Real Estate Closing Costs – Detailed Breakdown in 2025

You found your dream home, made the offer, and now you’re counting down the days to move in - but have you been made aware of the final hurdle?

Closing costs are often overshadowed by the more attention-grabbing down payment, but they can still have a significant impact on your budget. They can vary widely depending on the type of transaction and location, however, they typically include a range of different fees related to the loan, property and other services. 

As you prepare for closing, it is important to understand all the fees involved to avoid an unexpected financial strain. We’ll break down all the typical closing costs you can encounter in 2025, giving you the information you need to plan ahead.

Here’s a table with the most common closing costs you can encounter when buying a home.

Common Real Estate Closing Costs Breakdown

Source: Investopedia

What are Real Estate Closing Costs?

Real estate closing costs are the fees and expenses involved in finalizing a property transaction. These cover essential services such as appraisals, inspections, loan origination, and title searches. 

They ensure that all legal, financial, and administrative details are properly handled before ownership is transferred and the deal is wrapped up. Closing costs are typically covered by both buyer and seller. Sellers usually have their closing costs taken from the sale money, while buyers typically pay theirs out of pocket. Also, there are shared closing costs which, like HOA (Homeowners Association) fees are typically divided between the seller and the buyer.

What Do Closing Costs Include?

As shown in the table above, real estate closing costs are loan-related costs, property-related costs, insurance and escrow costs as well as taxes and other costs. These costs are essential when it comes to finalizing property transactions and cover services like appraisals, attorney fees, closing costs and other. 

Some of these fees can be negotiated with the seller while others are standard and required by local governments or lenders. It is important to understand these costs to be able to plan and budget for the transaction appropriately.

Who Pays Real Estate Closing Costs?

Closing costs are covered by both sellers and buyers, however, sellers typically pay more. Usually, buyers pay 2% to 6% of the purchase price for closing costs and a lot of these costs go to lender fees.

In general, seller closing costs are 8% to 10% of home’s sale price and these amounts vary depending on taxes, agent commissions and other fees. Seller closing costs usually range from 2% to 4% of the sale price. These costs are typically deducted from the seller’s proceeds at closing, so they generally don’t need to bring extra cash to the table.

Closing Costs Responsibility Breakdown

Average Closing Costs by State in 2025

Closing Costs by Home Sale Price: Low vs. High

According to ClosingCorp, the average closing costs for a single-family home are approximately from $6,800 to $18,000. However, as home prices continue to rise, the range could increase in 2025. 

Closing costs can vary based on location, loan type, and other factors, but buyers can typically expect to pay between 2% to 6% of the home's purchase price in closing costs. It's important for buyers to account for these costs when budgeting for a home purchase, as they can significantly impact the overall amount needed at closing. Let’s take a look at the average home prices and closing costs by state.

Average Home Prices and Closing Costs by State (Grouped by Cost Range)

Source: Fool

Difference Between Residential vs Commercial Closing Costs

From legal protections to the closing process, residential and commercial closing costs are quite different. Commercial real estate has a more complex documentation, multiple parties involved and a greater risk degree. On the other hand, residential real estate has a straightforward process, standard procedures and greater buyer protection. 

Residential Real Estate Closing Costs

The Real Estate Settlement Procedures act typically governs residential real estate closing costs and it offers buyers more protection and transparency. The transactions have simpler documentation and tend to be more standardized. The process usually involves a sales agreement, financing documents, and a home inspection. 

Also, with residential real estate, buyers rights are generally well-defined and title issues are less common. Unlike with commercial real estate, the process is quicker and involves just the buyer and the seller where the financing is provided through mortgages with standardized terms.

Commercial Real Estate Closing Costs

Commercial real estate transactions are a bit more complex. They usually start with a letter of intent and require extensive due diligence, including structural inspections, environmental assessments, and reviews of any existing tenant agreements. 

When it comes to the ownership of commercial real estate, it can be a bit more difficult to determine, especially when the property is owned by LLC or corporations. Also, more parties are involved in the process, including real estate brokerages, attorneys, lenders and tenants which could make the transactions quite complex. 

Even more so, financing in commercial real estate is not a standard procedure, so lenders tend to have more rights when it comes to foreclosing on the property. Because of the complexity of the deal, the process takes longer and requires a careful review of all aspects before closing.

How to Pay for Closing Costs? 

Buyers can opt for several different ways to pay closing costs depending on their financial situation and preferences. Whether it’s paying out of pocket, getting lender’s assistance or other ways, you can pick the most suitable way to pay. Make sure you consider the timing of these payments since some options can impact your monthly payments as well as long-term financial commitments.

