How this estimate works
Closing costs are the fees and prepaid items you pay when a home purchase settles. They are often quoted as a few percent of the price, roughly 2% to 5%, but that is a rule of thumb, not a law, and it varies widely by state and loan. This calculator builds the figure up line by line instead, so you can see what drives it.
Two lines are plain formulas:
- Prepaid interest = loan amount × interest rate ÷ 365 × days of interest. The days depend on your closing date within the month.
- Escrow set-up = months collected × (annual property tax ÷ 12 + annual insurance ÷ 12), where annual property tax is price × tax rate. Your lender decides how many months it collects.
The first-year insurance premium is the amount you enter. The remaining lines (lender origination or points, title insurance, transfer taxes, appraisal, credit report, settlement or attorney fees, recording and inspection) are assumptions. We do not use a state table, because transfer taxes and recording fees differ by state and locality and sometimes fall on the seller. Enter the percentages from your own paperwork.
Worked example
Defaults: a $350,000 home, a $280,000 loan at 6.5%, origination 0.5% to 1% of the loan, title insurance 0.5% of the price, no buyer transfer tax, 15 days of prepaid interest, property tax 1.1% a year, insurance $1,200 a year and 2 escrow months.
Origination $1,400 to $2,800 Title insurance $1,750 Fixed fees $1,275 to $3,675 (5 assumption lines) Prepaid interest $748 (280,000 x 6.5% / 365 x 15) Escrow set-up $842 (2 x (350,000 x 1.1% / 12 + 1,200 / 12)) First-year ins. $1,200 Total $7,215 to $11,015 (about 2.1% to 3.1% of the price)
Change any assumption and the range updates. The totals here are test-checked against the calculator code.
Checking the estimate against real paperwork
A lender must send a Loan Estimate within three business days of receiving your application (CFPB). Use it as the source of truth: copy its origination, title and tax figures into the boxes above and the calculator becomes a sanity check rather than a guess. Later in the process you should also receive a Closing Disclosure listing the final numbers; compare it with the Loan Estimate line by line and ask about any increase.
Ways people try to lower the total include comparing Loan Estimates from several lenders, asking the seller for a concession, and choosing a closing date that reduces the days of prepaid interest (your first payment then falls due sooner). Whether any of these is possible depends on your market and lender.
Renting instead of buying?
If you are still deciding whether to buy, our sister site PayCompare has a break-even comparison of renting and buying that includes closing and selling costs: PayCompare rent vs buy calculator.
Frequently asked questions
Who pays closing costs, the buyer or the seller?
Both sides usually have their own costs, and some are negotiable. Which party pays things like transfer taxes differs by state and by contract. A seller concession, where the seller agrees to cover part of the buyer costs, is possible in some deals but not guaranteed.
Are closing costs included in my mortgage?
Usually they are paid in cash at settlement. Some lenders offer to finance them or to trade them for a higher interest rate, which can cost more over the life of the loan. Ask for both versions in writing and compare the total cost.
What is the difference between title insurance and a title search?
A title search reviews public records for liens, disputes or defects on the property. Title insurance is a policy that protects you or your lender if a covered problem turns up after closing.
Why does the calculator give a range instead of one number?
Several fees genuinely vary between lenders and title companies, so a range is more honest than a single figure. Narrow it by replacing the assumptions with the numbers on your Loan Estimate.
Does this include my down payment or moving costs?
No. The range covers closing costs only. Your down payment, moving costs, repairs and any ongoing HOA fees are separate and are not included.