You've saved for a down payment, gotten pre-approved, and found a house you love.
Then the lender hands over a Loan Estimate, and a number near the bottom stops you cold.
Closing costs are the fees stacked on top of your down payment, and for most buyers they run between 2% and 6% of the purchase price.
On a $400,000 home, that's $8,000 to $24,000 due on closing day — money that doesn't build a single dollar of equity.
Here's what's actually inside that pile, and where you have room to push back.
The biggest line items usually come from your lender.
You'll see an origination fee, an application fee, and a charge for pulling your credit report.
There's also prepaid interest, which covers the days between closing and your first mortgage payment.
Discount points are optional — each point costs 1% of the loan and lowers your rate — so treat them as a math problem, not a default.
Title services are the second-biggest bucket.
Title search, title insurance, and escrow fees all show up here.
You generally can't skip lender's title insurance, but you can shop around for the provider.
Under federal rules, the lender has to let you compare quotes on certain services, and that alone can shave hundreds off the total.
Depending on where you live, you may owe state and local transfer taxes, plus recording fees to file the deed.
Your lender may also require you to fund an escrow account upfront to cover property taxes and homeowners insurance.
That money isn't a fee — it's yours, sitting in an account to pay future bills — but you still need it in cash at the table.
A few things catch first-time buyers off guard.
If you're putting less than 20% down, expect private mortgage insurance, which is paid monthly rather than at closing but still raises your payment.
If you're buying in a homeowners association, there may be transfer fees, disclosure fees, and a couple months of dues collected upfront.
And if you close late in the month, your prepaid interest will be smaller — a small piece of timing luck worth knowing.
Within three business days of applying, your lender must send a Loan Estimate.
Compare it against the Closing Disclosure you receive at least three business days before closing.
Fees can change for legitimate reasons, but some — like origination charges on a locked loan — can't move without a valid trigger.
You can also ask the seller to cover some closing costs as part of your offer.
In a slower market, that request lands more often than it did two years ago.
Every dollar they absorb is a dollar you keep in savings after move-in day.
The takeaway: closing costs are a known, negotiable expense, not a surprise tax on being a grown-up.
Budget 3% as a working number, shop the title and lender fees you're allowed to shop, and read the Closing Disclosure line by line before you sign.
Final Thoughts
Ten minutes of questions can be worth four figures — and that's a rare deal in real estate.