How to Negotiate Your Mortgage Closing Costs

What are closing costs?

Closing costs are the fees and expenses you pay when finalizing a home purchase or mortgage refinance. They include charges for services required to complete the transaction, such as a title search. They’re paid at closing when the property officially changes hands.

Closing costs will be detailed in the Closing Disclosure, which you receive from the lender at least three business days before closing. Closing costs typically include:

• Mortgage application fee
• Appraisal fee
• Credit report fee
• Title search and title insurance
• Survey fee
• Recording fee
• Property tax proration
• Homeowners insurance premium
• Mortgage points, if any
• Escrow or attorneys fees

How much are closing costs?

Home closing costs vary depending on several factors, the most prominent being your location and lender. It’s best to plan for closing costs of 2% to 5% of your home’s purchase price, though the nationwide average ranged from 0.5% to 3% in 2025, according to a Lodestar study.

For instance, homes in Washington, D.C., New York and Delaware have the most expensive average closing costs as a percentage of the total average home price, according to Lodestar. They fall at 2.99%, 2.47% and 2.39%, respectively.

Transfer tax refers to a one-time fee to transfer the property deed from the seller to the buyer.

Per the same study, South Dakota, Alaska and North Carolina have the lowest closing costs, with averages of 0.46%, 0.54% and 0.56%, respectively.

In general, states with low or no transfer tax have the lowest closing costs. Conversely, states with the highest closing costs are ones where the transfer tax comprises a majority of the fees.

Closing cost breakdown by fee

Here’s an idea of what you’ll pay for different closing costs:

• Appraisal fee: Appraisal fees typically range from $350 to $650, but appraisers set their own rates. For example, if you’re buying property in a rural area, it might take an appraiser more travel time and research, which can mean a higher appraisal fee.
• Origination fee: The lender often charges a 0.5% to 1% origination fee upfront to start a new home application. For example, if you purchase a $400,000 home, expect to pay a fee of $2,000 to $4,000.
• Title fees: The title is a document saying the seller can legally sell the property. Title fees range from $300 to $600. The seller or the buyer might pay them, depending on the property’s location.
• Title insurance: Title insurance protects the buyer from losses if there’s something wrong with the property that prevents them from owning it outright. It averages about $1,000.
• Transfer tax: Costs vary widely by state and locality, ranging from zero to several percentage points of the home's sale price. In high-cost states like Delaware and New York, transfer taxes often comprise the largest portion of closing costs. For example, on a $400,000 home in New York, you might pay $4,000 or more in transfer taxes.

» READ MORE: Closing costs: average cost and how to calculate

Which closing costs are negotiable?

Closing costs you can often negotiate include:

• Title insurance: Both the lender’s and the owner’s title insurance policies are negotiable.
• Title search fee: This fee can be paid by the seller or buyer or be split between them.
• Survey fee: This fee can be paid by the seller or buyer or get split.
• Escrow or attorneys fees: This fee can be paid by the seller or buyer or be split.
• Homeowners insurance: You can shop for your own home insurance company. You don’t need to use one the lender recommends.
• Mortgage discount points: Your lender may be open to negotiating points, which are essentially prepaid costs to lower your interest rate.
• Transfer tax: In states that impose transfer tax, it’s often negotiable. Depending on your location and the market, the seller or buyer can pay this fee or split it.

How market conditions affect negotiation leverage

How much negotiation power you have for closing costs depends on the local market conditions and the home. If you’re buying in a seller’s market and purchasing a home at or below market value, you might not have any room for negotiation.

In a buyer’s market, however, you may have more leverage to ask the seller to cover part of your closing costs or to negotiate lower fees with your lender, since sellers are often more motivated to close the deal.

Which closing costs are not negotiable?

Not all closing costs are negotiable. Some of them are fixed expenses required by lenders or government agencies.

Closing costs that are usually not negotiable include:

• Credit report fee
• Recording fee
• Appraisal fee
• Property taxes

How to negotiate closing costs

You can negotiate closing costs by discussing them with the seller, lender or real estate agent involved in the transaction.

Guide to negotiating each major closing cost item

Here’s how to negotiate each major closing cost item and what language you should use for the best outcome.

While you can’t lower every closing cost, it’s worth looking at the cost breakdown in the Loan Estimate and Closing Disclosure and asking for the lender or seller to cover some expenses.

