Closing Costs Explained: The 3-5% Most Buyers Forget

Closing costs typically run 3-5% of the home price ($12K-$20K on a $400K home), paid at closing on top of the down payment. Major line items: loan origination fees 0.5-1% of loan amount; appraisal $400-$700; title search $200-$400; lender title insurance ~0.5% of loan; owner title insurance optional but recommended ($1K-$3K); home inspection $300-$500; survey $400-$700; recording fees and transfer taxes vary by state (0.1-2% combined); prepaid items — first year of homeowners insurance, escrow setup for property tax and insurance, prepaid interest. Negotiation tip: in a buyer's market, request the seller cover 2-3% of closing costs as a concession. Our Mortgage Calculator does not include closing costs by default — budget for them separately.