Then, three days before closing, a document lands in your inbox with a number on it that makes your stomach drop: closing costs, often running 2% to 6% of the purchase price.
On a $400,000 home, that's roughly $8,000 to $24,000 due at signing — on top of your down payment.
Unlike the down payment, which you've been saving for and staring at for months, closing costs tend to sneak up on buyers because they're a bundle of fees from a half-dozen different parties, all due on the same day.
A big chunk goes to your lender: an origination fee for processing the loan, an application fee, and often a rate lock fee.
Then there's third-party stuff — an appraisal to confirm the home's value (typically $300 to $600), a home inspection if you opt for one ($300 to $500), title search and title insurance (which protects the lender if someone later claims ownership of the property), and a credit report fee.
You'll also prepay property taxes and homeowners insurance into an escrow account, plus daily interest on the mortgage from your closing date to the end of the month.
The single biggest variable is title insurance, which varies wildly by state.
In some states, the seller pays for the owner's policy; in others, the buyer picks up the tab.
In states like Texas, title costs can run well over $2,000.
In parts of the Midwest, they're a fraction of that.
Your real estate agent should know the local custom, but it pays to ask directly rather than assume.
There's also a common misunderstanding worth clearing up: closing costs aren't one fixed fee, and they're often negotiable.
Sellers frequently agree to cover a percentage of them as part of the deal — especially in a slower market where buyers have leverage.
Lenders can also waive or reduce origination fees if you shop around and compare Loan Estimates from at least three lenders.
That's not a guaranteed savings, but the difference between offers is often thousands of dollars.
Three days before closing, you'll get a Closing Disclosure that must legally match the Loan Estimate you received when you applied.
If a fee jumped, you're allowed to question it, and in many cases the lender has to explain why.
Don't treat that document like junk mail.
First-time buyers can sometimes lower the hit through state and local assistance programs, many of which offer grants or low-interest second loans specifically to cover closing costs.
These programs vary by location and have income limits, so it's worth a quick search of your state's housing finance agency.
One habit that saves real money: don't drain your savings to the last dollar at closing.
Moving, repairs, and the first month of utilities all land right after you get the keys, and a surprise furnace replacement in February doesn't care that you just spent your last $9,000 on title insurance.
The takeaway is simple: closing costs are not a rounding error, they're a second down payment that most buyers don't see coming until it's too late.
Ask for the Loan Estimate early, compare at least three lenders, and negotiate seller credits while you still have leverage.
Final Thoughts
A few hours of paperwork now can keep thousands of dollars in your pocket.