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Closing Cost Calculator

Estimate the closing costs on a US home purchase and the total cash you need at the table, separating one-off fees from prepaid escrow that is not really a cost.

How to use this calculator

  1. 1Enter the purchase price and your down payment percentage.
  2. 2Set lender fees as a percentage of the loan, and add discount points separately if you are buying the rate down.
  3. 3Enter third-party fees and your local transfer tax rate — the latter varies enormously, so check your county.
  4. 4Compare the true closing costs against the cash to close: the gap is prepaid escrow, which is not really a cost.

How the calculation works

Cash to close = down payment + lender fees + points + third-party fees + transfer taxes + prepaid escrow − seller credits
true closing costs
The fees and taxes the transaction itself creates — typically 2–5% of the price
prepaid escrow
Property tax and insurance collected in advance. Your money, held for your bills

Prepaid escrow is separated from true closing costs deliberately. It is the largest reason a "cash to close" figure looks alarming — but it is money you would have spent on tax and insurance anyway, simply collected sooner.

Transfer taxes are the widest variable in the whole calculation. Some states charge nothing; others charge more than 2% of the price, which on a $400,000 house is the difference between zero and $8,000.

Seller credits cannot exceed your actual closing costs, and loan programmes cap them as a percentage of the price. Negotiating a credit larger than your costs simply wastes the excess.

Worked example

A $400,000 purchase with 20% down

  1. 1.Down payment: $80,000, leaving a $320,000 loan.
  2. 2.Lender fees at 1% of the loan: $3,200. Third-party fees: $3,500. Transfer tax at 0.5%: $2,000.
  3. 3.True closing costs total $8,700 — about 2.2% of the price.
  4. 4.Prepaid escrow adds 3 months of the $583 monthly tax and insurance: $1,750.

Result: $90,450 at closing, of which $8,700 is genuine cost

The same purchase with a seller credit

  1. 1.The costs are unchanged at $10,450 including prepaid escrow.
  2. 2.A $6,000 seller credit reduces what you bring to the table.
  3. 3.Cash to close falls to $84,450.
  4. 4.The credit cannot exceed your actual costs — anything above $10,450 would be wasted.

Result: $84,450 — the credit saves $6,000 of cash

What is actually in a closing cost figure

Closing costs are the fees and taxes triggered by the transaction itself, and they typically run 2% to 5% of the purchase price. They fall into three groups worth telling apart, because only some are negotiable.

Lender fees — origination, underwriting, processing — are charged by whoever writes the loan, and they vary between lenders for identical loans. These are the most negotiable item on the sheet, and shopping two or three lenders routinely saves four figures. Discount points sit here too, but they are optional: money paid to buy a lower rate.

Third-party fees cover appraisal, title search, title insurance, survey, attorney and recording. Some are genuinely fixed; title insurance in particular varies more than people expect and can often be shopped. Transfer taxes are set by state and county and are not negotiable at all — they simply differ enormously by location.

Prepaid escrow is not a cost

The single most confusing line on a closing disclosure is prepaid escrow, and it is the main reason the "cash to close" number looks worse than the transaction really is.

Lenders collect several months of property tax and homeowner's insurance in advance, to seed the escrow account that will pay those bills. It is your money, held on your behalf, for expenses you would have paid regardless of how you financed the house. It inflates the cash needed on the day without making the purchase more expensive.

This calculator separates it for exactly that reason. The true closing cost figure is what the transaction cost you; the cash to close is what you must physically bring. Confusing the two makes it hard to compare lenders — a lender collecting six months of escrow instead of three looks more expensive on cash to close while being identical on actual fees.

Where the savings actually are

Three things move the number meaningfully, and they are not the ones buyers usually focus on.

  • Shop lenders, not rates alone — the Loan Estimate is standardised precisely so competing offers can be compared line by line. Lender fees on identical loans differ by thousands, and the headline rate hides that.
  • Ask for a seller credit — in a slower market sellers frequently agree to pay some closing costs. It is capped as a percentage of the price by loan programme, and cannot exceed your actual costs — a credit larger than the costs is simply lost, so negotiate the number deliberately.
  • Check the transfer tax before choosing a location — it is the widest variable of all. On a $400,000 purchase the difference between a state charging nothing and one charging 2% is $8,000 — larger than every lender fee combined, and entirely outside your control once the address is chosen.

What this assumes, and where it stops

Assumptions

  • A US residential purchase with a conventional mortgage.
  • Lender fees are expressed as a percentage of the loan amount.
  • Prepaid escrow is the stated number of months of property tax and insurance.
  • Seller credits apply against closing costs rather than reducing the purchase price.

Limitations

  • Transfer taxes vary by state, county and sometimes city — the default here is illustrative and must be checked locally.
  • Mortgage insurance premiums, which apply below 20% down, are not included and add to both closing and monthly costs.
  • Prepaid interest from closing to the first payment date is excluded and depends on the closing date.
  • Loan programme caps on seller credits are not enforced by the calculation.

Common questions

How much are closing costs on a house?

Typically 2% to 5% of the purchase price — on a $400,000 home, roughly $8,000 to $20,000. The widest variable is transfer tax, which some states do not charge at all and others charge over 2%. Lender fees are the most negotiable component, and shopping two or three lenders on the standardised Loan Estimate routinely saves four figures on an identical loan.

What is the difference between closing costs and cash to close?

Closing costs are the fees and taxes the transaction creates. Cash to close is everything you must bring on the day — the down payment, the closing costs, and prepaid escrow. That last item is several months of property tax and insurance collected in advance, which is your own money held for bills you would have paid anyway. It inflates cash to close without being a real cost.

Can I get the seller to pay my closing costs?

Often, particularly in a slower market. A seller credit reduces the cash you bring, and loan programmes cap it as a percentage of the purchase price. One important limit: a credit cannot exceed your actual closing costs, so negotiating more than you need simply wastes the excess. Work out your costs first, then ask for a figure that fits them.

Can closing costs be rolled into the loan?

On a purchase, generally not — they must be paid at closing, though a seller credit or a lender credit in exchange for a higher rate can cover them. On a refinance it is routine to roll them into the new balance. Either way it is not free: you either pay a higher rate or pay interest on the costs for the life of the loan.

Sources

Formula and content last reviewed on .

Results are estimates for information only, not professional advice.

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