A Guide to Mortgage Closing Costs: What You Pay, How Much and How to Lower It

Q: How much are closing costs on a $300,000 house?

At the typical 2% to 6% range, closing costs on a $300,000 loan run roughly $6,000 to $18,000. Where you land depends on your state's transfer taxes and recording fees, your loan type, your lender's origination charges, and how many months of taxes and insurance must be prepaid into escrow. Your Loan Estimate gives the specific figure for your transaction.

Written by Samantha SheltonNMLS 1647301Updated October 2026

Buyers meeting a closing agent at a wooden table to finalize mortgage closing costs on a Michigan home

Mortgage closing costs are the fees required to finalize your loan and transfer ownership of the home, and Freddie Mac tells buyers to expect 2% to 5% of the home purchase price, roughly $6,000 to $15,000 on a $300,000 home.¹ That money is owed at the closing table on top of your down payment, not carved out of it.

They cover four things: charges from your lender, third-party services the lender requires such as the appraisal and lender’s title insurance, government recording fees and transfer taxes, and prepaid items like the first year of homeowners insurance and property taxes headed into escrow. Federal rules make your lender itemize all of it on a Loan Estimate within three business days of your application. Which is what makes closing costs comparable lender to lender.

Learn what mortgage closing costs include, who pays which line, how to read the estimate, and which fees you can negotiate down. If you’re earlier in the process, start with our Home Buying guide.

Key takeaways:

Budget 2% to 5% of the purchase price: On a $300,000 home that’s roughly $6,000 to $15,000, owed at the table on top of your down payment.
The Loan Estimate is your comparison tool: Every lender must deliver one within 3 business days of your application, itemizing the same 7 cost categories in the same order.
Some fees legally can’t go up: Lender and broker charges carry a zero tolerance, a second group can rise no more than 10% as a group, and only prepaid interest, insurance premiums and escrow deposits move freely.

What are mortgage closing costs?

Mortgage closing costs are the one-time fees and prepaid items you pay to finalize a mortgage and transfer a property into your name, and they typically run 2% to 5% of the home purchase price. On a $300,000 home, that’s $6,000 at the low end and $15,000 at the high end, a spread wide enough to belong in your savings plan from day one.

Closing costs are not your down payment. The down payment is equity you’re putting into the house; closing costs pay for services and taxes tied to the transaction. Both are due at closing and both come out of the same pile of cash, which is why buyers who budget only for the down payment get blindsided. The sections below break each fee down.

Why do closing costs exist?

Closing costs exist because a mortgage closing isn’t one transaction, it’s a dozen small ones stacked into a single day. An appraiser values the property, a title company searches decades of county records for liens, a register of deeds records the deed and mortgage, an insurer binds coverage, and an underwriter reviews your file. Each party bills for the work.

Federal disclosure rules sort all of it into two buckets. Loan Costs are what you pay the lender and the third-party providers of services it requires. Other Costs are taxes, recording fees, and payments driven by the calendar, prepaid interest, insurance, escrow deposits. The split matters, because the two follow different rules about how much they can change. See where closing sits in the wider sequence in our home buying process guide.

What’s included in closing costs?

Nearly every closing cost a buyer pays falls into one of the groups below, and each lands in a fixed spot on your Loan Estimate. Here’s who charges what, what it typically runs, and whether it can increase before closing.

Cost	Who charges it	Typical range	Can it increase before closing?
Origination charges, points, application, underwriting	Your lender or broker	0.5% to 1% of the loan amount	No. Zero tolerance.
Appraisal, credit report, flood determination	Third parties the lender picks	Varies by property and market	No. Zero tolerance.
Lender’s title insurance and title services	Title company	Varies with the loan amount	Up to 10% as a group, using the lender’s list.
Survey, pest inspection, closing agent fee	Providers you may choose	Varies by provider	Up to 10% as a group, or freely off-list.
Recording fees	County register of deeds	$30 per document in Michigan	Up to 10% as a group.
Transfer taxes	State and county	$8.60 per $1,000 of sale price in Michigan	No. Zero tolerance.
Prepaids, first-year insurance, prepaid interest, property taxes	Insurer and taxing units	Varies with your closing date	Yes. No tolerance limit.
Initial escrow deposit	Collected by your lender	Varies with the tax cycle	Yes. No tolerance limit.

Two rows deserve extra attention. The appraisal is one you pay for and are entitled to see: your lender must give you a free copy of every appraisal and written valuation promptly upon completion, or three business days before closing, whichever comes first. And title insurance comes in two versions. The lender’s policy, which protects its lien and is almost always required, and an owner’s policy, which protects your equity. When the lender doesn’t require the owner’s policy, federal rules make it carry the label “(optional).” Optional isn’t unnecessary; see why title insurance is important and the American Land Title Association on title insurance.

