When you’re buying or selling a home, one of the most common questions is: who pays closing costs? The short answer: both buyers and sellers usually pay closing costs. But the exact split isn’t one-size-fits-all. It can vary based on your loan type, where you live, what’s written into your contract, and how the deal is negotiated.
In a Nutshell
Buyers and sellers both have closing costs
Buyers typically pay loan-related and prepaid expenses
Sellers often pay more overall, largely due to agent compensation and transfer-related fees
The final breakdown depends on your purchase agreement and negotiations
What Are Closing Costs?
Closing costs are the fees required to finalize your mortgage and officially transfer ownership of the home. They’re separate from your down payment and can include everything from lender fees to title services to prepaid property taxes and insurance.
Some of these costs are paid at closing, while others – like home inspections or appraisal fees – may be paid earlier in the process.
As a general guideline:
Buyers often pay around 3%-6% of the loan amount in closing costs
Sellers usually may pay more overall (often 8%-10% of the sales price), often because agent compensation, transfer taxes, and negotiated credits are usually based on the home’s sale price.
Who Usually Pays Closing Costs: Buyer or Seller?
If you’re wondering who pays closing costs, buyer or seller, the answer is: both, but for different things. In most transactions, buyers pay the majority of mortgage-related and upfront housing costs. Sellers often pay more overall, mainly due to agent compensation and transfer fees
There isn’t one universal rule for every line item. What matters most is the local customs for home sales in your area. There is typically room for negotiation. Just make sure you work with your agent to outline who pays which closing costs in your purchase agreement.
Closing Costs Buyers Commonly Pay
Buyers are typically responsible for costs tied to getting the loan and setting up homeownership.
Common buyer-paid closing costs include:
| Closing Cost | Typical Price | What it Covers |
|---|---|---|
| Appraisal fee | $350 to $450 | Confirms the home’s value |
| Credit report fee | Typically under $30 | Covers the lender’s review of your credit |
| Loan origination or underwriting fees | 0.5%–1% of the loan amount | Covers the lender’s work to process and review your loan |
| Title-related lender fees | Varies; title insurance is typically 0.5%–1% of the purchase price | Helps protect the lender’s interest in the home |
| Prepaid costs | Varies by location and loan details | May include property taxes, homeowners insurance, and sometimes mortgage insurance |
| Discount points | Optional; cost varies | An upfront cost you may choose to pay to lower your interest rate |
If you’re paying in cash, you’ll usually avoid many mortgage-related fees, but you will still need to cover title services, escrow, and other administrative costs. All of these costs can add up.
With a median home price of about $400,000, that means average closing costs range anywhere from $12,129 to $24,258 in 2026.
Closing Costs That Sellers Commonly Pay
Sellers often pay higher total closing costs, especially when agent compensation is included.
Typical seller-paid costs include:
| Seller Cost | Typical Cost Range | What it Covers |
|---|---|---|
| Real estate agent compensation | Often 5%–6% total, but negotiable | Fees paid to the listing agent and, in some cases, the buyer’s agent |
| Transfer taxes | Often 0%–2% of the sale price | Taxes charged to transfer ownership of the property |
| Prorated property taxes | Varies | The seller’s share of property taxes up to the day of closing |
| Title and escrow-related fees | Often $1,500–$3,000, but can vary | Services that help verify ownership and handle the closing process |
| HOA fees or transfer fees | Often $100–$500, if applicable | Fees to transfer HOA membership or provide required documents |
| Seller credits | Often 0%–3% of the purchase price, if negotiated | Funds the seller agrees to contribute toward the buyer’s closing costs |
Unlike buyers, sellers usually don’t bring a check to closing. Instead, these costs are typically deducted from the proceeds of the home sale.
How Will You Know What You Owe?
You won’t have to guess your closing costs. After you apply for a mortgage, you’ll receive a Loan Estimate that breaks down your expected costs. Later, before closing, you’ll receive a Closing Disclosure with your final numbers.
Review these documents closely and ask questions about anything that feels unclear. Some costs may be fixed, while others may depend on the service providers you choose.
What Closing Costs Are Negotiable?
Not all closing costs are set in stone. Some fees, like government recording fees or certain third-party services, are fixed. But others may be negotiable or flexible depending on your situation.
Here’s how buyers can take a more active role:
Compare lenders: Some lender fees (like origination charges) can vary
Shop for services: In some cases, you can choose providers for title or insurance services
Ask for seller credits: You may be able to negotiate for the seller to cover part of your closing costs
Review your loan estimate carefully: This helps you spot fees that might be reduced or clarified
The key is to ask questions early and understand which costs you can influence.
Can the Seller Pay the Buyer’s Closing Costs?
Yes, this is where seller concessions (also called seller credits) come into play. A seller may agree to cover part of the buyer’s closing costs to help the deal move forward. This can be especially helpful if a buyer is short on cash but otherwise well-qualified.
However, there are a few important things to keep in mind:
Concessions are negotiated as part of the purchase agreement
Loan programs may set limits on how much a seller can contribute
Market conditions matter; sellers are more likely to offer concessions in a slower market
Recent industry changes, including the 2024 National Association of Realtors (NAR) settlement, have also shifted expectations around agent compensation. While it was once more common for sellers to cover certain buyer-related costs, that may not always be the case now, so it’s important to clarify what’s included in your agreement. Sellers may pay some closing costs depending on the contract or state law, but it’s never required.
Can Closing Costs Be Rolled Into the Loan?
In some cases, yes, closing costs can be rolled into the loan, but it depends on your loan type and financial situation. Rolling closing costs into your loan means you’re financing those costs instead of paying them upfront. While this can reduce your immediate cash needed, it usually means:
A higher loan balance
More interest paid over time
You may also come across “no closing cost” loans. These don’t eliminate the costs – they typically shift them into:
A higher interest rate, or
A larger loan amount
For example, many borrowers using USDA loans choose to finance the upfront guarantee fee into their loan balance rather than paying it out of pocket. This approach can make homeownership more accessible, but it’s important to understand the long-term tradeoffs.
Closing Cost Help May Be Available
If closing costs feel like a barrier, you may have options. Some buyers can reduce upfront costs through:
Lender credits (in exchange for a higher rate)
Closing costs and down payment assistance programs
Seller concessions negotiated in the contract
Exploring these options early can help you build a more realistic budget and avoid surprises as you get closer to closing.
Understanding who typically pays closing costs can make the homebuying process feel a lot more manageable. While both buyers and sellers share the responsibility, the details come down to your loan, your location, and your negotiations.
If you’re unsure what to expect in your situation, it can help to talk through your options with a loan expert. The more you understand upfront, the more confident you’ll feel when it’s time to close.
Emily Kittle is an experienced underwriter with a strong background in risk assessment, training, and loan decision-making. She excels at solving complex mortgage challenges and guiding loans to closing using creativity and critical thinking.
