US closing costs: what to budget beyond your down payment

On a $400,000 conventional purchase with 10% down ($40,000), the loan is $360,000. Monthly payment at 6.50% is $2,515 - that is $2,275 in principal and interest plus $240 in PMI, which cancels around month 96 when the balance crosses 80% of the purchase price. That monthly figure is what most buyers focus on - but the day you sign you also owe a separate cash payment at the closing table. On this loan, that bill runs $10,500 to $16,000 beyond your down payment, depending on your lender, location, and the choices you make on title insurance and points. This article itemizes every line so you can budget before you make an offer.

The scenario modeled

The worked example is a $400,000 US home purchase, conventional loan, 10% down. Closing cost ranges are drawn from published CFPB guidance and typical market rates. The calculator scenario below models the mortgage P&I; the itemized closing cost table uses fixed-fee estimates representative of a mid-cost US market.

The findings

Closing costs split into three categories. Lender fees compensate the lender for underwriting the loan. Third-party fees pay outside vendors - appraisers, title companies, settlement agents, and surveyors. Prepaids are not fees at all; they are deposits and advance payments for ongoing costs (insurance, property taxes, interest) that you would owe anyway.

The table below shows the typical range for each line and a single-point estimate for this $400,000 example. The total estimate of $10,556 represents a mid-cost market with all standard items included. Skipping the optional owner's title insurance saves $950. A market that does not require a survey saves another $500.

Prepaid interest depends on your closing date. Lenders collect interest from closing day through the last day of that month (after that, your first full payment covers the next month). Closing on the 1st costs roughly a full month of interest - $1,924 on this loan. Closing on the 25th costs about $962 (6 days). Closing near month-end minimizes this line, though it does not change total interest paid over the life of the loan.

FHA loan note

FHA loans require a 1.75% upfront mortgage insurance premium (UFMIP). On a $400,000 purchase with 3.5% down, the base loan is $386,000 and UFMIP adds $6,755 - but that amount is rolled into the loan balance, not paid in cash at closing. FHA closing costs for lender fees, title, and prepaids are similar to conventional. The practical effect is a higher starting balance ($392,755 vs $360,000) and therefore more total interest over the life of the loan.

How to reduce closing costs

Two options can lower your cash at closing. Seller concessions: the seller agrees to credit a portion of closing costs at the table. On a conventional loan with less than 10% down, seller concessions are capped at 3% of the purchase price ($12,000 on $400k). Lender credits: you accept a higher interest rate in exchange for a credit applied to fees. A 0.25% rate increase on this loan raises your payment by about $59/month but can offset $2,000 to $4,000 in upfront fees depending on the lender's pricing.

Neither method eliminates cost - seller concessions often come with a negotiated purchase price that offsets them, and lender credits front-load interest into the rate. They are tools for managing timing and cash flow, not total-cost reduction.

US context

The CFPB's mortgage closing disclosure rules require lenders to provide a Loan Estimate within 3 business days of receiving a complete application and a Closing Disclosure at least 3 business days before consummation. Lender origination charges on the Loan Estimate cannot increase between that document and the final Closing Disclosure. Certain third-party fees (appraisal, title services you did not shop for separately) may increase by up to 10% in aggregate. Services you shop for independently have no cap, which is why comparing appraisers and title companies matters.

Source: Consumer Financial Protection Bureau, "What is a Closing Disclosure?" accessed June 2026. URL: https://www.consumerfinance.gov/owning-a-home/closing-disclosure/

When this applies - and when it doesn't

This applies when: You are purchasing a primary residence in the USA with a conventional loan in the $300k-$500k range. The itemized ranges are drawn from mid-cost US markets. High-cost coastal markets (New York, California, Hawaii) run toward the top of each range or above it. Rural markets and states with no state-level transfer tax (no transfer tax line is included here) often come in below the midpoint.

The numbers shift if: You are in a state with transfer taxes. Several states - including New York, Maryland, and Delaware - charge real estate transfer taxes on the buyer ranging from 0.5% to 2% of the purchase price. On a $400,000 purchase in Maryland (0.5%), that adds $2,000. New York City buyers face a mansion tax of 1% on purchases at $1,000,000 or above.

This does not apply if: You are refinancing rather than purchasing. A refinance has no origination inspection, no title search for ownership transfer, and no property tax escrow setup - so closing costs are lower, typically $2,000-$5,000. It also does not apply to VA loans, which prohibit certain buyer fees and have no monthly PMI.