How much are closing costs when buying a home, and what do they include?

Know what closing costs cover

Closing costs are expenses paid to arrange a mortgage and complete the transfer of property. According to the CFPB, they often total roughly 2% to 5% of the purchase price, excluding the down payment, although actual costs vary. On a $300,000 home, that broad planning range would be approximately $6,000 to $15,000 before accounting for the particular transaction. Common charges include lender fees, appraisal, title search and insurance, settlement services, recording fees, and government charges. Some buyers also pay prepaid insurance or taxes and make initial deposits into an escrow account. These are different from the amount paid toward the home’s purchase price.

Understand which costs depend on the property

Taxes, insurance, association fees, and local transaction practices can significantly affect the final amount. In Pennsylvania, state and local realty transfer taxes also apply, but the purchase agreement and applicable rules determine how these expenses are allocated between buyer and seller. The CFPB recommends reviewing the Loan Estimate to understand expected charges and comparing offers from different lenders. Some settlement services can also be shopped for separately. Be cautious with advertisements promising ‘no closing costs,’ because the expense may be reflected in a higher rate or other loan terms.

Plan for your cash needed at closing

Your final cash requirement may include the down payment, closing costs, and prepaids, reduced by deposits already paid and applicable credits. The Closing Disclosure shows the final figures for covered mortgages. Review it carefully and ask your lender to explain meaningful changes from your earlier Loan Estimate. For Pittsburgh-area buyers, start with a conservative estimate, then replace assumptions with lender and settlement figures as your plans become specific. Keep additional savings for moving, repairs, and unexpected expenses. A purchase is more manageable when the funds required at closing are understood before you make an offer.

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Sources

Consumer Financial Protection Bureau: Figure Out How Much You Want to Spend; Loan Estimate Explainer; Closing Disclosure Explainer

*Closing costs and tax allocation depend on the loan, agreement, and jurisdiction. Verify your figures with the lender and settlement professional. Includes AI-generated content.