Plenty of buyers save exactly one number — the down payment — and get an unwelcome surprise at the closing table when the total is higher. The gap is almost always the same handful of costs, all fairly predictable once you know to look for them.
1. Your down payment
The obvious one. Conventional loans can go as low as 3–5% down, FHA allows 3.5%, and VA/USDA can allow 0% for eligible buyers. A larger down payment reduces your loan amount, can eliminate PMI at 20%, and lowers every other cost on this list that scales with the loan amount.
2. Closing costs
A bundle of fees charged by the people who make the transaction happen: the lender, the title company, and the appraiser. Typically 2–3% of the loan amount. This includes:
- Lender fees — origination, underwriting, processing
- Title insurance & search fees — confirming the seller actually owns the home free and clear
- Appraisal — usually $500–650
- Recording fees — the local government's fee to officially record the new deed and mortgage
3. Prepaid interest
Mortgage interest is paid in arrears (for the month just finished), so at closing you prepay interest for the partial month between your closing date and the start of your first full payment cycle. Closing earlier in the month means more prepaid interest; closing near month-end means less.
4. Prepaid escrow (taxes & insurance)
Lenders typically require 2–3 months of estimated property taxes and homeowners insurance deposited into your escrow account upfront, as a cushion before your monthly payments catch the account up.
5. Home inspection
Not always required by the lender, but almost always a good idea. Typically $300–600 depending on the home's size and your area.
6. Upfront loan program fees (sometimes)
FHA loans have an upfront mortgage insurance premium (1.75% of the loan), VA loans have a funding fee, and USDA loans have a guarantee fee. The good news: these are usually financed into the loan rather than paid in cash at closing — so they raise your loan amount and monthly payment slightly, but typically don't add to your cash-to-close.
Putting it together
On a $250,000 home with 10% down, a realistic total might look like: $25,000 down payment + roughly $4,500 in lender/title/appraisal fees + $450 inspection + $700 prepaid escrow + $230 prepaid interest — around $30,900 total, not just the $25,000 down payment.
Frequently asked questions
Are closing costs the same everywhere?
No — they vary by state, county, and which title company and lender you use. Some states also charge transfer taxes, which can be a buyer or seller cost depending on local custom.
Can closing costs be rolled into the loan?
Sometimes, depending on the loan program and lender, though it typically raises your rate or loan balance. It's worth asking your lender directly if cash is tight.
Is earnest money separate from all of this?
Earnest money (a deposit showing you're serious about the offer, often 1–2% of the price) is usually paid before closing and then credited back toward your down payment or closing costs at the closing table — it's not an extra cost on top, just paid earlier.