1. Title insurance and title search fees: Ask your lender if you’re required to use its recommended title company. If not, shop around for title insurance companies and compare quotes from at least three providers. Once you have competitive quotes, negotiate the rate by saying, “Another title company quoted me $500 less. Can you match this?” You can also ask the seller to cover or split the title search fee, especially in a buyer’s market.
2. Survey fee: If the seller has a recent survey from when they purchased the property, ask, “Do you have an existing survey we can use to avoid this fee?” If a new survey is required, negotiate with the seller to cover it or propose, “Can we split the survey fee 50/50?”
3. Escrow or attorney fees: Compare rates from several escrow companies or real estate attorneys before committing. Ask, “What services are included in your fee, and is there room for negotiation?” You can also ask the seller, “Would you be willing to cover the attorney fees as part of our agreement?”
4. Homeowners insurance: Get quotes from multiple insurers to find the best rate and coverage. Tell your lender, “I’ve found a better rate with another insurance provider that meets your coverage requirements.” Shopping around can save you hundreds of dollars annually.
5. Mortgage discount points: Calculate whether paying points makes financial sense based on how long you plan to stay in the home. Ask your lender, “Can we reduce the number of points, or can you offer a lower interest rate without requiring points?” Some lenders may be willing to negotiate to earn your business.
6. Transfer tax: Research local customs by asking your real estate agent, “Who typically pays transfer tax in this area?” In negotiations with the seller, you might propose, “Given the current market conditions, would you be willing to cover the transfer tax or split it with me?”

Tips for reducing closing costs

Here are five strategies to help reduce how much you pay in closing costs:

1. Compare lender costs: Get quotes from several lenders and compare the closing costs they charge. This will give you an idea of what is a fair deal and what is not.
2. Ask about local grants or closing costs assistance programs: Your area might have special grants or incentives available. Additionally, qualified buyers such as veterans might be eligible for special assistance programs.
3. Ask the seller to pay for some of the costs: Many sellers are willing to contribute to closing costs as an incentive to close the deal. This works in your favor if you’re buying in a slow market or buying a home that’s been on the market for several months.
4. Ask to have certain costs waived: Some lenders may be willing to waive some fees if you meet certain conditions, such as maintaining a certain credit score or having a certain amount of money in savings.
5. Ask for a no-closing-cost loan: Some lenders offer loans with no closing costs. However, bear in mind that these loans typically have higher interest rates. So, while this allows you to save money upfront, it can cost you more over the life of the loan.

» LEARN: Buyer’s market vs. seller’s market: What’s the difference?

Negotiation strategies for different buyer types

Not all homebuyers approach closing cost negotiations the same way. Whether you’re buying your first home, using VA benefits or refinancing an existing mortgage, your situation can affect your leverage and the strategies that work best.

First-time homebuyers

First-time buyers often face tight budgets, but they also have access to unique tools that can reduce upfront costs. Ask your lender about first-time homebuyer programs offered by your state or city, as many provide grants or low-interest loans to cover closing costs or down payments.

Veterans and active-duty service members

Veterans and active-duty service members have a major advantage with U.S. Department of Veteran Affairs (VA) loans. These loans limit the types of fees lenders can charge and often eliminate the need for private mortgage insurance, which can save thousands.

When negotiating, highlight your eligibility for a VA loan to gain leverage. Some sellers are willing to cover allowable closing costs to make their property more appealing to qualified VA buyers. Always review the VA loan funding fee and ask if it can be reduced or waived, especially if you have a service-related disability.

Refinancers

Refinancers already own their homes, which gives them flexibility when it comes to timing and leverage. Use that to your advantage. Since you’re not under pressure to move, shop around for the best refinance terms and closing cost structure.

Ask lenders about “no-closing-cost” refinance options, where fees are rolled into the loan balance or covered in exchange for a slightly higher rate. You can also negotiate to have certain administrative or appraisal fees waived. If your credit score or home value has improved since your last loan, use that as a bargaining chip to push for lower costs or better terms.

Legal and regulatory considerations

When negotiating closing costs, it’s important to understand the legal and regulatory limits that protect consumers. Federal laws and loan program rules set boundaries on what lenders can charge and how fees must be disclosed.

Federal protections: TILA and RESPA

Two key federal laws shape how closing costs are handled: the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA).

TILA requires lenders to clearly explain loan terms and disclose the full cost of borrowing, including interest rates and fees. RESPA ensures transparency by requiring lenders to provide a Loan Estimate and a Closing Disclosure so you can compare offers and identify unexpected charges.

Under RESPA, lenders and real estate professionals are also prohibited from receiving kickbacks or referral fees that could inflate costs. If you believe your lender isn’t complying, you can file a complaint with the Consumer Financial Protection Bureau (CFPB).

State and loan program rules

Many states have their own consumer protection laws that cap or regulate certain closing fees, such as attorney or title insurance charges. Check your state’s housing agency or Department of Financial Regulation for details before closing.

Loan programs also come with specific restrictions. For example, Federal Housing Authority (FHA), VA and USDA loans limit the types and amounts of fees that borrowers can pay. Some costs may be shifted to the lender or seller instead.

Understanding these rules gives you leverage when negotiating and helps ensure your deal complies with all legal requirements.