Closing costs are covered on the closing day once the final loan documents are signed. Usually, you send the funds to the escrow agent on closing day through a wire transfer or by showing a certified check at the closing table. Make sure that you have the exact amount ready since delays or mistakes in payment could slow down the closing process. 

1. Pay in Cash at the Time of Closing

This option could be the least expensive over time if you have cash available and plan to keep the mortgage for a longer period of time. While you might need a larger sum at closing, paying upfront means no additional costs later on. This option is suitable for those who want to cut overall debt and make sure not to pay any extra interest on closing costs for many years.

On the other hand, paying in cash could make your offer a lot more attractive to sellers because it signals financial stability and a smoother closing process.

2. Ask the Lender to Cover Your Closing Costs

Some lenders offer to cover your closing costs but keep in mind that it could mean they’ll charge higher interest rates in return. If you don’t have extra cash and do not plan to stay in the home for a longer period of time, this could be a good option. The higher interest rate might only affect you for a few years so if you plan to sell or refinance before the loan term ends, the extra cost should not be as significant.

3. Incorporate Closing Costs into Your Mortgage Loan

You can choose to add closing costs to your loan amount instead of paying them upfront or accepting a higher interest rate. This will increase your loan amount and you will be paying interest on the added amount over time. This could be a good choice if you want to preserve your cash flow over time or you don’t have enough cash available upfront. 

Ready to explore mortgage loan options that fit your needs? Kredium has a network of trusted mortgage brokers to help you compare rates and find the best loan solution for your home purchase.

4. Negotiate With the Seller to Cover Your Closing Costs

In many real estate transactions, the seller could be willing to contribute towards your closing costs, and this is called a seller concession. Depending on the loan type, you can negotiate for the seller to cover a portion of the closing costs, allowing you to save thousands of dollars. This could be very helpful in a buyer’s market or when the seller is eager to close the deal.

Closing Costs Calculator for Buyers and Sellers

The closing cost calculator is an important tool for real estate investors especially when considering how to pay closing costs since it offers valuable clarity and control with the critical aspects of property transactions. The calculator works by taking into account different factors like the property purchase price, loan amount, local taxes, insurance and other typical fees associated with closing. Then, it generates a detailed breakdown of potential closing costs including lender fees, title insurance, appraisals and recording fees.

The calculator is especially helpful with budgeting for the overall cost of the transaction and allows you to pay for other associated fees. For sellers, it can provide an insight into what needs to be covered out of pocket, such as agent commissions, repairs and transfer taxes. Overall, the calculator helps both parties avoid unexpected surprises and make the closing process a lot smoother.

Want to explore more tools and expert advice to make your real estate transaction even smoother? Register with us today and calculate your closing costs, access personalized insights, and connect with top mortgage brokers who can help guide you through the entire process. Take control of your home-buying journey with Kredium!

Key Factors That Influence Closing Costs

How much you pay for closing costs is influenced by various factors like the impact of property price, fees related to financing your mortgage and more.

It is also important to understand that closing cost estimates can be a subject to change even when using a closing cost calculator. Because initial estimates are based on the best available information, throughout the transaction certain items may shift. Some common adjustments typically happen because of fluctuations in interest rates, decisions to pay discount points to lower your interest rate or renegotiations made with the seller after the inspection process.

Due to certain regulations put in place, there is a limit to how much the fees can increase between the period of receiving the Loan Estimate to the Closing Disclosure Statement so surprises in terms of higher fees should be rare. By taking the time to review all the documents you will have a better understanding of the final amount you are required to pay as well as the timing for payment so you are well-prepared for the closing day.

When you know upfront what influences these costs you can plan your budget accordingly. 

1. Impact of Property Price on Closing Costs

The price of property directly affects your closing costs. Typically, closing costs are a percentage of the price you are paying for the property meaning that the higher the cost of the property the higher the closing costs. Aside from that, there are some fixed fees that may apply regardless of the property price.

2. Fees Related to Financing Your Mortgage

If you are taking out a mortgage to finance the home purchase, there will be several fees tied to the loan. The fees include origination fees, appraisal fees, points, mortgage insurance premiums and credit report charges. The type of loan you opt for and the lender’s requirements can also affect the closing costs.

3. Title and Insurance Services

Title services are essential to ensure a clean transfer of ownership. This includes the title search that verifies the property’s ownership history and title insurance that protects both the buyer and the lender from any future title issues. The costs of the services depend on the location, property price as well as complexity of the title history.

