Closing costs explained
Reviewed August 2026
Your down payment isn't the only cash you bring to closing. Closing costs are a separate bucket of fees — and for buyers they typically add 2%–5% of the price on top.
What's in closing costs
Common buyer closing costs include:
- Lender fees — origination, underwriting, and any discount points.
- Appraisal and credit report fees.
- Title search and title insurance (lender's policy required; owner's policy optional).
- Escrow, settlement, or attorney fees.
- Government recording fees and, in some states, transfer taxes.
- Prepaids — upfront property tax and homeowners insurance funded into escrow.
How much to expect
For buyers, closing costs commonly run 2%–5% of the purchase price, varying by state and loan. On a $400,000 home that's roughly $8,000–$20,000, separate from the down payment.
By federal rule, your lender must send a standardized Closing Disclosure at least three business days before closing so you can check every number against your original Loan Estimate.
Frequently asked
Are closing costs separate from the down payment?
Yes. The down payment goes toward the price; closing costs are the fees to originate the loan and transfer the property. Together they make up your 'cash to close.'
Can closing costs be negotiated or covered?
Sometimes. You can shop lenders and title companies, ask the seller for a closing-cost credit, or roll some costs into the loan — each has trade-offs.