How much are mortgage closing costs?

Mortgage closing costs typically total 2%–5% of the loan amount, according to the CFPB. On a $400,000 mortgage, that's $8,000–$20,000. Costs include lender origination fees, third-party fees (appraisal, title, attorney), prepaid items (homeowners insurance, property taxes), and government recording fees. Some costs are negotiable; some are not.

Closing costs are the fees and prepaid items due at the closing table when you finalize a mortgage. The CFPB's mortgage closing costs guide estimates they typically total 2%–5% of the loan amount, though costs vary by loan size, lender, property location, and loan type. A Loan Estimate (LE), which lenders are required to provide within 3 business days of your application, lists all projected closing costs so you can compare offers.

Lender fees (some negotiable)

Origination fee: Charged by the lender to process the loan — typically 0.5%–1% of the loan amount. May be called a processing fee, underwriting fee, or application fee.
Discount points: Optional upfront payment to buy down the interest rate. One point = 1% of the loan amount and typically reduces the rate by 0.125%–0.25%. See also: should-i-buy-mortgage-points.
Rate lock fee: Some lenders charge for extended rate locks — typically built into the rate on standard 30/45/60-day locks.

Third-party fees (less negotiable, but shop around)

Appraisal: $400–$700+ depending on property type and location — required by the lender to confirm property value.
Title search and title insurance: Combined $1,000–$3,000+ — protects the lender (and optionally you) against title defects. Required by lenders.
Attorney fee: Required in some states (NY, MA, SC, GA, others) — $500–$1,500 typically.
Inspection: $300–$600 — paid before closing; not always included in closing cost totals.

Prepaids and escrow deposits (not fees — they're your own money upfront)

Prepaid homeowners insurance: Usually 12 months paid upfront at closing.
Prepaid property taxes: 2–6 months of property tax deposited into escrow.
Prepaid interest: Interest from closing date to end of month.

How to reduce closing costs

Shop multiple lenders — origination fees and rate offerings vary. You also have the right to shop for your own title insurance company in most states (the lender will designate a preferred vendor, but you can choose). Some lenders offer 'no-closing-cost' mortgages — these roll costs into the loan balance or rate rather than eliminating them. The CFPB's mortgage comparison tools and the RESPA-required Loan Estimate make side-by-side comparison straightforward.

What CFPB and RESPA require

Under RESPA and TRID rules, lenders must provide a Loan Estimate within 3 business days of receiving a complete mortgage application, listing all projected closing costs. — CFPB — Know Before You Owe (TRID)
The CFPB estimates mortgage closing costs typically total 2%–5% of the loan amount. — CFPB — Closing Costs Guide
Closing Disclosure must be provided at least 3 business days before closing, giving borrowers time to review the final costs against the Loan Estimate. — CFPB — TRID

Key takeaways

Closing costs typically run 2%–5% of the loan amount — on a $400K mortgage, budget $8K–$20K.
Lender fees (origination) are more negotiable; third-party fees (appraisal, title) are less so — but shop providers.
Prepaids (insurance, taxes, interest) are your own money collected upfront — not pure costs.
Always compare the Loan Estimate across at least 2–3 lenders before choosing.
A 'no-closing-cost' mortgage doesn't eliminate costs — it embeds them in the rate or loan balance.

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