Who pays for what at closing?

The buyer pays most of it. As the CFPB puts it, when you’re buying a home you generally pay all of the costs associated with that transaction. Though depending on the contract or state law, the seller may end up paying some. Treat this as the default split, not a rule.

Cost	Typically paid by	Notes
Lender and broker charges, appraisal, credit report	Buyer	Costs of getting the loan, so they follow the borrower.
Lender’s title insurance policy	Buyer	Required to insure the lender’s lien position.
Owner’s title insurance policy	Varies by market custom	Optional unless the lender requires it; negotiable either way.
Prepaid interest, insurance and escrow deposits	Buyer	Driven by your closing date and the local tax calendar.
Recording fees for the deed and mortgage	Either party	Set by contract. $30 per document in Michigan.
State and county real estate transfer tax	Seller in Michigan	State law makes the seller or grantor liable.
Real estate commissions	Set in the listing and purchase agreements	Contract terms, not loan-program rules.

One protection worth knowing: a seller cannot require you, as a condition of selling, to buy title insurance from any particular title company. A seller who does is liable to the buyer for three times all charges made for that title insurance. Our breakdown of what to expect as a buyer goes deeper on the split.

How do you estimate your closing costs?

Use the Loan Estimate, not a calculator. Once you’ve given a lender the pieces that legally make an application, it has three business days to hand you a Loan Estimate itemizing your closing costs, and because the form’s categories, order and math are set by federal rule, two estimates read side by side without translation. Page 2 holds seven lettered categories:

A. Origination Charges: Points and every fee your lender or broker keeps. Lenders differ most here.
B. Services You Cannot Shop For: Appraisal, credit report, flood determination and similar items, providers the lender chooses.
C. Services You Can Shop For: Title search, the lender’s title insurance premium, the settlement or closing agent fee, the survey and pest inspection. Items you may source yourself from the lender’s written provider list.
E. Taxes and Other Government Fees: Recording fees first, transfer taxes second.
F. Prepaids: Homeowners insurance, mortgage insurance, prepaid interest and property taxes, each with the period it covers.
G. Initial Escrow Payment at Closing: Insurance and taxes going into escrow, with the monthly amount and months collected.
H. Other: Owner’s title insurance and any warranty product, marked “(optional)” when the lender doesn’t require it.

D, I and J are the subtotals: Total Loan Costs, Total Other Costs, Total Closing Costs. The CFPB’s walkthrough of how to read and compare a Loan Estimate shows the form page by page.

Final numbers arrive on the Closing Disclosure, which you must receive at least three business days before closing. A waiting period built so you can check them against your estimate. Only three changes restart that clock: the disclosed APR becoming inaccurate, the loan product changing, or a prepayment penalty being added. Everything else gets a corrected form with no new wait, so read it the day it arrives. Keep the CFPB’s Closing Disclosure explainer beside you, and start saving early with how to budget for closing costs.

Can you lower your closing costs?

Yes, and the savings cluster in two places: the lender’s own charges and the services you’re permitted to shop for. Everything else is fixed by a government schedule or by your calendar.

Negotiate lender charges first: Origination, application, underwriting and rate-lock fees are set by the lender, carry a zero tolerance once quoted, and vary most between lenders. Freddie Mac puts origination at 0.5% to 1% of the loan amount, $1,500 to $3,000 on a $300,000 loan.
Shop the services you’re allowed to shop: Your lender must give you a written list of providers for the Section C services. Pick from that list and those charges, plus recording fees, can rise no more than 10% as a group. Off-list, you may still save, but you lose the cap.
Ask for seller concessions, within program limits: Fannie Mae caps interested-party contributions at 3% of value above 90% LTV, 6% from 75.01% to 90%, and 9% at 75% or less, with 2% on investment property. FHA allows 6% of the sales price.² Neither can cover your down payment.
Take a lender credit with your eyes open: The CFPB is blunt. A lender credit isn’t free. The lender typically either increases your loan amount to cover the costs or charges a higher rate in exchange. Seller credits work the same way; sellers price them back into the purchase price.
Check assistance programs early: Michigan down payment and closing cost assistance gets layered onto the loan at application, not bolted on at closing.

A “no-closing-cost” loan is that same trade in a different wrapper: the costs move into your rate or your balance. Reasonable when cash is tight; expensive over thirty years. If a seller is covering part of your bill, seller-paid closing costs covers how concessions get written into the contract, and refinancing closing costs explains why the same fee list looks different on a refinance.

