Mortgage Closing Costs: What Homebuyers Should Expect
Understand the lender charges, third-party services, prepaid expenses and escrow deposits that may be due when you buy a home. Then use our closing cost calculator for an initial estimate.
Calculator results are estimates. Your Loan Estimate and Closing Disclosure provide transaction-specific figures.
What are mortgage closing costs?
Mortgage closing costs are the loan charges, third-party service fees, government fees, prepaid expenses and initial escrow deposits associated with completing a home purchase or refinance. They are not the same as the down payment, although both can affect the total amount of money needed to close.
The exact total depends on the property, loan amount, loan program, interest-rate pricing, insurance, taxes, title work, settlement charges, closing date and negotiated credits.
How much are mortgage closing costs?
A percentage of the purchase price can be useful for early planning, but it should not be treated as a quote. Costs vary materially from one transaction to another.
What changes the total?
- Purchase price and loan amount
- Loan program and down payment
- Interest rate, discount points or lender credits
- Property location and recording charges
- Title, settlement and required third-party services
- Homeowners insurance and property-tax timing
- Closing date and prepaid daily interest
- Seller credits, earnest money and other adjustments
Use the closing cost calculator
Enter your purchase details to create an initial planning estimate, then request a personalized Loan Estimate when you are ready to compare actual financing options.
Open the Closing Cost CalculatorDo not confuse closing costs with cash to close. Cash to close also reflects your down payment, deposits already paid, credits and transaction adjustments.
What is included in mortgage closing costs?
Your disclosures organize costs into categories. Some charges are tied to the mortgage, while others come from independent service providers, government offices or prepaid ownership expenses.
Lender and loan charges
Charges may include origination-related services, underwriting, processing, credit reports, verification services, flood determinations and optional discount points.
Appraisal and property services
An appraisal helps establish the property's value for lending purposes. Additional property-related services may be required depending on the loan and property.
Title and settlement services
These may include title search, lender's title insurance, settlement or closing services, document preparation and other title-related charges.
Taxes and government fees
Counties and other government entities may charge for recording the deed, mortgage and related documents. Charges vary by location and transaction.
Prepaid expenses
Prepaids can include daily mortgage interest, the first homeowners-insurance premium, property taxes or mortgage-insurance amounts due before regular payments begin.
Initial escrow deposits
When an escrow account is required or selected, funds may be collected at closing to establish reserves for future property-tax and insurance bills.
Learn how escrow accounts workClosing costs versus cash to close
Closing costs
The collection of loan costs, other costs, prepaids and initial escrow payments shown on your mortgage disclosures.
Down payment
The portion of the purchase price you pay rather than finance. The requirement depends on the loan program and your transaction.
Credits and deposits
Earnest money, seller credits, lender credits and other adjustments can reduce the remaining amount you must provide.
Cash to close
The final amount due after the down payment, closing costs, deposits, credits and transaction adjustments are combined.
Who pays closing costs?
Buyers and sellers can each have expenses. The exact allocation depends on the contract, local practices, loan-program rules and negotiated concessions.
Costs commonly associated with the buyer
- Mortgage and lender charges
- Appraisal and required loan services
- Lender's title insurance and settlement charges
- Prepaid interest and homeowners insurance
- Initial escrow deposits
- Recording and other transaction charges
Costs commonly associated with the seller
- Existing loan payoff and lien releases
- Real-estate brokerage compensation under the contract
- Negotiated seller credits
- Owner-related title charges where customary or agreed
- Prorations, repairs or other contract obligations
A cost being “customary” does not automatically make it mandatory. Review the purchase contract and preliminary closing figures with your real-estate agent, lender and settlement provider.
Ways to reduce upfront closing costs
A lower amount due at closing is not always the lowest-cost option over time. Compare the interest rate, APR, payment, credits, points and break-even period together.
Compare Loan Estimates
Review the same loan type, lock period and borrower scenario. Compare lender charges, points, credits, cash to close and long-term payment—not simply the advertised rate.
Negotiate seller-paid costs
Your agent may negotiate a seller contribution in the purchase contract. The amount and eligible uses are limited by the loan program, appraisal and transaction terms.
Evaluate lender credits
A lender credit may reduce upfront costs in exchange for different interest-rate pricing. Compare the monthly difference and expected time in the loan.
