Closing costs: the 2–5% surprise no one budgets for
The line items on a Loan Estimate, and which ones you can actually shop.
5 min read · Updated 2026-07-04
What's in the number
Closing costs on a purchase typically run 2–5% of the loan amount and include lender fees (origination, underwriting), third-party fees (appraisal, title insurance, credit report), prepaid items (property tax escrow, homeowners insurance, prepaid interest) and government recording fees.
What you can shop
Federal law requires lenders to give you a Loan Estimate within three days of applying and lists which services you can shop for separately — usually title insurance, title search, and settlement services. Shopping title alone can save $500–$1,500 in most states.
Seller concessions
In slower markets, sellers will often agree to pay a portion of your closing costs (typically capped at 3–6% depending on loan type). Bake this into the offer conversation, not the closing conversation.
Key takeaways
- Budget 2–5% of loan amount for closing costs.
- Title services are usually shoppable — do it.
- In buyer's markets, ask the seller to pay part of closing.
Keep reading
Educational content only. Not individualized financial, tax, or legal advice.