Understanding Closing Costs: What You'll Pay to Buy a Home
By Colson · Reviewed by Abodemic Editorial Standards · Updated June 1, 2026
Closing costs run about 2%–5% of the loan amount and cover lender origination, the appraisal, title insurance, escrow, recording, and prepaid taxes and insurance. You can lower them by comparing lenders, negotiating seller concessions, or choosing a no-closing-cost loan structure.
How much are closing costs?
Closing costs typically run 2%–5% of the loan amount. On a $320,000 loan, that's roughly $6,400 to $16,000 on top of your down payment. Estimate yours with the closing cost calculator.
What's included in closing costs?
- Lender fees: origination, underwriting, and any discount points.
- Third-party services: appraisal, title search, and title insurance.
- Government: recording fees and transfer taxes.
- Prepaids: upfront property taxes and homeowners insurance into escrow.
How to lower your closing costs
Shop at least three lenders and compare their Loan Estimates side by side — fees vary widely for the same loan. You can also ask the seller for concessions, or choose a "no-closing-cost" loan that folds fees into a slightly higher rate (cheaper upfront, more over time).
Cash to close vs. down payment
Your total cash to close is your down payment plus closing costs. Budget for both — buyers are often surprised that the down payment isn't the whole story.