How Much Is It to Close on a Home?

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Buying a house can be an overwhelming process, but it’s also one of the most rewarding things you can do in your life. Figuring out what it will cost to actually close on that house, however, can be a daunting task. This guide will break down all the costs associated with the closing, so you know what to expect.

Down Payment

A down payment is a deposit that a borrower makes on a home in order to secure a loan. The down payment is a percentage of the sales price of the home, and it is paid upfront when the loan is first taken out.

The most widely used type of home loan in the United States is the conventional home loan, which requires a down payment of 20%. For example, if a buyer is looking to purchase a home for $200,000, they would need to put down $40,000 as a down payment.

If a buyer cannot put down that much money upfront, they can still buy the house with a smaller deposit, provided they buy private mortgage insurance. Private mortgage insurance is insurance that protects the lender in case the borrower defaults on their loan.

There are other available loans to those who qualify that might reduce or eliminate your down payment, such as an FHA, USDA, or VA loan.

Earnest Money Deposit

An earnest money deposit is a refundable deposit that a buyer puts down when they enter into a purchase agreement with the seller. This deposit shows that the buyer is serious about buying the home and is typically 1-3% of the sales price.

For example, if a buyer were to purchase a home for $200,000, their earnest money deposit would likely be between $2,000 and $6,000. This deposit is typically held in escrow until closing, at which point it will be applied to the buyer’s down payment or other closing costs.

Closing Costs

Closing costs are fees charged by lenders and third parties during the closing process. These fees can vary depending on the lender, the type of loan, and the state in which the home is being purchased.

Some common closing costs include:

Application fee: A fee charged by the lender to cover the cost of processing the loan application

Credit check: A fee charged by the lender to pull the borrower’s credit report

Lender fees: Fees charged by the lender for originating and servicing the loan

Appraisal: A fee charged by the lender to have the property appraised to ensure that it is worth the sales price

Inspection: A fee charged by the lender to have the property inspected for any damage or repairs that need to be made

Title check: A fee charged by the lender to check the property’s title to make sure there are no outstanding liens or claims

Homeowners’ insurance: A fee charged by the lender to insure the property against damage or destruction

Flood or fire insurance: A fee charged by the lender to insure the property against flooding or fire damage

Private mortgage insurance: A fee charged by the lender to insure the loan in case the borrower defaults.

Property taxes: A fee charged by the local government to tax the property

Moving Expenses

When you’re buying a house, it’s important to factor in all of the costs associated with moving. There are the obvious costs, like packing supplies and renting a moving truck, but there are also less obvious costs, like deposits for utilities and household items you’ll need to get settled into your new home. By taking the time to calculate all of the moving costs upfront, you can be sure that you have the down payment and other funds you need to make your move a success. Here’s a list of some of the most common moving expenses:

Packing materials: boxes, tape, foam padding, bubble wrap, tarp, and more

Moving truck rental: the cost will vary depending on the size of the truck you need and the distance you’re moving

Hired movers: if you’re hiring professional movers, be sure to get an estimate of the cost upfront

Gas: if you’re driving your own car or rented truck, you’ll need to factor in the cost of gas

Food and lodging: if you’re moving a long distance, you’ll need to factor in the cost of food and lodging for yourself and any helpers you’ve hired

Deposits: many utility companies require a deposit in order to start service at your new home

Window coverings: you’ll need to either bring your existing window coverings with you or purchase new ones for your new home

An Emergency Fund

Experts recommend that an emergency fund should cover 3-6 months of living expenses. This may seem like a lot, but it’s important to have a cushion in case of job loss, illness, or another unforeseen event. Try to sock away a little bit of money each month so that you’ll have the funds you need when an emergency arises

It’s also important to expect those unexpected surprises of homeownership, such as a broken water heater, plumbing issue, or another issue you’ll need to repair.


There are a lot of costs associated with buying a house, but by being prepared and knowing what to expect, you can make the process a smooth one. Be sure to factor in the cost of your down payment, closing costs, moving expenses, and an emergency fund when budgeting for your new home. And remember, if you have any questions, don’t hesitate to ask your real estate agent or lender for help.

Owning a home is a big financial responsibility. By understanding all of the costs associated with buying and owning a home, you can be sure that you’re prepared for the unexpected and ready to make your dream of homeownership a reality.

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