Average Closing Costs for Home Buyers: Updated for 2024

Average closing costs for home buyers in the U.S. typically range from 2% to 5% of the purchase price. For a median-priced home, that would equal $7,200 to $18,000.

But you don't have to guess. When you apply for a mortgage loan, you'll receive a standard document that includes your estimated closing costs.

You'll also receive a second document shortly before you close, which will show the actual amount you have to pay.

Closing Costs in Plain English

The term "closing costs" refers to the various fees, charges, and taxes that are required to (A) originate the mortgage loan and (B) transfer the property from seller to buyer. They are also referred to as settlement costs in some parts of the country.

It takes a lot of different people to facilitate a home purchase. First, there's the mortgage lender, and they might charge several fees to originate and process the loan. But you'll also be served by a home appraiser, a title or escrow company, and even local government officials.

All of these people and organizations charge fees for their services, and these are collectively referred to as closing costs.

The Average Costs for Home Buyers in 2024

On average, home buyers in the United States pay somewhere between 2% and 5% of the purchase price in closing costs. Though your costs could fall outside of that range, depending on the specifics of your transaction.

Here's what those averages would look like at different home-price thresholds:

As you can see, closing costs can add up to a pretty large amount. First-time home buyers, in particular, are often caught off guard by these expenses.

Key point: Your lender will check your bank statements to see that you have enough "cash to close." So you should start saving money as soon as possible, to meet that goal.

Some of the Services You Might Pay For

Closing costs can include a wide variety of individual service charges, fees and taxes. And this can vary from one home buyer to the next, for a number of reasons.

Here are some of the costs you might encounter:

• Loan origination fee:  Lenders charge these fees for processing the mortgage application. It typically ranges from 0.5% to 1% of the loan amount.
• Title fees:  This covers the title search used to make sure there aren't any liens or other claims against the property. (Title  insurance , on the other hand, protects both the lender and the buyer from future claims.)
• Survey fee:  Depending on your state, you might need to have a survey conducted to verify the property's boundaries. The cost usually ranges from $300 to $600.
• Attorney fees:  In some states, an attorney is required to conduct the closing process. A standard attorney fee for closing services can range from $500 to $1,500.
• Prepaid interest:  At closing, home buyers sometimes have to pay for interest that accrues on the mortgage between the closing date and the first mortgage payment. The amount will depend on the loan amount and interest rate.
• Property taxes:  As a home buyer, you might have to reimburse the seller for any prepaid property taxes. You might also be required to pay a few months of property taxes upfront. But this can vary, so ask your escrow or closing agent for details.
• Homeowners insurance:  The first year's homeowners insurance premium often has to be paid in advance, as part of the closing process. This might cost anywhere from $1,000 to $2,000, or more, depending on the coverage you purchase.
• Escrow fees:  These are fees paid to the escrow company for handling the closing process. This usually ranges from $300 to $700.
• Recording fees:  Your local government will record the new property deed that shows you as the new owner. They might charge a fee for this service, usually $50 ranging from to $150.
• Transfer taxes:  These taxes are imposed by the state, county, or municipal government officials for transferring the property title. They vary by location but can add up to a significant cost.
• Homeowners association fees:  If the home you are buying has an HOA, you might have to pay prorated HOA fees and transfer fees at closing. The cost can vary depending on the community.
• Courier fees:  This is a minor fee that covers the transporting of documents prior to closing. It usually ranges from around $25 to $50.

Reading Your Loan Estimate and Closing Disclosure

When you apply for a mortgage loan, you'll receive an estimate of your closing costs that you can use for planning purposes. You'll also receive a finalized number a few days before you are scheduled to close. So there's really no guesswork here.

If you're using a mortgage loan to buy a home, keep an eye out for these documents:

The Loan Estimate (LE) is a standardized three-page form you should receive from a lender within three business days after applying for a mortgage. It provides an estimate of the loan terms, interest rate, monthly payment, and closing costs associated with the mortgage.

The Closing Disclosure (CD) is a standardized five-page document required by the government. It provides a final breakdown of your mortgage loan details, including the interest rate, loan amount, monthly payment, and a detailed listing of all closing costs you'll be responsible for on closing day.

Both of these documents are important, but for different reasons.

• The LE helps you compare loan offers from different lenders and understand the potential costs of the loan before you commit to it.
• The CD shows you the actual amount you need to bring to the closing, and helps you ensure that the terms match what you've agreed to.

The Consumer Financial Protection Bureau offers the following advice:

"Compare your Closing Disclosure with your most recent Loan Estimate to ensure the terms and costs are what you expected … It's possible some of your costs may change. If you find an error, contact your lender or settlement agent immediately to have it corrected."

7 Things to Take Away From This Guide

Closing costs can be a confusing subject, and we've thrown a lot of information at you all at once. So let's wrap up with a summary of the most important points.

Here are seven things to take away from this buyer's guide:

1. Closing costs are fees, charges and taxes paid when buying a home.
2. They are paid in addition to the down payment.
3. Average closing costs range from 2% to 5% of the purchase price.
4. You'll receive an estimate of your in advance (via the Loan Estimate).
5. You'll receive a finalized list a few days before you actually close.
6. Your lender will expect to see this money in the bank up front.
7. The best strategy is to start saving money as soon as possible.

Disclaimers: We created this guide to serve a general audience. So it might not apply to all home buying and mortgage situations. The best way to compare costs is by applying for a home loan through multiple lenders, using the Loan Estimate for comparison purposes.