Closing Costs, Line by Line
What you're actually paying for at the closing table, what's negotiable, and how the seller can help.
The Short Version
Closing costs typically run 2%–5% of the loan amount and break into three buckets: lender fees, third-party services, and prepaid escrows. Lender fees are the most negotiable. Prepaids aren't really costs - they're funds you'd be paying anyway (taxes, insurance) just prepaid to seed the escrow account.
Every fee is disclosed twice: on the Loan Estimate you get within 3 business days of application, and on the Closing Disclosure you must receive at least 3 business days before signing. Read them side by side.
Bucket 1 - Lender Fees (Most Negotiable)
These are what the lender charges to originate and underwrite your loan. Different lenders package them differently - one lender's flat 'origination charge' is another lender's 'application' + 'processing' + 'underwriting' fees. Compare the total, not the line items.
- Origination charge (or points): 0%–1% of the loan; can be zero on 'par' pricing.
- Underwriting fee: typically $500–$1,200.
- Processing fee: $300–$700 if charged separately.
- Discount points: optional, each point (1% of loan) buys down the rate - do the break-even math.
Bucket 2 - Third-Party Services
These aren't lender fees, but the lender collects them at closing. Some you can shop for (title, survey), some you can't (appraisal, credit report). The Loan Estimate tells you which is which.
| Appraisal | $550–$800 (residential) |
| Credit report | $50–$100 per applicant |
| Title search | $200–$500 |
| Lender's title insurance | 0.3%–0.5% of loan amount |
| Owner's title insurance (optional but standard) | 0.3%–0.6% of purchase price |
| Recording fees / transfer taxes | Varies by state and county |
| Survey (if required) | $300–$700 |
| Pest / termite inspection | $75–$150 |
Bucket 3 - Prepaids and Escrow Setup
These are amounts you'd be paying anyway, just collected early to seed the escrow account (the lender-managed account that pays your property tax and insurance).
- Homeowners insurance: first year's premium, paid at closing.
- Property tax escrow: 2–6 months of taxes deposited into escrow depending on the calendar and county.
- Homeowners insurance escrow: usually 2 months into escrow on top of the first year prepaid.
- Prepaid interest: the days of interest from your closing date to the end of the closing month.
If closing costs feel high, look at how much is prepaids vs. actual fees. Prepaids are money you'd have paid over the first year anyway. Comparing lenders on 'total closing costs' without separating out prepaids can mislead you.
What the Seller Can Pay for You
Seller-paid closing costs are one of the most underused negotiating tools. Rather than a $10,000 price reduction, ask for a $10,000 seller credit toward closing costs - you keep more cash at closing, and it costs the seller the same.
| Conventional, primary, LTV > 90% | 3% of purchase price |
| Conventional, primary, LTV 75%–90% | 6% of purchase price |
| Conventional, primary, LTV < 75% | 9% of purchase price |
| Conventional, investment | 2% of purchase price |
| FHA | 6% of purchase price |
| VA | 4% of purchase price for 'concessions' + unlimited toward standard closing costs |
What's Actually Negotiable
Almost every lender fee is negotiable, especially if you're a strong file (high credit, strong down payment). Third-party services you can shop are also negotiable, though usually less impactful. Recording fees and transfer taxes are set by government and are not negotiable.
- Title insurance: shop title companies; premiums are regulated in some states but total 'settlement fees' vary.
- Discount points: always optional; run the break-even.
- Appraisal: rarely negotiable; it's paid to a third party.
- Government fees: never.