component. The final figure appears on your Closing Disclosure, which you must receive at least 3 business days before closing.
Why is my cash to close so much higher than the fees I was quoted?
Almost always prepaids and escrow reserves: prepaid interest, 12 months of homeowners insurance upfront, and 2–3 months of tax and insurance reserves. They aren’t fees — you’d owe that money anyway — but they require real cash at the table, often $3,000–$6,000 or more, and most “2–5%” quotes don’t include them.
Can closing costs change after the Loan Estimate?
Only within legal limits. Lender fees and transfer taxes have zero tolerance — they cannot increase at all. Recording fees and listed third-party services can rise at most 10% as a group. If the lender exceeds the tolerances, it must refund the excess within 60 days — and industry data shows these “cures” happen on more than one in three loans, averaging about $1,225.
Do I really need the owner’s title insurance policy?
It’s optional but strongly recommended. The lender’s policy — the one you’re required to buy — protects only the lender’s lien. The owner’s policy protects you against forgery, undisclosed liens and title defects, and industry data attributes roughly 30–40% of claims to issues a records search can’t reveal. It’s a one-time premium.
How can I lower my closing costs?
Five levers that actually work: get Loan Estimates from at least 3 lenders and compare Section A origination charges; shop title and settlement services using the lender’s written list; ask for seller concessions (realistic in 2026’s balanced market); close near month-end to cut prepaid interest; and check assistance programs — 1,993 nationwide help with down payment or closing costs.
Are closing costs cheaper if I pay cash?
Much cheaper — roughly 1–2% of the price. No lender fees, no origination, no prepaid interest, and no lender’s title policy required. You’d still pay title search, the owner’s policy (recommended), transfer taxes, recording, and any attorney or settlement fee your state requires.