Quick Answer
The cost to transfer ownership of a house typically ranges from 1-6% of the home’s value, with average closing costs around 3-4% for both buyers and sellers. The specific fees depend on your location, purchase price, and other factors like title insurance and taxes. Expect to pay about $6,000-$12,000 in closing costs when buying or selling a $200,000 home.
What are the average closing costs for buyers?
For buyers, closing costs average 3-4% of the home’s sale price. On a $200,000 home, expect to pay about $6,000-$8,000. Typical closing costs for buyers include:
- Lender fees: 1-2% of loan amount for origination, underwriting, etc.
- Appraisal fee: $300-$600
- Credit report fee: $50-$70
- Home inspection fee: $300-$500
- Home insurance premium: Varies based on provider and coverage
- Property tax escrow: 1-2 months of property taxes
- Homeowner’s insurance escrow: 1-2 months of homeowner’s insurance
- Title insurance fee: Varies by state, around $700-$2,000
- Recording fees: Varies by state, $50-$200
Some other costs that may apply include mortgage points, HOA fees, mortgage insurance premiums, survey fees, and more. Your exact closing costs will depend on your purchase price, lender, location, and other specifics of the transaction.
What are the average closing costs for sellers?
For sellers, closing costs are typically 1-6% of the home’s sale price. On a $200,000 home, expect to pay about $2,000-$12,000. Typical closing costs for sellers include:
- Real estate agent commissions: 5-6% of sale price
- Title insurance fee: Varies by state, around $700-$2,000
- Escrow fee: $50-$400
- Recording/deed fees: Varies by state, $50-$200
- Transfer tax: Varies by state and county, usually around 0.5%-2% of sale price
- Any negotiated repairs or credits
Some sellers also choose to pay their buyer’s closing costs as an incentive. And in some states, the seller pays the owner’s title insurance policy for the buyer. Overall closing costs vary significantly based on your specific real estate transaction details.
What are the main fees that make up closing costs?
The primary closing costs for buyers and sellers include:
For buyers:
- Lender origination and underwriting fees
- Appraisal fee
- Credit report fee
- Home inspection fee
- Home insurance premium
- Property tax escrow
- Title insurance fee
- Recording fees
For sellers:
- Real estate agent commissions
- Title insurance fee
- Escrow fee
- Recording/deed fees
- Transfer tax
These fees make up the bulk of closing costs for most real estate transactions. The specific totals will vary by property, location, and market conditions.
How much are closing costs for a $200,000 house?
For a $200,000 home, typical closing costs range from about $6,000-$12,000 total.
Here are estimated closing costs for buyers and sellers of a $200,000 house:
Typical buyer closing costs:
- Lender origination fee: $2,000
- Appraisal fee: $400
- Credit report fee: $60
- Home inspection: $400
- Home insurance premium: $800
- Property tax escrow: $2,000
- Title insurance: $1,000
- Recording fees: $100
- Total: $6,760
Typical seller closing costs:
- Agent commission: $12,000
- Title insurance: $1,000
- Escrow fee: $400
- Deed transfer fee: $100
- Transfer tax: $1,000
- Total: $14,500
So for a $200,000 home, expect the buyer to pay about $6,000-$8,000 and the seller to pay about $12,000-$14,500 in closing costs, on average. But costs vary by location and transaction specifics.
What are closing costs as a percentage of home price?
As a percentage of the home price, closing costs typically range from:
- Buyer closing costs: 3-4% of purchase price
- Seller closing costs: 1-6% of sale price
So for example, on a $350,000 home:
- Buyer closing costs: Around $10,500-$14,000 (3-4% of $350,000)
- Seller closing costs: Around $3,500-$21,000 (1-6% of $350,000)
For a $500,000 home:
- Buyer closing costs: Around $15,000-$20,000 (3-4% of $500,000)
- Seller closing costs: Around $5,000-$30,000 (1-6% of $500,000)
And for a $750,000 home:
- Buyer closing costs: Around $22,500-$30,000 (3-4% of $750,000)
- Seller closing costs: Around $7,500-$45,000 (1-6% of $750,000)
So while closing costs vary for each transaction, a general rule of thumb is 3-4% for buyers and 1-6% for sellers based on the home’s sale price.
What are the closing costs for buying a house with FHA loan?
For buyers using an FHA loan, closing costs are typically a bit higher compared to conventional loans. Here are typical FHA closing costs:
- Upfront mortgage insurance premium: 1.75% of loan amount
- Appraisal fee: $400-$600
- Credit report fee: $50-$70
- Home inspection: $300-$500
- Title insurance fee: $700-$2,000
- Recording fees: $50-$200
- Origination fee: 1% of loan amount
In addition, FHA buyers must pay the first year’s homeowner’s insurance premium and two months of property taxes into escrow.
So on a $200,000 home with 3.5% down FHA loan for $194,000, total closing costs would be around $7,000-$9,000. The upfront mortgage insurance premium of 1.75% alone would equal $3,395 on a $194,000 loan.
How can I estimate my closing costs?
