Home Mortgage: How much are closing costs?

image of closing costs money

Closing costs are the various fees and expenses related to buying or selling a home above and beyond the down payment at closing. Closing costs can be as low as 1% of the total mortgage price and as high as 8%, but most pay in the 2% to 4% range.

If you're planning on buying a home and believe a down payment is all you need to save for, think again. You also need to come up with "closing costs" at the time your mortgage is purchased. You could call closing costs the expenses related to transferring ownership of a home. We have an example schedule of closing costs if you'd like to learn more.

Closing costs vary from state-to-state and from city-to-city and they can be as low as 1% of the total loan cost or reach as high as 8% of your mortgage. Don't panic, most people pay from 2% to 4% to settle closing costs. Even at the low end of the scale, closing costs can add up.

Let's take a look at some examples of closing costs so you can see how much you might have to pay:

Closing Cost Examples

Mortgage Amount 2% 3% 4% 5%
$100,000 $2,000 $3,000 $4,000 $5,000
$200,000 $4,000 $6,000 $8,000 $10,000
$300,000 $6,000 $9,000 $12,000 $15,000
$400,000 $8,000 $12,000 $16,000 $200,000
$500,000 $10,000 $15,000 $20,000 $25,000
The above results are rough approximations of closing costs. Your actual closing costs can vary significantly.
image of closing costs by state 2010

How and Who Pays Closing Costs

The bottom line is that closing costs are an unavoidable expense when purchasing a home. Who pays closing costs and how they're paid is another matter. Sometimes a seller will offer to share or pay closing costs. Another option to explore is rolling closing costs into the mortgage.