One thing closing costs generally won’t do is cut your tax bill. The IRS is direct: the only settlement or closing costs you can deduct are home mortgage interest and certain real estate taxes.³ Recording fees, surveys, transfer taxes, legal and title search fees, and an owner’s title policy get added to your home’s basis instead. Loan assumption fees, the credit report charge, the appraisal fee and mortgage insurance premiums are neither deductible nor added to basis.

What Michigan buyers should know

Michigan’s government line items are set by statute, which makes them the easiest part of a buyer’s closing costs to predict to the dollar.

Transfer tax runs $8.60 per $1,000 of sale price: The state tax is $3.75 per $500 of value and the county tax is 55 cents per $500. On a $300,000 sale that’s $2,250 to the state and $330 to the county, $2,580 combined. State law lets a county with more than 2 million residents charge up to 75 cents per $500, but no Michigan county currently reaches that threshold. Wayne, the largest, sits near 1.8 million, so 55 cents applies statewide.
The seller owes the state transfer tax: Michigan law makes the seller or grantor liable, payable to the county treasurer within 15 days of delivery of the deed. Most Michigan buyers never carry this line.
Recording is a flat $30 per document: A Michigan register of deeds charges $30 to record a document regardless of page count, so a deed plus a mortgage is $60.
Two tax bills, one escrow calculation: Summer taxes are levied July 1 and run interest-free through September 14; winter taxes are billed December 1. Where your closing date falls between those dates drives how many months get prorated to you and how much goes into your initial escrow deposit. Which is why that line moves between your Loan Estimate and your Closing Disclosure.

Which closing cost rules protect you that most buyers never hear about?

A few rules shape what you pay and when. You cannot negotiate them, which is exactly why they are worth knowing before the first estimate arrives.

No fees before the Loan Estimate

Until you have received a Loan Estimate and told the lender you intend to go ahead, no one may charge you an application, appraisal or underwriting fee. The one exception is a bona fide and reasonable fee for pulling your credit report (12 CFR 1026.19(e)(2)). A lender asking for an upfront deposit before you have the estimate in hand is asking for something the rule does not allow.

A cap on the escrow cushion

The initial escrow deposit on your Loan Estimate is not a fee. It seeds the account your servicer uses to pay property taxes and insurance. Federal rules let the servicer collect enough to cover the bills coming due plus a cushion of no more than one-sixth of the estimated yearly escrow payments, about two months’ worth (12 CFR 1024.17(c)). In Michigan, where summer taxes are levied July 1 and winter taxes are billed December 1, your closing date decides how much that deposit needs to be. Our guide to mortgage escrow accounts covers the yearly escrow analysis.

Prepaids are money you would spend anyway

Prepaid interest, the first year of homeowners insurance and the escrow deposit raise your cash to close, but they pay for things you would owe as a homeowner anyway. They are not a charge for the loan. When two estimates differ only in these lines, the cause is usually a different closing date or insurance quote, not a different price for the loan.

VA buyers: seller help has a different limit

On a VA purchase loan, VA does not limit seller credits toward your closing costs. It limits seller concessions, such as paying your VA funding fee, prepaying your taxes and insurance or paying off your debts, to no more than 4% of the home’s reasonable value, the figure on the VA Notice of Value. VA explains the rule on its funding fee and closing costs page. Our guide to seller-paid closing costs shows how concessions get written into an offer.

How Align moves your purchase to the closing table

Over the last 12 months, Samantha's loans averaged under 14 days from application to clear to close, across more than 100 loans. Your closing date is set by your purchase agreement. Her job is to have your loan ready well before it.

She handles your file herself, with a processor supporting her behind the scenes. You always know who to call, and the person who answers knows your goals.

Build your homebuyer game plan

Sources: Align Lending loan records, 12 months to October 2026.

FAQ: Mortgage closing costs

Here are answers to common questions about mortgage closing costs.

How much are closing costs on a $300,000 house?

At the typical 2% to 5% of purchase price, closing costs on a $300,000 home run roughly $6,000 to $15,000. Where you land depends on your state’s transfer taxes and recording fees, your loan type, your lender’s origination charges, and how many months of taxes and insurance are prepaid into escrow. Your Loan Estimate gives the figure for your transaction, and budgeting for closing costs shows how to save toward it.

Can closing costs be rolled into the mortgage?

Sometimes. Many refinances allow it, and some purchase programs permit lender credits that cover costs in exchange for a slightly higher rate. The trade-off is real: financing $8,000 in fees means paying interest on that amount as long as you hold the loan. It makes sense when cash is tight and you plan to sell or refinance within a few years, see refinancing closing costs for the math.