There are a few ways to estimate your closing costs:
- General rule of thumb: Estimate 3-4% of home price for buyers, 1-6% for sellers
- Online calculators: Input your specific transaction details for an estimate
- Ask your lender/real estate agent: They can provide estimates based on your specifics
- Review recent closing cost data: Check public records to see costs for comparable sales
- Closing cost estimator tools: Some title companies and real estate sites offer tools
The most accurate way is to work with your lender and real estate agent to review costs specific to your transaction, including title fees, transfer taxes, commissions, and more. Online calculators can also help generate an estimate based on your home price, loan type, and location.
How can I reduce my closing costs?
Some tips to reduce closing costs:
- Shop around for the best rates on title insurance, home insurance, and mortgage rates
- Negotiate seller contributions or lender credits
- Pay discount points for a lower mortgage interest rate
- See if your state/county offers first-time homebuyer programs
- Reduce loan amount by increasing down payment
- Opt for a lower-cost loan like FHA or VA loans
- Don’t buy down your interest rate
- See if your employer offers down payment assistance
Saving on title insurance, shopping lenders, minimizing loan fees, negotiating with the seller, and boosting your down payment can all potentially lower your closing costs by hundreds or thousands of dollars.
Does the seller pay any closing costs?
In most cases, the seller pays certain closing costs including:
- Broker commission fees (5-6% of sale price)
- State/local transfer taxes
- Deed stamps and fees
- Their portion of the title insurance policy premium
- Any negotiated credits or repairs
Often the seller will also agree to pay a portion of the buyer’s closing costs or provide a credit. Some typical seller-paid closing costs for the buyer include:
- Owner’s title insurance premium
- Loan origination or discount points
- Home warranty plan
- Home inspection fees
- Appraisal fees
- Buyer attorney fees
Sellers end up paying about 1-6% of the home’s sale price in closing costs through commissions, title insurance, transfer taxes, and credits given to buyers.
Are closing costs tax deductible?
Home buyers may be able to deduct certain closing costs from their federal income taxes, including:
- Points paid on the mortgage
- Mortgage interest
- Real estate taxes
- Homeowner’s insurance premiums
- Loan origination fees
- VA funding fee (for VA loans)
- FHA mortgage insurance premiums
These deductions are itemized on Schedule A when you file your taxes. You’ll receive forms at closing and from lenders showing qualified deductible costs. Sellers can also deduct things like commission fees and other costs related to selling the home.
Can closing costs be included in the loan amount?
Yes, most types of loans allow you to finance closing costs and add them to the mortgage loan amount. This avoids having to pay costs upfront. Some options include:
- Piggyback Loan: Second simultaneous loan to cover down payment and closing costs.
- 80/10/10 Loan: 80% first mortgage, 10% second mortgage for down payment help, 10% down payment.
- 80/15/5 Loan: 80% first mortgage, 15% second mortgage for closing costs, 5% down payment.
- All-in-one Loan: Single mortgage financing down payment and closing costs.
The advantage is not having to pay thousands in upfront costs. The disadvantage is higher monthly payments, more interest, and potentially higher mortgage insurance rates.
How much are closing costs for a $500,000 house?
For a $500,000 house, typical closing costs range from:
- Buyer closing costs: Around $15,000-$20,000 (3-4% of $500,000)
- Seller closing costs: Around $5,000-$30,000 (1-6% of $500,000)
Here is a breakdown of estimated closing costs for buyers and sellers of a $500,000 home:
Typical buyer closing costs on $500,000 home:
- Lender origination fee: $3,500
- Appraisal fee: $550
- Credit report fee: $75
- Home inspection: $450
- Home insurance premium: $2,000
- Property tax escrow: $5,000
- Title fees: $2,500
- Recording fees: $150
- Total: $14,225
Typical seller closing costs on $500,000 home:
- Agent commission: $30,000
- Title insurance: $2,500
- Escrow fee: $500
- Deed transfer fee: $200
- Transfer tax: $2,500
- Total: $35,700
So for a $500,000 home, total closing costs are typically $14,000-$20,000 for buyers and $30,000-$35,000 for sellers. But costs vary by location.
How are closing costs determined?
Closing costs are determined by several factors:
- Purchase price – Impacts taxes, insurance, commissions, title fees
- Down payment – More down = lower loan amount and potentially lower lender fees
- Loan type and term – FHA or VA loans often have higher upfront mortgage insurance
- Interest rate – Discounted rates require points paid upfront
- Location – Transfer taxes and title fees vary by state/county
- Credits – Seller credits can offset buyer costs
Your real estate agent and lender will calculate closing costs based on specific property, loan, taxes, title commitments, and more. Shop around among multiple lenders to help minimize loan fees and interest charges.
Conclusion
Closing costs typically range from 3-4% of the purchase price for buyers and 1-6% for sellers. On a $200,000 home, buyers can expect to pay around $6,000-$8,000 and sellers $12,000-$14,500 on average. Lender fees, title insurance, transfer taxes, commissions, and escrow accounts make up the bulk of costs. Shop around among lenders and negotiate with sellers to reduce expenses. Closing costs can also be deducted from taxes in many cases.