The fees you pay at closing to finalize the mortgage and home purchase. Typically 2–5% of the home's price. Includes lender, title, escrow, and government fees.
Closing costs are the various fees you pay at closing to complete the home purchase and finalize your mortgage. They typically total 2–5% of the home's purchase price — not insignificant, and worth budgeting for from day one.
They fall into a few buckets: Lender fees (origination fee, application fee, underwriting fee, discount points), Third-party fees (appraisal, credit report, title search, title insurance, survey), Government fees (recording fee, transfer tax), and Prepaids (escrow for property taxes and insurance, prepaid mortgage interest).
Your Loan Estimate (provided within 3 days of applying) gives you the initial breakdown. Your Closing Disclosure (provided at least 3 days before closing) gives you the final numbers. They should be very close — some line items are zero-tolerance, meaning the lender can't increase them.
Example
On a $400,000 home with $320,000 financed, expect closing costs around $8,000–$20,000. Typical breakdown: $3,500 lender fees, $2,500 title and escrow, $1,200 prepaid interest and taxes, $1,000 appraisal/inspections, $500 government recording.
Also known as
closing fees, settlement costs, cash to close (related)
Source:
CFPB