Who Pays Which Closing Costs, Between the Buyer and Seller?
Question: Who typically pays for which closing costs during a real estate transaction, between the home buyer and seller?
Answer: Buyers usually cover costs related to their mortgage (like loan origination and processing fees), while sellers typically pay expenses associated with transferring the property title (such as transfer taxes). But it's all negotiable!
Closing Costs Add Up to Thousands of Dollars
First-time buyers who are unfamiliar with the home buying process are often shocked by the amount of closing costs they must pay.
The various fees, charges, and taxes can easily add up to thousands of dollars. And this goes above and beyond the amount you have to pay for a down payment.
In the U.S., the average closing costs for home buyers typically range from 2% to 5% of the purchase price. For a median-priced home in 2025 ($355,000), that would range from $7,100 to $17,750 in total closing costs, on average.
Given the size of this collective and accumulated expense, home buyers naturally want to know who pays which costs—and if it's negotiable. So let's talk about that next.
What Do Closing Costs Include?
When you buy a house, you will encounter a wide variety of mortgage-related fees. Basically, anytime someone performs some kind of administrative task, there will be a fee associated with it.
The lender will charge a fee when they "originate" the loan, which is required just to get your foot in the door. They will also charge fees for various stages of the mortgage underwriting and approval process.
You can see a more complete list of closing costs on this page.
Home buyers almost always have closing costs to pay (with a few exceptions). But the seller has certain costs to pay as well. Sellers are usually responsible for the real estate agent's commission (if applicable), title transfer fees, prorated taxes and utilities.
Who Pays for Which Ones?
Closing cost customs and practices can vary from one part of the U.S. to another. Even within the same state, the "who pays what" breakdown can vary for different regions.
Even so, there are certain costs that home buyers usually pay for, and certain ones that sellers typically cover. The table below provides a basic overview.
| Home Buyer | Home Seller |
|---|---|
| Loan origination fees | Real estate agent commission (both agents) |
| Appraisal fee | Title insurance (owner's policy) |
| Title search fee | Transfer taxes |
| Title insurance (lender's policy) | HOA transfer fees (if applicable) |
| Credit report fee | Outstanding property taxes |
| Prepaid property taxes and homeowners insurance | Seller-paid buyer closing cost contributions (if negotiated) |
| Recording fees | Mortgage payoff fees (if applicable) |
| Escrow or settlement fees (shared in some regions) | Escrow or settlement fees (shared in some regions) |
Note: Most items in the above table are negotiable. In some cases, a seller will agree to make a contribution toward the buyer's closing costs.
Can the Buyer Ask the Seller to Pay These Costs?
Both parties — buyers and sellers — usually have certain costs they must pay during a home purchase. Local customs, legal requirements, and common sense often dictate who pays which costs.
However, closing costs are often just as negotiable as other aspects of the deal, such as the sale price and escrow period.
So yes, the buyer can ask the seller to pay for some of their closing costs. This is referred to as a seller concession. You might also encounter the term "seller contribution." These terms are interchangeable.
The question is: How will this affect the chances of your offer being accepted?
This is where you really have to know your real estate market.
- If you're in a seller's market, where homeowners typically receive multiple offers from competing buyers, requesting a seller concession might be a bad idea.
- If you're in a buyer's market, where homes tend to stay on the market longer, the seller might be more willing to offer a concession to close the deal.
Think about it from the seller's perspective. If they receive two offers for the same amount -- and only one buyer is asking them to pay their closing costs — which offer do you think they'll accept?
The seller will net more money by going with the offer that doesn't ask them to pay the buyer's closing costs. So it becomes an obvious choice.
The takeaway for buyers: Before asking a seller to pay some of your closing costs, consider the type of housing market you are in. In a hot market, asking too much from a seller could cause that home to slip through your fingers.
Ask Your Agent Who Typically Pays What
Your real estate agent can tell you who typically pays which closing costs in your area. So you should seek their advice as well.
This is one of the benefits of having an experienced agent on your side. If your agent has asked for seller concessions in the past, he or she can tell you what kind of responses they've received.
For example, if your real estate agent tells you that sellers are almost always willing to contribute 3% to the buyer's costs, then it might be a good idea to ask for it. On the flip side, if your agent says that most sellers are turning their noses up at such requests, you might want to leave it out of your offer.
Allowances Vary, Based on Loan Type
When trying to figure out who pays closing costs, you must also consider the type of loan you are using. Different mortgage programs have different stipulations about who can pay for what.
FHA Loans
FHA-insured mortgage loans generally limit a seller's concession to 6% of the purchase price. This means the seller's contribution to the buyer's closing costs cannot exceed 6% of the sale amount in most cases.
Here's what HUD Handbook 4000.1 says about the seller paying the buyer's closing costs on FHA loans:
"Interested Parties [including the seller] may contribute up to 6 percent of the sales price toward the Borrower’s origination fees, other closing costs and discount points. The 6 percent limit also includes: Interested Party payment for permanent and temporary interest rate buydowns, and other payment supplements; payments of mortgage interest for fixed rate Mortgages; Mortgage Payment protection insurance; and payment of the UFMIP."
So, who pays which closing costs when an FHA loan is used? It's negotiable! The buyer and seller can each pay their respective costs, or the seller can contribute a portion (up to 6%) toward the home buyer's costs.
VA Loans
For a VA loan, the seller is generally allowed to cover the buyer's closing costs up to 4% of the sale price. VA loans also have the benefit of no down payment for the buyer.
This combination is commonly referred to as the VA "no-no" mortgage, which means the buyer pays no closing costs and no down payment.
But here again, it's all negotiable. The seller doesn't have to make such a contribution — they're simply allowed to do so. That's a key distinction.
Conventional Loans
As for conventional loans (that are not backed by the government), you will have to ask your mortgage lender who can pay for what regarding closing costs. Depending on where you live and which lender you use, there may be certain restrictions on the amount sellers are allowed to contribute.
Some lenders will allow the seller to pay 6% of the sale amount toward the buyer's closing costs. In other states, or with a different lender, the limit might be set at 3% for seller concessions. Or there might be no limit. It varies.
Ask Your Lender in Advance
If you're concerned about who pays closing costs, or if you feel you cannot afford them, be sure to ask about it when you apply for the loan. It will prevent any unpleasant surprises down the road.
The lender might tell you they have no limitations on what the seller can contribute to your closing costs, and that it depends on what you negotiate during the offer process. Or they might tell you that your loan program has certain limitations on seller concessions.
Find out in advance, so you can plan accordingly.
And keep in mind there is no guarantee that a seller is going to pay your closing costs. Even if your loan program allows for such concessions, the homeowner might still turn you down. That's why you want to consider local market conditions before making such a request.
