Who pays closing costs?

Buyers pay most lender and title costs, but who pays what is negotiable and varies by local custom. Seller credits can cover part of them.

Are closing costs different for a foreclosure?

Bank-owned sales often use the bank's own addendum and may shift costs to the buyer. Auction purchases can carry back taxes or liens that a normal sale would clear.

Costs you pay in advance at closing rather than fees for the transaction: usually the first year of homeowner's insurance, several months of property tax to fund escrow, and interest for the rest of the month you close.

Can closing costs be added to the loan on a purchase?

Usually not directly, though some program fees can be financed. Common ways to reduce cash at closing are seller credits and lender credits, which cover costs in exchange for a higher interest rate. What's allowed depends on the loan program and lender.

Financing & closing

Closing Cost Calculator

Closing costs usually run a few percent of the price, on top of the down payment. Adjust each line to match your Loan Estimate and see the total cash you'll need to bring to closing.

Cash needed at closing

$86,883

Down payment $75,000 plus $11,883 in costs (3.2% of the price)

$11,883costs

Lender fees & appraisal: $3,600
Title & settlement: $3,075
Taxes & recording: $625
Inspection & other: $950
Prepaids & escrow: $3,633
Closing costs and prepaids: $11,883

How the estimate is built

The formula

Loan amount

Loan = Home price × (1 − Down payment %)

Lender fees

Lender fees = Loan × (Origination % + Discount points %) + Appraisal

Origination %: The lender's fee for making the loan
Discount points %: Optional fees paid to lower the interest rate

Title and settlement

Title = Home price × Title insurance % + Settlement fees

Settlement fees: Escrow, closing or attorney fees

Taxes and recording

Government fees = Home price × Transfer tax % + Recording fees

Transfer tax %: State or local tax on the sale; rates and who pays vary

Closing costs

Closing costs = Lender fees + Title + Government fees + Inspection + Other fees

Prepaids

Prepaids = Home price × Tax rate12 × Tax months + Annual insurance + Loan × Interest rate365 × Interest days

Tax rate: Annual property tax as a percentage of the price
Tax months: Months of property tax the lender collects for escrow
Annual insurance: The first year's homeowner's insurance premium
Interest days: Days of interest from closing to the end of the month

Cash to close

Cash to close = Down payment + Closing costs + Prepaids − Seller credits

Seller credits: Money the seller agrees to put toward your costs

Some costs scale with the deal and others are flat. Origination and discount points are charged on the loan amount; title insurance and transfer tax on the price. The appraisal, inspection, recording, settlement and attorney or escrow fees are entered as flat amounts.

Prepaids aren't fees but money collected in advance: the first year's homeowner's insurance premium, a few months of property tax to start your escrow account, and the interest due from closing day to the end of that month. They're counted separately from closing costs, but you still bring them to closing.

The defaults are placeholders. Transfer taxes, title rates and who customarily pays each cost vary by state and county, and lender fees vary by lender. Your Loan Estimate and Closing Disclosure are the figures to rely on. Earnest money you've already deposited is usually credited toward the cash you bring.

Results are estimates for planning, not a loan offer or financial advice. Lenders, title companies and local rules set the actual figures.

Terms used in this calculator

Closing CostsBuying & closingClosing costs are the fees and prepaid expenses paid to complete a real estate purchase, beyond the price and down payment. Buyers typically pay about 2% to 5% of the loan or purchase price.EscrowBuying & closingEscrow is an arrangement where a neutral third party holds money or documents until the conditions of a deal are met. The term also refers to the account a lender uses to pay a borrower's property taxes and insurance.Title InsuranceBuying & closingTitle insurance protects a buyer or lender against losses from ownership problems that existed before the purchase, such as undisclosed liens, forged documents or recording errors. It is paid once at closing.Earnest MoneyBuying & closingEarnest money is a deposit a buyer puts down when an offer is accepted to show good faith. It is held in escrow and usually credited toward the down payment or closing costs at closing.Title SearchTitle & legalA title search is a review of public records to confirm who legally owns a property and to find any liens, judgments, easements or other claims that could affect ownership.Down PaymentMortgages & financingA down payment is the part of a home's purchase price the buyer pays upfront in cash rather than borrowing. It is usually stated as a percentage of the price and is due at closing.AppraisalBuying & closingAn appraisal is a licensed appraiser's independent estimate of a property's market value. Lenders require one to make sure the home is worth at least the amount being borrowed.Home InspectionBuying & closingA home inspection is a professional visual examination of a home's structure and systems, ordered by the buyer to find defects before closing. It usually happens during the inspection contingency period.

Frequently Asked Questions

Guides to read next

Closing Costs Explained: What Buyers Pay and WhyGuide · 9 min readClosing costs are the fees and prepaid expenses due when a purchase completes, on top of the down payment. They vary by state, loan and price, and some are negotiable. This guide explains each category, how to read your disclosures and how to keep costs down.Closing Day: What to Expect When You Buy a HomeGuide · 7 min readClosing is where the loan funds, the money changes hands and the home becomes yours. Knowing what to review beforehand, what to bring and what you are signing makes the day shorter and helps you catch problems while they can still be fixed.Closing and Recording: How a Property Purchase Becomes FinalGuide · 7 min readSigning papers is only part of closing. Money has to change hands safely, the deed has to be recorded in the public records and title insurance policies have to be issued. This guide explains those mechanics, who handles each one, how to protect your funds from wire fraud and which records to keep once the purchase is complete.

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Disclaimer: The information on this page is for general educational purposes only and is not legal, financial, tax or investment advice. Laws, lending rules and market conditions vary by state and change over time, and any figures shown are estimates. Before you buy, sell, finance or bid on a property, consult a qualified attorney, financial advisor, lender or licensed real estate professional about your situation.