Quick Answer

On a $400,000 home with a $320,000 loan at 3% estimated closing costs, total estimated closing costs are approximately $12,000, bringing estimated total cash needed to approximately $92,000 (including the $80,000 down payment).

Home Purchase Price ($)

Loan Amount ($)

Purchase price minus down payment

Estimated Closing Cost (%)

Typical range: 2% to 5%

Results

Common Examples

Input	Result
$400,000 home, $320,000 loan, 3% closing costs	Estimated closing costs: approximately $12,000
$300,000 home, $270,000 loan, 3.5% closing costs	Estimated closing costs: approximately $10,500
$500,000 home, $400,000 loan, 2.5% closing costs	Estimated closing costs: approximately $12,500
$250,000 home, $237,500 loan, 4% closing costs	Estimated closing costs: approximately $10,000

How It Works

Total Closing Costs

Total Closing Costs = Home Price x (Closing Cost Percentage / 100)

Closing costs are one-time fees paid at the finalization (closing) of a real estate transaction. They typically range from 2% to 5% of the purchase price, depending on location, loan type, and negotiation.

Common Closing Cost Components

Loan Origination Fee: Approximately 0.5% to 1% of the loan amount. This covers the lender’s administrative costs for processing the mortgage.

Appraisal: Approximately $300 to $600. An independent assessment of the property’s market value, required by the lender.

Title Insurance: Approximately 0.5% to 1% of the home price. Protects the buyer and lender against title defects or ownership disputes.

Escrow / Prepaids: Approximately 1% to 2% of the home price. Includes prepaid property taxes, homeowner’s insurance, and prepaid mortgage interest.

Recording Fees: Approximately $100 to $400. County fees for recording the deed and mortgage documents.

Home Inspection: Approximately $300 to $500. Professional inspection of the property’s condition (often paid before closing).

Credit Report: Approximately $30 to $75. Fee for pulling the buyer’s credit history.

Buyer vs. Seller Closing Costs

Buyers typically pay most closing costs (2% to 5% of price). Sellers typically pay real estate agent commissions (5% to 6% of price) and their share of transfer taxes. Some costs are negotiable between buyer and seller.

Worked Example

A $400,000 home with a $320,000 loan (20% down payment of $80,000) at 3% estimated closing costs: Total closing costs = $400,000 x 0.03 = approximately $12,000. Estimated breakdown: loan origination = $3,200, appraisal = $450, title insurance = $2,000, escrow/prepaids = $4,000, recording = $200, inspection = $400, credit report = $50, other = $1,700. Total cash needed at closing = $80,000 + $12,000 = approximately $92,000.

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Frequently Asked Questions

What are closing costs?

Closing costs are one-time fees and expenses paid when a real estate transaction is finalized. They include lender fees, title fees, government fees, and prepaid items like insurance and taxes. These costs are separate from the down payment and are typically paid at the closing table or shortly before.

How much are typical closing costs?

Closing costs typically range from 2% to 5% of the home purchase price. On a $400,000 home, estimated closing costs would be approximately $8,000 to $20,000. The exact amount depends on location, loan type, lender fees, and what is negotiated between buyer and seller.

Can closing costs be rolled into the mortgage?

Some loan programs allow closing costs to be financed by adding them to the loan balance. This reduces the cash needed at closing but increases the total amount borrowed and the monthly payment. FHA and VA loans offer some flexibility in this area. Consult with a mortgage lender about specific options.

Who pays closing costs, the buyer or the seller?

Both parties have closing costs. Buyers typically pay lender fees, title insurance, appraisal, inspection, and escrow charges. Sellers typically pay real estate agent commissions and transfer taxes. Some costs are negotiable. In a buyer's market, sellers may agree to contribute toward the buyer's closing costs.

Are closing cost estimates exact?

This calculator provides approximations based on typical industry ranges. Actual costs vary by location, lender, loan type, and transaction specifics. The Loan Estimate document provided by lenders within three business days of a mortgage application gives a more precise breakdown for a specific transaction.