How the closing cost calculator works
Closing costs are the fees and prepaid amounts you pay to get your mortgage and transfer the home into your name. The calculator groups them the same way your lender’s Loan Estimate and Closing Disclosure do, so you can check a real quote line by line.
Loan costs
- A. Origination charges: the lender’s own fees, and any discount points you buy to lower your rate.
- B. Services you cannot shop for: appraisal, credit report, flood certification and tax service, chosen by the lender.
- C. Services you can shop for: lender’s title insurance, settlement or closing fees and a survey. You may pick these providers yourself.
Other costs
- E. Taxes and other government fees: recording fees and any transfer tax you pay.
- F. Prepaids: your first year of homeowner’s insurance, interest from closing day to the end of the month, and any property tax due soon.
- G. Initial escrow payment: a cushion of a few months of property tax and insurance for your escrow account.
- H. Other: home inspection, owner’s title insurance, HOA fees and anything else.
Prepaid interest = loan × rate ÷ 365 × days until the end of the month
Escrow deposit = months × (yearly tax ÷ 12) + months × (yearly insurance ÷ 12)
Cash to close = down payment + closing costs − seller credits − lender credits − earnest money paid
The figures start at typical round numbers for a US purchase. Replace each one with the numbers from your Loan Estimate, which your lender must send within three business days of your application.
Worked example 1: $400,000 home, 20% down
These are the calculator’s defaults: a $400,000 price, $80,000 down, a $320,000 loan at 6.5%, and closing on the 15th of the month.
| Section | Amount |
|---|---|
| A. Origination fee (0.5% of the loan) | $1,600.00 |
| B. Appraisal, credit report, flood and tax service | $740.00 |
| C. Lender’s title insurance and settlement fee | $2,400.00 |
| E. Recording fees | $150.00 |
| F. First-year insurance ($1,800) + 15 days of interest ($854.79) | $2,654.79 |
| G. Escrow: 2 months of insurance + 3 months of property tax | $1,300.00 |
| H. Home inspection | $450.00 |
| Total closing costs | $9,294.79 |
That is 2.32% of the price. Add the $80,000 down payment and your cash to close is $89,294.79. Notice that $3,954.79 of it (sections F and G) is not a fee at all: it pays your own insurance, interest and future tax bills.
Worked example 2: $300,000 home, 5% down, one point and a transfer tax
Now the buyer puts 5% down ($15,000) on a $300,000 home, buys one discount point and lives in a state where the buyer pays a 0.5% transfer tax.
- A. Origination 0.5% of $285,000 = $1,425, plus one point = $2,850, so $4,275
- E. Recording $150 + transfer tax 0.5% × $300,000 = $1,500, so $1,650
- F. Insurance $1,800 + 15 days of interest at $50.75 a day = $2,561.30
- G. Escrow: 2 × $150 + 3 × $250 = $1,050
- B, C and H stay at $740, $2,400 and $450
Total closing costs are $13,126.30, or 4.38% of the price, and cash to close is $28,126.30. If the seller agrees to a $6,000 credit, the buyer needs $22,126.30. With 5% down, a conventional loan allows seller credits of up to 3% of the price ($9,000 here).
Worked example 3: pick your closing date
Prepaid interest covers the days from closing to the end of that month. On the $320,000 loan at 6.5%, one day of interest is $320,000 × 6.5% ÷ 365 = $56.99. Closing on the 28th of a 30-day month instead of the 2nd means 26 fewer days to prepay, which lowers your cash to close by about $1,481.64. It does not save money overall, because your first payment comes sooner, but it can help if cash is tight.
Typical buyer closing costs
These are common ranges, not quotes. Your state, county, lender and title company make a big difference.
| Cost | Typical range | Notes |
|---|---|---|
| Origination fee | 0% to 1% of the loan | Some lenders charge a flat fee instead |
| Discount points | 0 to 2 points | 1 point = 1% of the loan |
| Appraisal | $400 to $800 | More for large or rural homes |
| Credit report | $25 to $100 | Per borrower |
| Lender’s title insurance | $500 to $2,500 | Set by state rate rules in some states |
| Settlement or closing fee | $500 to $1,500 | Attorney states can cost more |
| Recording fees | $50 to $300 | County fees |
| Transfer taxes | 0% to 2% or more of the price | Many states have none; sellers often pay |
| Home inspection | $300 to $600 | Paid before closing, not always on the Closing Disclosure |
| Escrow cushion | 2 to 3 months of tax and insurance | Depends on your tax due dates |
Tips to lower your closing costs
- Compare at least three Loan Estimates. They use the same standard form, so you can compare sections A, B and C side by side. Small differences in fees and rate add up.
- Shop for section C services. Your lender gives you a list of providers, but you may choose others for title and settlement services.
- Negotiate seller credits. In a slower market, sellers often agree to pay part of your closing costs. Loan programs cap these credits, for example at 6% of the price for FHA loans.
- Ask about lender credits. A slightly higher rate can come with a credit that covers some costs. Check the long-term cost with the mortgage calculator.
- Look for assistance programs. State and local housing agencies often offer closing cost help for first-time buyers.
Closing costs and the rest of your budget
Closing costs come on top of your down payment, so plan both together with the down payment calculator. Section G depends on your property tax, which the property tax calculator estimates by state. To see whether the whole purchase fits your income, use the house affordability calculator. If you already own and are thinking of a new loan, the refinance calculator handles refinance closing costs and break-even.
Before closing, your lender must give you a Closing Disclosure at least three business days ahead. Compare it with your Loan Estimate and with this calculator, and ask about any line that went up.
This calculator gives an estimate for planning. Your lender, title company and local government set the actual costs.