Closing costs generally run 2-5% of the loan amount and cover several distinct categories, each with its own typical range.
Cost category
Typical range
What it covers
Loan origination
0.5%-1% of loan
Lender fee for processing and underwriting
Appraisal
$400-$700
Required home valuation
Title insurance & search
0.5%-1% of price
Protects against ownership disputes
Recording & transfer taxes
Varies by state/county
Government filing fees
Prepaid interest
Varies by close date
Interest from closing to first payment
Escrow reserves (tax/insurance)
2-6 months upfront
Funds your escrow account
FHA and VA loans add specific costs
FHA loans add an Upfront Mortgage Insurance Premium (1.75% of loan amount) on top of standard closing costs. VA loans add a VA funding fee (1.25%-3.3% depending on down payment and prior use) but skip PMI entirely.
Ways to reduce closing costs
Ask about lender credits (a slightly higher rate in exchange for reduced closing costs), shop title insurance separately where state rules allow, and negotiate seller-paid closing costs as part of your purchase offer — common in slower markets.
Typically 2-5% of the loan amount. On a $360,000 loan, expect roughly $7,200-$18,000, though the exact figure varies significantly by state, lender, and loan type.
Can closing costs be rolled into the loan?
On a purchase, closing costs are generally paid in cash at closing, though some loan programs and lender credits can offset part of the cost. On a refinance, costs are more commonly rolled into the new loan balance.
Who pays closing costs, buyer or seller?
Traditionally the buyer, but sellers can agree to pay some or all closing costs as a negotiated concession, particularly common in buyer-favorable markets or on VA loans where seller concessions are frequently used.
Are closing costs tax deductible?
Some are — mortgage points and prepaid property taxes are often deductible in the year of purchase. Most other closing costs (title insurance, appraisal, recording fees) are not directly deductible but may add to your home's cost basis.
Do FHA and VA loans have different closing costs?
FHA adds a 1.75% upfront mortgage insurance premium. VA loans add a funding fee (1.25%-3.3%) instead of PMI, but VA loans often allow more seller-paid concessions to offset the total cash needed at closing.