August 2025

4 key factors to closing costs today

Closing cost	Average percentage of the total closing costs
Homeowners insurance	28%
Loan origination fee	19%
Title insurance	19%
Rate lock fee	9%
Attorney fee	6%
Appraisal fee	4%
Underwriting fee	4%
Other fees	4%

Buying or selling a home can be a lengthy process, with closing the final hurdle to clear before the key turns. Both buyers and sellers pay closing costs, but the expenses are not equal. Generally, it’s simpler for sellers with fewer unique costs, while buyers have more line items. The graphic above illustrates the buyer’s closing costs on a $400,000 home (assuming 20% down), and each color represents the share of the approximately $8,400 in total closing costs on that purchase price, on average. The fact is that these percentages and line items are not uniform for buyers and sellers.^Footnote1

Take a look at the key points your clients should understand.

1. If your client is selling

When you’re talking to a client who is selling, let them know that most of the closing costs go to various prepayments, fees, taxes and service charges. These vary by location, with local taxes, title charges and fees from purchase settlement firms. Average seller closing costs are typically 8% to 10% of the home’s selling price and probably include agent commissions and certain seller fees.^Footnote2

Much of that will be for your commission (2.5% to 3%) and for the buyer's agent’s commission (another 2.5% to 3%), should they choose to pay that.

Considering a median selling price of $362,000, closing costs for sellers can range from $28,960 to $36,200.^Footnote2 Other elements of closing costs can include attorney fees, settlement (escrow) fees, possible prorated property taxes, transfer fees and seller concessions.

It’s important to note the charge for the transfer of title from the seller to the buyer. This can have wild variations. Looking at the top 10 real estate markets in the United States, it’s a bit of a roller coaster ride:^Footnote2

Houston: $0
Denver: $597
Seattle: $11,058

Because of local market variations, it’s vital for your clients to appreciate the unique character of their locale. That’s where your expertise comes in.

2. If your client is buying

Buyer closing costs are generally less than the seller’s but more complex, ranging from 3% to 5% of the loan amount, and can include expenses such as origination fees, title insurance, private mortgage insurance (PMI), attorney fees, appraisals, and property taxes. Like seller costs, these costs vary widely by state and municipality. Escrow fees from 1% to 2% of the sale price are common, and often there’s a charge from $30 to $50 for running a buyer’s credit report.^Footnote3

These costs don't include your commission. Be sure to explain to your client when they sign the contract with you that, while sellers may agree to pay the commission for the buyer's agent, they aren't obligated to. Helping your client negotiate that will make their purchase a little more affordable.

Thoroughly explaining to your client why these charges are levied and how they’re calculated is crucial to a smooth home buying process.

Closing costs for buyers frequently include mortgage points if they choose to “buy down” the interest rate on their loan. On a 30-year fixed-rate mortgage, each point typically costs 1% of the total loan amount. For example, on a $300,000 mortgage, each point would cost $3,000 and reduces the interest rate by 0.25 percentage points, but terms vary among lenders.^Footnote4

3. Closing costs are location-unique

As you can see, buyers and sellers have different closing costs, and the line items within vary accordingly. The state, city and municipality of the property plays a very large part as well, with variations as wide as the United States itself.

From state to state and city to city, average buyer closing costs (based on 2021 numbers) can run from less than 1% of the home’s price tag to more than 5%. From the country’s highest cost city — Washington, D.C. ($29,888 or 3.9% of the average sale price) — to the lowest cost state — Missouri (at $2,061 or 0.8%) — the spectrum is wide.^Footnote5 According to data compiled by CoreLogic’s ClosingCorp, the average closing cost for purchasing a single-family home in the U.S. in 2021 was $6,905 with transfer taxes (the title/deed transfer tax mentioned earlier), and $3,860 without it. Transfer taxes are found in 35 states, from Alabama to Wisconsin, but not in 15 states, from Alaska to Wyoming.^Footnote6

In 2021, the state with the highest average closing cost was Delaware, at $17,859 or 5.4% of the average home sale price (including taxes). In the middle of the pack was Idaho, at $4,082 and 1%.^Footnote6

4. Calculate closing costs

To help ease the confusion over closing costs for clients, Bank of America offers a helpful calculator tool to estimate them. Understanding these fees early in the process is crucial, because they can significantly affect the affordability for buyers and the net proceeds for sellers. Clients can enter details including the purchase price, down payment, loan term and type and the property’s ZIP code for an estimate.

Get an estimate

1 HomeGuide, data pulled: 5/13/2025.

2 How Much Are Closing Costs for Sellers? Zillow.com, Nov. 21, 2024, written by May Ortega. Accessed May 2025.

3 What are closing costs? Bank of America Better Money Habits.

4 Everything you need to know about mortgage points, Bank of America Better Money Habits.

5 Average closing costs on a house in 2024, Bank Rate, April 2, 2024, written by David McMillin and edited by Michele Petry. Accessed May 2025.

6 What is a real estate transfer tax, and who pays for it? Yahoo Finance, Nov. 27, 2024. By Emily Guy Birken. Accessed May 2025.

MAP8055987 | 07/2025

When deciding whether an adjustable-rate mortgage (ARM) is right for your situation, you should consider the potential risk of rising rates and payments and such factors as how long you plan to own your home. ARM rates subject to increase after the fixed-rate period.
Maximum income and loan amount limits apply. Fixed-rate mortgages (purchases or no cash out refinances), primary residences only. Certain property types are ineligible. Maximum loan-to-value ("LTV") is 97%, and maximum combined LTV is 105%. For LTV >95%, any secondary financing must be from an approved Community Second Program. Homebuyer education may be required. Other restrictions apply.
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Minimum down payment requirements vary by property type and location. Loan amount, interest-only payment option, loan-to-value percentage, property and/or occupancy type may require a higher level of reserves and/or post-closing liquidity. Two separate full appraisals may be required. Excellent credit required, including proof of recent consistent housing payment history. Not available on all loan programs. Other restrictions apply, ask for details.
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If applicant's employment does not commence until after closing, in addition to the minimum cash reserves required, sufficient reserves to handle all debt obligations between closing and employment start date up to an additional 90 days must be verified.
Additional documentation is required.

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4 key factors to closing costs today

1. If your client is selling

2. If your client is buying

3. Closing costs are location-unique

4. Calculate closing costs