How Much Does It Cost to Close on a House?

Travelers umbrella logo.
By Travelers
3 minutes
Couple at desk looking at closing cost papers.

You’ve found the right house, are negotiating a purchase price and locking in an interest rate for your mortgage. But there’s still another variable ahead on your road to home ownership. The cost to close should be part of your calculation as you figure how much you’ll need before you get the keys to your new home.

Home closing costs are costs paid to third parties, from your realtor to your real estate attorney, to help finalize the sale of your home. They can range between 2% to 7% of the home’s purchase price.1 So on a $300,000 home, your closing costs should be between $6,000 and $21,000.

Room to negotiate

Remember that while many of the costs are automatically the responsibility of the buyer or seller, some are negotiable when you are determining the purchase price of the home. Others can be negotiated with your mortgage lender. The lender is required to give you a Loan Estimate and Closing Disclosure Form within three business days of receiving your loan application. This will explain the loan terms and associated costs, and can help avoid surprises on closing day.2

Your exact home closing costs will vary depending on a number of factors, including the fees your city or town charges and any types of additional testing you might choose to do in addition to what is included in the house inspection.3 For example, you might choose to test the water quality for the presence of lead paint or for radon, if these are not standard in a house inspection performed in your area. You may want to check with your town or city’s clerk to determine if there will be local fees required.

Man sitting in chair at home.

Travelers wants to help you protect the things that matter to you. We offer a wide breadth of products so you can be covered at home and on the road.

 

Here are a number of typical expenses, as well as a link to an example of a closing costs calculator provided by realtor.com. There are a number of closing cost calculators available on the internet.

Typical closing fees include4:

Expenses related to securing a mortgage

  • A loan origination fee from lenders, who process the payment of your loan.
  • A fee for the underwriter, who evaluates your creditworthiness.
  • An appraisal fee, often required to make sure the home’s value matches the loan value.
  • A flood certification fee, to determine if the house is within a flood plain.
  • A fee for running your credit report.
  • Pre-paid interest, for any interest that will accrue between closing day and the date of your first mortgage payment.
  • Private Mortgage Insurance (PMI), required if you are making a deposit of less than 20%, and you may be required to pay the first month’s installment at closing.
  • Points, which you can choose to pay the lender to lower your overall mortgage rate.

Expenses related to the sale itself

  • A title or escrow fee, paid to the independent title company or attorney that conducts the closing.
  • A title search fee, to uncover any liens on the property.
  • A notary fee.
  • Owner’s title insurance.
  • Attorney fees.

Home-related expenses

  • A home inspection fee, to check for potential problems with the home.
  • A pest inspection, required by some states and for government loans, to test for termites or dry rot.
  • Other inspections, from measuring radon levels to testing well water, may be recommended for your area and can add additional costs.

Municipal expenses

  • Taxes on the money you have borrowed for your home loan.
  • A fee for recording the mortgage.

Other fees include your homeowners insurance premium and property taxes, which some homeowners choose to pay as part of their monthly mortgage payments, or escrow. Depending on what day of the month you close, some property taxes may be due on closing day.

At least three days before closing, federal law requires the lender to give you a closing disclosure detailing your closing costs. Review those numbers carefully to make sure they match your expectations. You should consult with your attorney on any questions you may have. Buying a home is a big investment, but knowing what to expect can help you make sound financial decisions.

Learn more about Travelers homeowners insurance products, or if you’re ready to take the next step, click here to get a quote or find an agent.

Home inspector on a ladder inspecting the roof of a home.

Top stories

Questions to Ask Your Home Inspector

Moving into a newly purchased home can be one of the most stressful and challenging life moments for any homeowner. An important part of the process of purchasing a home is the required home inspection.

Related products & discounts

Protect your home the way it protects you by choosing the property insurance coverage that meets your needs.

This can help protect your home in case of fire, hail, theft and other perils.

A home insurance deductible is the amount of a covered claim that is your responsibility.

More Prepare & Prevent

8 Tips for First-Time Homebuyers

Before you buy your first home, make sure you've done your homework. Get first-time homebuyer tips with this checklist from Travelers.

Couple of new homeowners looking at an empty house.

More Prepare & Prevent

Information You May Need for a Homeowners Insurance Quote

Getting a homeowners quote can take only a few minutes when you have the correct information.

Woman on laptop calling to get a homeowners insurance quote.

More Prepare & Prevent

Things to Consider When Buying a Home: A Step-by-Step Guide

Buying a home can be overwhelming, especially if you haven’t done it before. Our handy checklist will help you learn the steps to take when buying a house.

Man and woman smiling looking at home listing flyer.