Who pays closing costs, the buyer or the seller?

Both pay, but different items. Buyers typically cover lender fees, the appraisal, lender’s title insurance and prepaid escrow items. Sellers usually cover the real estate commission, the owner’s title policy in many markets, and transfer taxes depending on state law. Buyers can also negotiate seller-paid closing costs, where the seller covers part of the buyer’s bill, subject to loan-program limits.

Which closing costs are negotiable?

Lender-controlled charges are the most negotiable: origination, application, underwriting and rate-lock fees. You can also shop independently for the services listed under “Services You Can Shop For,” such as title services and the survey. Non-negotiable items include government recording fees and transfer taxes. Comparing two or three Loan Estimates is the fastest way to find savings, our overview of closing costs for buyers shows what to compare first.

The bottom line on mortgage closing costs

Mortgage closing costs typically run 2% to 5% of the home purchase price, about $6,000 to $15,000 on a $300,000 home, owed on top of your down payment. They cover lender charges, third-party services like the appraisal and title work, government recording fees and transfer taxes, and prepaid items headed into escrow. Your Loan Estimate itemizes all seven categories within three business days of your application, your Closing Disclosure lands at least three business days before closing, and the gap between those two documents is where the negotiating happens.

If you’re ready to see what your closing costs would really look like, talk to Align Lending, we’ll shop your scenario across our lender network and put competing Loan Estimates in front of you side by side. Call 248-506-5727 or start online today.

Footnotes:

1. Example figures in this article are hypothetical and for educational purposes only; they do not constitute an advertisement of credit terms or a rate quote under federal or state lending laws. Your closing costs depend on your loan amount, program, property location, closing date, and providers, and will be itemized on your Loan Estimate and Closing Disclosure. Return to text.

2. Align Lending is not acting on behalf of or at the direction of FHA or HUD. FHA interested party contribution limits are set by HUD in Single Family Housing Policy Handbook 4000.1 and are subject to change. Return to text.

3. This is general information, not tax advice. Deductibility depends on your individual circumstances and on whether you itemize. Consult a qualified tax professional about your situation. Return to text.

Sources: closing costs of 2% to 5% of the home purchase price and origination fees of 0.5% to 1% of the total loan amount, Freddie Mac (My Home by Freddie Mac). Loan Estimate delivery within three business days of application, written list of settlement service providers, and zero, 10% cumulative and no-tolerance categories, 12 CFR § 1026.19(e)(1)(iii), (e)(1)(vi) and (e)(3). Loan Estimate cost categories, subheadings and the “(optional)” label on non-required owner’s title insurance, 12 CFR § 1026.37(f) and (g); CFPB, Guide to the Loan Estimate and Closing Disclosure Forms. Closing Disclosure delivery at least three business days before consummation and the three changes requiring a new waiting period, 12 CFR § 1026.19(f)(1)(ii) and (f)(2)(ii). Free copy of appraisals promptly upon completion or three business days before consummation, 12 CFR § 1002.14(a)(1) and (a)(3). Seller may not require the buyer to use a particular title company; treble damages for violations, 12 U.S.C. § 2608; 12 CFR § 1024.16. Buyer generally pays transaction costs and lender credits are recovered through a larger loan amount or a higher rate, Consumer Financial Protection Bureau. Interested party contribution limits of 3%, 6%, 9% and 2%, Fannie Mae Selling Guide B3-4.1-02. FHA interested party contributions up to 6% of the sales price and the prohibition on using them for the borrower’s minimum required investment, HUD Handbook 4000.1. Deductible and non-deductible settlement costs, IRS Publication 530. Michigan state real estate transfer tax of $3.75 per $500 and seller liability, MCL 207.525 and MCL 207.523. Michigan county real estate transfer tax of 55 cents per $500, with up to 75 cents authorized only in a county of more than 2,000,000 population (no Michigan county currently qualifies), MCL 207.504. Register of deeds recording fee of $30 per document, MCL 600.2567. Summer property tax levy collected July 1 with interest added after September 14, MCL 211.44a.

This article is for informational purposes only and is not intended to provide legal, financial, or tax advice. Closing cost amounts, transfer taxes, recording fees and program limits change and vary by property, county and loan program; confirm your figures with your Loan Estimate and Closing Disclosure and consult a qualified professional about your situation. Figures shown are illustrative, are not a rate quote or an offer of credit, and are subject to change. Align Lending is an independent Michigan mortgage broker, NMLS #2041154.