Closing costs are separate from the down payment and, for sellers, from commissions and the mortgage payoff. A buyer sees them first on the Loan Estimate, then in final form on the Closing Disclosure or settlement statement.
What do buyers pay at closing?
A buyer with a mortgage pays the lender’s charges (origination fees, any discount points, the appraisal and credit report), the lender’s title policy, a settlement or escrow fee, and recording fees for the deed and mortgage. Some states add taxes on the mortgage itself, like Florida’s documentary stamps on the note
Buyers also pay prepaid items: interest from closing to the end of the month, the first year of homeowners insurance, and deposits to start the escrow account for taxes and insurance. These aren’t fees, but they’re due at closing and can add thousands to the cash
What do sellers pay at closing?
Sellers’ closing costs are usually smaller but vary more from state to state. The main items are any transfer tax the seller customarily pays, the owner’s title policy where sellers buy it, the seller’s share of the settlement fee, fees to release the old mortgage and, in some states,
Commissions, the loan payoff and the property tax proration also come out of the seller’s proceeds, though they’re usually counted apart
Who decides who pays what?
The contract, state law and local custom. In Texas, for example, sellers customarily pay for the owner’s title policy; in New York, the buyer usually does. A buyer can also negotiate seller concessions, a credit from the seller toward their costs. The CFPB notes that a seller who agrees to a credit will often want a higher price
How can you lower closing costs?
Compare Loan Estimates from more than one lender, since lender charges vary the most. Ask which title and settlement services you’re allowed to shop for; the Loan Estimate lists them. You can also ask for a seller credit or a lender credit, keeping in mind that a lender credit usually comes with a
Example: closing costs on a $400,000 home in Florida
| Seller: documentary stamp tax on the deed (0.70%) | $2,800 |
|---|---|
| Seller: owner’s title insurance (state-set rate) | $2,075 |
| Seller: settlement and recording fees (estimates) | $700 |
| Seller total, before commissions and the payoff | $5,575 |
| Buyer: lender fees and appraisal (estimates) | $3,900 |
| Buyer: stamps on the note and intangible tax on a $320,000 loan | $1,760 |
| Buyer: lender’s title policy, settlement and recording | $875 |
| Buyer total with 20% down, before prepaids | $6,535 |
The taxes and title premium are Florida’s own rates; the fees are national estimates. Sellers usually pay the owner’s title policy in Florida, except in a few counties such as Miami-Dade, where buyers usually do. Prepaid interest, insurance and escrow deposits add about $4,200 more
Common mistakes
- Budgeting only for the down payment. Closing costs and prepaids are due
at closing too. - Assuming the buyer pays everything. Sellers have their own closing costs, and custom shifts some items
between the two. - Comparing lenders on interest rate alone instead of the
full Loan Estimate. - Treating a lender credit as free money. It’s usually paid for with
a higher rate.
Questions
How much are closing costs?
It depends on the state, the price and the loan. Across all 50 states and DC, a typical seller pays about $2,500 and a typical buyer with 20% down about $6,130 on a $400,000 home, before commissions and prepaids, per the closing costs by state dataset linked
Can closing costs be rolled into the mortgage?
On a purchase, usually not directly, though a seller credit or lender credit can cover some of them. Some loans let you finance specific charges, such as FHA’s upfront mortgage insurance premium or the
When do I find out the exact amount?
Your lender must give you the Closing Disclosure at least three business days before closing. Compare it with your Loan Estimate and ask about
Sources
- CFPB: What fees or charges are paid when closing on a mortgage?
- CFPB: Loan Estimate explainer
- CFPB: Closing Disclosure explainer
- ALTA Home Closing 101: Closing costs explained
Written and checked by the Broker & Agent team on October 2, 2026. General information, not legal, tax or lending advice. Something out of date? Tell us.