Closing Cost Calculator

What Are Closing Costs?

Closing costs are the fees and expenses you pay when finalizing a mortgage, separate from the down payment. Our closing cost calculator helps you estimate these expenses, which typically range from 2-5% of the home purchase price. These costs cover lender fees, title services, government charges, third-party services, and prepaid items like property taxes and insurance.

Major Closing Cost Categories

Understanding each category helps you anticipate expenses:

• Lender Fees: Origination fee (0.5-1.5% of loan), underwriting, processing, and discount points if purchased
• Title & Escrow: Title search, title insurance, escrow/settlement fees, and attorney fees (in some states)
• Government Fees: Recording fees, transfer taxes (vary significantly by state), and deed stamps
• Third-Party Services: Appraisal ($500-700), home inspection, credit report, flood certification, and survey
• Prepaid Items: Homeowner's insurance, property taxes, prepaid interest, and mortgage insurance reserves
• Loan-Specific: FHA upfront mortgage insurance (1.75%) or VA funding fee (2.15-3.3%)

How to Reduce Closing Costs

Several strategies can help lower your closing costs. Shop around for title insurance and other services where you have a choice of providers. Ask the seller for concessions (typically 3-6% of purchase price). Consider a no-closing-cost mortgage where the lender covers costs in exchange for a slightly higher interest rate. Compare loan estimates from multiple lenders within 45 days to avoid multiple credit inquiries affecting your score. Use our closing cost calculator to understand where you can negotiate.

Loan Type Comparison

Different loan types have varying closing cost structures:

• Conventional: Typically 2-5% of loan amount, requires PMI if down payment <20%
• FHA: Lower down payment (3.5%) but adds 1.75% upfront mortgage insurance premium plus monthly MIP
• VA: No down payment required, funding fee of 2.15-3.3% (can be financed), no monthly mortgage insurance
• USDA: No down payment, 1% upfront guarantee fee, lower closing costs for rural properties
• Jumbo: Higher fees due to loan size, typically requires 20% down and larger reserves

State-by-State Variations

Closing costs vary significantly by state due to different regulations, transfer taxes, and customary practices. States like New York, Pennsylvania, and Delaware have higher-than-average closing costs due to attorney requirements and higher transfer taxes. Texas has no transfer tax but higher title insurance costs. California has moderate transfer taxes but expensive title insurance. Use this closing cost calculator with your specific state to get accurate estimates.

Should You Pay Discount Points?

Discount points allow you to pay upfront to reduce your interest rate (typically 0.25% per point). One point equals 1% of your loan amount. This makes sense if you plan to stay in the home long enough to break even on the upfront cost through monthly payment savings. For a $300,000 loan, one point ($3,000) might save $50-60/month, requiring 4-5 years to break even. Use our closing cost calculator to evaluate if points make financial sense for your situation.