Closing costs can add significantly to the cost of buying a home. Learn what they may include, how much they typically cost, and ways eligible buyers may reduce expenses.
Blog
May 20, 2026
Key Takeaways
- Closing costs are additional fees and payments due at closing. Costs might include application fees, lender fees, appraisal fees, homeowners insurance, among others.
- Closing costs often range between approximately 2% and 5% of the home purchase price, though the costs vary based on factors such as loan type, property, financing terms, and location.
- Consider closing cost assistance. Certain programs may offer closing cost assistance for eligible borrowers. In some transactions, you may be able to negotiate with the home seller on concessions or credits toward closing costs.
- Plan ahead for closing costs to help make the homebuying process smoother. Having a financial plan can give you more time to budget and explore your options.
If you’ve decided it’s time to buy a home, it’s a good idea to plan ahead for the costs that are a typical part of the homebuying process. And while your down payment is probably the number one expense on your mind, don't forget about closing costs. Here’s what you may want to consider.
What Are Closing Costs?
Simply put, closing costs are the fees, expenses and charges associated with finalizing a real estate transaction and mortgage loan. These costs are typically paid at or around the time of closing and will vary based on factors like the price of the home, lender, property location and how it’s being financed.
According to Freddie Mac, closing costs may include fees such as:
- Application fees
- Credit report fees
- Loan origination fees
- Appraisal fees
- Home inspection fees
- Title insurance
- Homeowners insurance
- Survey fees
- Attorney fees
Some closing costs are one-time expenses associated with the purchase transaction while others, such as homeowners insurance, may represent upfront payments towards ongoing obligations you’ll have once you own the home.
How Much Are Closing Costs?
According to Freddie Mac, “Closing costs vary greatly depending on your location and the price of your home. Typically, you should be prepared to pay between 2% and 5% of the home purchase price in closing fees.”
Based on the Freddie Mac example range, closing costs on a $400,000 home could range from approximately $8,000 and $20,000, depending on the transaction and financing details. Keep in mind, if the purchase price is higher or lower than this example, your closing costs may also vary.
Depending on market conditions, some sellers may be willing to contribute toward certain closing costs through concessions or credits.
Depending on market conditions, some sellers may be willing to contribute toward certain closing costs through concessions or credits.
Ways to Help Reduce Your Closing Costs
If you’re exploring ways to reduce your closing costs, here are a few things you might want to consider:
Negotiate with the Seller: Depending on market conditions, some sellers may be willing to contribute toward certain closing costs through concessions or credits. In certain market conditions, buyers may have additional flexibility to negotiate seller concessions. Buyers may wish to explore whether seller concessions or credits may be available.
Shop Around for Home Insurance: As home insurance costs continue to rise across many areas of the country, consider reviewing multiple coverage options. Comparing coverages and pricing from multiple insurers may help identify a policy that fits your budget and needs.
Look into Closing Cost Assistance: Certain programs may offer support with down payment or closing cost assistance. These programs vary by area, income levels, professions, and specific towns or neighborhoods. The U.S. Department of Housing and Urban Development (HUD) maintains a helpful resource for finding homebuying assistance programs in every state.
Bottom Line
Planning ahead for closing costs can help make the homebuying process smoother. Understanding these expenses early on can provide more time to budget and explore available options. With the help of experienced professionals, buyers can better understand potential costs and considerations.
Acrisure Mortgage is here to help you pursue your homeownership goals. Learn more about our mortgage services.
This material is provided for general informational purposes only and should not be construed as financial, legal, tax, or lending advice. Costs, eligibility, loan terms and available programs vary based on individual circumstances, lender requirements and applicable laws and regulations.
Insights
