Closing Cost Calculator

Understanding Real Estate Closing Costs

Closing costs are the fees and expenses you pay when finalizing a real estate transaction, beyond the down payment. They typically range from 2% to 5% of the purchase price, though they can be higher in states with significant transfer taxes or attorney requirements.

What Are Typical Closing Costs?

Closing costs fall into several categories. Lender fees include the loan origination fee (0.5-1% of the loan), appraisal ($300-500), credit report ($30-50), and underwriting. Title costs include title insurance (0.5-1% of the price), title search ($200-400), and escrow fees. Government fees include recording fees and transfer taxes, which vary dramatically by state.

State Transfer Taxes: Why Location Matters

Some states charge no transfer tax at all (Alaska, Idaho, Indiana, Kansas, Louisiana, Mississippi, Missouri, Montana, New Mexico, North Dakota, Oregon, Texas, Utah, Wyoming), while others can add significant costs. Pennsylvania charges 1%, Washington state 1.28%, and Delaware 1.5%. In high-cost states, transfer tax alone can add thousands to your closing costs.

FHA and VA Loan-Specific Costs

• FHA loans require an upfront Mortgage Insurance Premium (MIP) of 1.75% of the loan amount, which is typically rolled into the loan balance. FHA loans also have an annual MIP of 0.55% that is paid monthly.
• VA loans charge a funding fee of 2.15% for first-time use (1.25% with 10%+ down). Disabled veterans and surviving spouses may be exempt. VA loans do not require a down payment or mortgage insurance.

How to Reduce Your Closing Costs

• Shop for lender fees: Get Loan Estimates from multiple lenders and compare origination fees, underwriting fees, and rate lock costs.
• Negotiate with the seller: Ask the seller to pay a portion of closing costs (seller concessions). This is common, especially in buyer's markets.
• Compare title companies: Title insurance rates can vary by hundreds of dollars between providers.
• Ask about lender credits: A slightly higher interest rate can come with lender credits that offset closing costs, which may make sense if you plan to refinance later.
• Time your closing: Closing at the end of the month reduces prepaid interest charges.
• Check for first-time buyer programs: Many states and cities offer closing cost assistance programs for first-time homebuyers.

Prepaid Items vs. Closing Costs

Prepaid items (property taxes, homeowner's insurance, and mortgage interest) are not technically "fees" but are collected at closing to set up your escrow account. You would pay these costs regardless of the transaction, but they increase the cash you need at the closing table. Budget for roughly 3 months of property tax and 1 year of homeowner's insurance as prepaids.