How much cash do I need for closing costs?

Closing costs typically run about 2%–5% of the purchase price, on top of your down payment. On a $400,000 home, that's roughly $8,000–$20,000 in additional cash needed at closing — though the exact amount depends on your loan type, location, and whether you negotiate any seller-paid credits.

What closing costs actually cover

• Lender fees: Loan origination, underwriting, and application fees.
• Third-party fees: Appraisal, home inspection, credit report, survey.
• Title & escrow: Title search, title insurance (owner's and lender's policies), escrow/settlement fees.
• Prepaid items: The first months of homeowners insurance, prepaid property taxes, and interest accrued between closing and your first mortgage payment.
• Government fees: Recording fees and, in some areas, transfer taxes.

Some of these — prepaid taxes and insurance in particular — aren't really a "cost" so much as money you'd be paying anyway, just collected upfront rather than later.

Ways to reduce the cash you need at closing

1. Seller concessions: In some markets, buyers can negotiate for the seller to cover part of the closing costs (loan program limits apply).
2. Lender credits: Accepting a slightly higher interest rate in exchange for the lender covering some closing costs.
3. Shopping fees: Some closing costs (like title insurance in certain states) can be shopped between providers.
4. First-time buyer or down payment assistance programs: Some state and local programs help cover closing costs for eligible buyers.

What to budget beyond closing day

Beyond the closing costs themselves, it's wise to keep a cushion for move-in expenses — movers, immediate repairs, appliances, and the first month in a new home tends to cost more than people expect. Lenders will also generally want to see evidence of reserves left after closing, not just enough to barely make it to the table.

This page is for general educational purposes and is not personalized financial advice. Closing costs vary by state, lender, loan type, and negotiated terms — confirm your specific costs with your lender and title company.