4. Government Taxes and Local Fees

Every property transaction will involve some government taxes and fees. These can be property transfer taxes, recording fees and other. The exact amount you pay depends on local regulations and the area where the property is located. So, it is generally a good idea to consult with a local real estate expert to help you understand the specific requirements.

5. Prepaid Costs and Upfront Expenses

At closing, some fees have to be paid upfront like property taxes, homeowners insurance and interest on your mortgage loan. These costs can vary based on the factors like when the transaction takes place during the year, the property’s tax cycle and the terms of the loan.

6. Inspections, Surveys and Property Inspections

Buyers choose property inspections and surveys to make sure that the home is in good condition before purchasing and that there are no boundary issues. The costs of inspections are typically covered by the buyer and can contribute to the overall closing costs. The type and extent of inspections varies depending on the property type and local regulations.

7. Legal and Escrow-Related Costs

If an attorney is involved in the transaction, their legal fees will be included in the closing costs. Attorneys help with the contract reviews and ensure everything compiles with the current laws. Also, if an escrow service is used to manage the transfer of funds and documents, the fees will also be a part of the closing expenses.

How to Minimize Real Estate Closing Costs?

While it might be impossible to avoid paying closing costs entirely, there are some ways to lower them. With careful planning and consideration you can significantly minimize the financial impact of these costs and free up the funds for some other aspect of your home purchase and future financial needs. The key is to start this early to be able to compare your options and negotiate where possible.

Find Lenders That Give Discounts

Not all lenders charge the same fee and rates can vary significantly. Shopping around and comparing different lenders can help you find one that offers lower closing costs or is willing to waive some fees. You should ask for all the fees that are included in the closing estimate to be sure that there are no hidden costs.

Consider a No-Closing Cost Loan

While these loans might look appealing because they reduce the immediate, out of pocket costs, it is important to understand how they work. Namely, they incorporate the closing costs into the loan amount which usually leads to a higher interest rate. Over time, this can be a lot more expensive than paying the costs upfront so make sure you weigh the long term costs before choosing this option.

Explore Down Payment Assistance Programs

Many states and local governments as well as non-profit organisations offer down payment assistance programs. Eligibility depends on the factors like income, location and whether you are a first time home buyer, so it is helpful to research available options in your area to check if you qualify.

Shop Around for Closing Services

Some services involved in the closing process like title insurance, home appraisals and inspections can be priced differently depending on the provider. You are allowed to shop around for these services so make sure to get quotes from multiple companies to find the best rates.

Work with a Trusted Mortgage Broker

Mortgage brokers have access to a wide range of lenders and loan products that allow them to shop around on your behalf and find the best deals. They are experts in finding lenders that offer competitive interest rates, lower fees, or special discounts, which could minimize your overall closing costs.

Working with the best mortgage brokers to find lenders with favorable rates is easy. At Kredium, our team is committed to matching you with the right mortgage broker who can meet your specific financial needs.

Close at the End of the Month

When you close at the end of the month, you have fewer days of prepaid interest to cover. Namely, mortgage interest is typically calculated daily, so the amount you owe for interest at the time of closing is based on the number of days remaining in the month. Closing at the end of the month allows you to pay for fewer days of interest before your first mortgage payment is due which can also reduce the overall cost at closing. 

However, it is important to understand that this strategy only affects the interest portion of your closing costs and other fees like lender fees, title insurance, or appraisal costs are not reduced.

FAQ about Real Estate Closing Costs

In case some of your questions were left unanswered, we covered some additional points of interest when it comes to real estate closing costs so you can have a better grasp of the topic. You can dive into those extra details in the section below.

1. How long does the closing process take?

From the time your offer is accepted to the ownership of your home, the closing process usually takes 30 to 60 days.

2. Who Pays the Realtor's Commission at Closing?

In most real estate transactions sellers pay the realtor’s commission at closing. This commission is usually split between the seller’s agent and the buyer’s agent. 

3. What closing costs apply to cash buyers?

Cash buyers pay for notary fees, property taxes, and recording fees. Many also choose to cover expenses like appraisals, inspections, and owner's title insurance.

Take the Next Step with Kredium’s Expertise

All in all, the key to negotiating closing costs is to thoroughly understand the process, do your research on the market, and most of all, to understand the leverage you have. Being flexible can go a long way – asking for too much might put the deal at risk.

At Kredium, we help you make smart mortgage decisions with confidence. Register with us and our expert advisors and vast lender network ensure a faster, smoother, and more transparent mortgage process. 

Make sure to check out our list of international mortgage brokers and let us help you find your dream property or next smart investment!

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