Mortgage Closing Costs: What They Really Include, and Why Two Common Estimates Can Differ by Thousands of Dollars

Buyers who search for typical mortgage closing costs often find two very different answers. One industry study puts the national average for a purchase at about $4,500. Federal consumer guidance, meanwhile, describes closing costs as typically running 2% to 5% of the purchase price, which on a $450,000 home would be $9,000 to $22,500. The gap comes down to which charges are counted.

How much are mortgage closing costs on average?

LodeStar Software Solutions, which provides closing cost data to lenders, reported in April 2026 that average total closing costs for a purchase mortgage in 2025 were $4,528, or 1.04% of the average sales price, based on more than 620,000 purchase quotes. The median was $3,492, or 0.85%. Excluding recording fees and transfer taxes, the average was $2,993.

That figure covers settlement and escrow fees, owner's and lender's title insurance, recording charges and transfer taxes. It does not include lender origination fees, discount points, appraisal and inspection costs, or the prepaid property taxes and homeowners insurance collected to fund an escrow account, according to a summary of the report's methodology by RealCostIQ.

LodeStar found the largest variation came from transfer taxes. Delaware had the highest closing costs as a share of price, at 3.06%, with states such as New York, Vermont and Pennsylvania also near the top because of heavy transfer taxes.

A second data set looks at the lender's side of the bill. An analysis by FairPriceCheck of 2025 federal Home Mortgage Disclosure Act data, covering more than 4.6 million loans, found borrowers paid a median of $4,242 in total loan costs. The median origination charge was $1,495, and 51% of loans included discount points, while 34% included lender credits that offset closing costs.

Why do closing cost estimates run 2% to 5% of the price?

The broader 2% to 5% range used by the Consumer Financial Protection Bureau captures all of those categories together, along with prepaid interest and the initial deposit into escrow.

Where do closing costs appear on the Loan Estimate?

The clearest way to see the full picture for a specific loan is the Loan Estimate, the standardized three-page form lenders must provide within three business days of an application. Page two separates the charges into loan costs, which include origination charges in Section A, services the borrower cannot shop for in Section B and services the borrower can shop for in Section C, and other costs, which include taxes and government fees, prepaids and the initial escrow payment.

Each section behaves differently. Origination charges and points are set by the lender and vary from one lender to the next, which is why the CFPB encourages borrowers to compare Loan Estimates from more than one lender. Title and settlement services listed in Section C can be shopped. Prepaids and escrow deposits are not fees in the usual sense; they are advance payments of property taxes, insurance and interest that the borrower would owe regardless.

Lender credits can lower the cash needed at closing, but they are generally paired with a higher interest rate, so the trade-off depends on how long a borrower expects to keep the loan.

Before closing, the CFPB requires lenders to deliver a Closing Disclosure at least three business days in advance, allowing borrowers to compare the final figures line by line against the Loan Estimate and ask about any changes.

Frequently asked questions

What is the average closing cost on a home purchase?

LodeStar reported average total closing costs for a purchase mortgage in 2025 of $4,528, or 1.04% of the average sales price, with a median of $3,492. That figure does not include lender origination fees, discount points, appraisal and inspection costs, or prepaid taxes and insurance.

Can you shop for closing costs?

Some of them. Title and settlement services listed in Section C of the Loan Estimate can be shopped, and origination charges and points vary from one lender to the next, which is why the CFPB encourages comparing Loan Estimates from more than one lender.

When do you see the final closing costs?

Lenders must deliver a Closing Disclosure at least three business days before closing, so borrowers can compare the final figures line by line against the Loan Estimate.

Sources

• LodeStar Software Solutions, "2025 Purchase Mortgage Closing Cost Data Report," April 27, 2026: https://www.lodestarss.com/2026/04/27/data-reports-2025-purchase-mortgage-closing-cost-data-report/
• RealCostIQ, "Closing Costs by State, 2026": https://realcostiq.com/data/closing-costs-by-state/
• FairPriceCheck, "Closing Cost Index," April 29, 2026: https://www.fairpricecheck.com/closing-cost-index
• Consumer Financial Protection Bureau, "What fees or charges are paid when closing on a mortgage?": https://www.consumerfinance.gov/ask-cfpb/what-fees-or-charges-are-paid-when-closing-on-a-mortgage-and-who-pays-them-en-1845/
• Consumer Financial Protection Bureau, Loan Estimate explainer: https://www.consumerfinance.gov/owning-a-home/loan-estimate/