Choose points intentionally
Discount points increase upfront cost to obtain a lower rate. Calculate how long the monthly savings may take to recover the initial expense.
Plan your closing date
The closing date can change prepaid daily interest and tax or insurance adjustments. Choose timing based on the complete transaction—not solely one prepaid line item.
How closing costs differ by loan program
Most cost categories appear across loan types, but mortgage insurance, funding fees, seller-contribution rules, appraisal requirements and financing options can differ.
Conventional Loans
Compare down payment, mortgage insurance, points and standard closing charges.
Explore Conventional loansFHA Loans
Review FHA mortgage insurance and permitted contributions alongside other costs.
Explore FHA loansVA Loans
Consider the VA funding fee, exemption status and VA rules for allowable charges.
Explore VA loansUSDA Loans
Review the USDA guarantee fee, eligibility and transaction-specific cash requirements.
Explore USDA loansJumbo Loans
Higher loan amounts can affect points, title charges, appraisal scope and reserves.
Explore Jumbo loansLoan Estimate and Closing Disclosure
Loan Estimate
After a completed mortgage application, the Loan Estimate summarizes projected loan terms, payments, closing costs and cash to close. Use it to compare consistent scenarios.
Read the Loan Estimate guideClosing Disclosure
The Closing Disclosure shows the final loan terms and costs before consummation. Compare it carefully with the Loan Estimate and ask about any change you do not understand.
Learn how to read the Closing DisclosureWhere closing costs fit into the mortgage process
Follow the steps from application and disclosures through underwriting, clear to close and final signing.
Local closing costs depend on the specific property
A purchase in Johnson County, Jackson County or another Kansas City-area county can have different taxes, recording charges, insurance costs, title requirements and prorations. The state line alone does not determine which transaction will cost more.
Metropolitan Mortgage helps buyers compare the complete financing structure, including expected payment, down payment, closing costs and reserves.
Mortgage closing cost FAQs
Are closing costs included in the down payment?
No. The down payment is the portion of the purchase price you pay rather than finance. Closing costs are the loan, settlement, government, prepaid and escrow-related expenses associated with completing the transaction.
Can closing costs be added to a purchase mortgage?
Closing costs are not automatically added to a standard purchase loan. Depending on the loan program and transaction, permitted seller contributions, gift funds, lender credits or certain financed program fees may reduce the cash needed at closing.
Can a seller pay my closing costs?
A seller may pay eligible costs when the contribution is included in the purchase agreement and allowed by the loan program. Contribution limits and eligible expenses depend on the transaction and cannot exceed applicable costs.
What is the difference between points and closing costs?
Discount points are one possible closing cost. They are paid upfront to obtain different interest-rate pricing. Other closing costs include lender services, appraisal, title, settlement, recording, prepaids and escrow deposits.
When will I know my exact closing costs?
Your Loan Estimate provides projected costs after application. The Closing Disclosure provides the final figures before closing. Changes can still occur when permitted by applicable rules or when transaction details change.
Are closing costs tax deductible?
Tax treatment depends on the type of charge and your individual circumstances. A mortgage professional cannot provide personal tax advice; consult a qualified tax professional before claiming a deduction.
How accurate is a closing cost calculator?
A calculator is useful for early budgeting, but it cannot know your final rate, title charges, insurance premium, tax timing, program requirements or negotiated credits. Use the calculator as a planning tool and the formal disclosures as the transaction-specific source.
Look up unfamiliar closing terms
Search plain-English definitions for escrow, prepaid interest, title insurance, origination charges, discount points, cash to close and hundreds of other mortgage terms.
Know your expected payment and cash to close before you make an offer
Tell us your target price, down payment and homebuying plans. A Metropolitan Mortgage professional can help you compare available loan structures and expected upfront costs.
Calculator results and examples are for educational purposes only and are not a Loan Estimate, commitment to lend or guarantee of approval. Interest rates, APR, points, lender credits, closing costs, mortgage insurance, taxes, insurance and cash-to-close requirements vary by borrower, property, loan program and market conditions. All loans are subject to credit, income, asset, appraisal, title and underwriting approval. Metropolitan Mortgage Corporation is an Equal Housing Lender. Company NMLS #227722.