Closing costs are everything you pay to complete the purchase beyond the down payment itself. On a $350,000 loan, 2–5% means roughly $7,000 to $17,500. The range is that wide because it depends heavily on your state, your lender, and how much of it you negotiate.
Read your Loan Estimate by section
Every US lender must give you a standardised three-page Loan Estimate within three business days of your application. It is organised deliberately, and the organisation tells you what to argue about.
| Section | What's in it | Can you shop? |
|---|---|---|
| A. Origination charges | Lender's own fees: origination, underwriting, points | Negotiable with the lender |
| B. Services you cannot shop for | Appraisal, credit report, flood certification | No — lender selects |
| C. Services you can shop for | Title search, title insurance, survey, pest inspection | Yes |
| E. Taxes and government fees | Recording fees, transfer taxes | No — set by law |
| F. Prepaids | Interest to month end, first year's insurance, property taxes | Not a fee — timing |
| G. Escrow at closing | Initial deposit into your escrow account | Not a fee — your money |
Section C is where the money is. Lenders provide a written list of providers, and you are legally free to use someone else. Title insurance in particular varies substantially between providers for identical coverage, and it is frequently one of the largest single line items.
What each line actually is
Origination fee
The lender's charge for processing the loan, usually 0.5–1% of the amount. Sometimes broken into "underwriting", "processing" and "application" fees, which is the same money wearing three hats. Negotiable, especially with a competing Loan Estimate in hand.
Discount points
Optional. One point costs 1% of the loan and buys the interest rate down. Worth it only if you keep the loan past the break-even — divide the cost by the monthly saving to find it in months.
Appraisal
An independent valuation confirming the property is worth what you are borrowing against. Typically $400–$800. Not negotiable and not optional, but you are entitled to a copy of the report.
Title search and title insurance
The search confirms the seller can legally sell. Lender's title insurance protects the lender's interest and is required. Owner's title insurance protects you and is usually optional — and usually worth it, because it is a one-off premium against a risk that would otherwise be catastrophic. Both are shoppable.
Prepaid interest
Interest from your closing date to the end of that month. Closing on the 28th means a few days; closing on the 2nd means nearly a month. This is the one lever most buyers never think about — closing later in the month reduces cash needed at the table, though it does not reduce total cost.
Escrow deposit
Several months of property taxes and insurance held in advance so the servicer can pay them when due. Not a fee — it is your money, held on your behalf. It does inflate the cash you need at closing though.
Which fees are genuinely negotiable
| Fee | Negotiable? | Approach |
|---|---|---|
| Origination / underwriting | Often | Show a competing Loan Estimate |
| Application fee | Often | Frequently waived to win business |
| Rate-lock extension | Sometimes | Ask who caused the delay |
| Title insurance | Yes | Shop Section C independently |
| Survey, pest inspection | Yes | Your choice of provider |
| Appraisal | Rarely | Lender-ordered |
| Credit report | No | Pass-through cost |
| Recording, transfer tax | No | Set by government |
Seller concessions
In a buyer's market, sellers will sometimes pay part of your closing costs — a "seller concession" or "seller-paid costs". Limits depend on loan type and down payment, so ask your lender what is permitted before negotiating. It is often easier to secure than a price reduction of the same amount, and it helps more if cash at closing is your constraint rather than the monthly payment.
Three business days before closing you receive a Closing Disclosure with final numbers. Put it side by side with your original Loan Estimate. Some lines are legally allowed to change, some are capped, and some cannot change at all. Anything that has moved without explanation is worth questioning before you sign, not after.
Budget the whole thing Use the calculator for your monthly payment, then add 2–5% of the loan for closing costs.
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