Closing Costs Explained: Your Updated Guide for 2026

Buying a home is an exciting milestone. Along with picking out paint colors and imagining furniture layouts comes the reality of closing costs, the final set of fees you’ll pay before getting the keys to your new home.

Understanding how closing costs are determined, what’s typical today, and how to plan for them can reduce stress and help you feel prepared heading into closing day. To see how closing costs fit into the full buying journey, review our guide on homebuying steps from making an offer to closing.

Key Takeaways

• Closing costs typically range from 2% to 5% of purchase price
• Mortgage closing costs include lender, title, and prepaid fees
• Closing costs in Texas and Florida vary by local regulations
• Your Closing Disclosure details final closing cost amounts

What Are Closing Costs?

Closing costs are the collection of fees and expenses associated with finalizing your mortgage and officially transferring ownership of a home. They are paid at closing, which is when your loan funds and the property legally become yours.

Closing costs are separate from your down payment. While your down payment contributes directly to the purchase price of the home, closing costs cover the services, documentation, and protections required to complete the transaction. For a closer look at final signing day, read what to expect when closing on a house.

What is Included in Closing Costs?

Closing costs vary depending on your location, lender, and loan type, but most fall into several key categories.

Lender and Loan-Related Fees

These are charges from your lender and may include:

• Loan origination fee
• Underwriting and processing fees
• Credit report fee
• Appraisal fee
• Rate lock fee, if applicable

Each lender structures fees differently, which is why comparing Loan Estimates early in the process can make a meaningful difference.

Title and Settlement Fees

These fees help ensure the property’s ownership is transferred legally and securely:

• Title search
• Title insurance
• Settlement or escrow fees
• Recording fees
• Attorney fees (in some states)

A thorough title search confirms the property is free from liens or legal issues before closing.

Prepaid Expenses

Some costs are collected upfront and placed into escrow to ensure future payments are covered. These may include:

• Property taxes
• Homeowners insurance premiums
• Prepaid mortgage interest

You may also see discount points, which allow you to pay upfront to reduce your interest rate. One discount point typically equals 1 percent of the total loan amount.

Government and Third-Party Fees

These can include recording fees, courier fees, surveys, and other third-party services required to complete the transaction.

How Much Are Closing Costs in 2026?

In most cases, homebuyers can expect closing costs to range between approximately 2 percent and 5 percent of the home’s purchase price.

For example, on a $400,000 home, closing costs might fall somewhere between $8,000 and $20,000, depending on the loan structure and prepaid items included. Property taxes, insurance rates, and lender fees all influence the final amount.

Because costs vary regionally, buyers in Texas and Florida may see differences based on local regulations, title practices, and insurance requirements. Reviewing your Loan Estimate and Closing Disclosure carefully will give you the most accurate estimate of what to expect. If you're planning ahead, these first-time homebuyer tips for planning and saving can help you budget for estimated closing costs.

Are Closing Costs Different for New Construction Homes?

Closing costs for new construction homes are similar in structure to existing homes or resale transactions, but there can be important differences.

With new construction, certain repair-related negotiations that are common in resale purchases typically do not apply. Because the home is newly built, buyers are not negotiating around existing wear and tears, which can simplify the closing process.

In some cases, some builders may offer incentives that can be applied toward closing costs when buyers work with a preferred lender, for example. These incentives vary by community, timing, and market conditions, but they can help streamline financing and reduce unexpected expenses.

Who Pays Closing Costs?

In most home purchases, buyers are responsible for many closing costs, including lender fees, title charges, prepaid expenses, and government recording fees.

Sellers may cover certain costs depending on the terms of the contract and local market conditions. In new construction transactions, the structure of who pays which fees is typically outlined clearly in the purchase agreement, helping buyers understand their financial responsibilities upfront. Working with a knowledgeable professional can help clarify negotiations. Learn how to find a realtor to help with your next move.

Understanding Your Closing Disclosure

At least three business days before closing, you’ll receive a Closing Disclosure from your lender.
This document outlines:

• Your final loan terms
• A detailed list of every fee included
• The total cash required at closing

Review this document carefully and ask questions if anything is unclear. Understanding the details before you sign ensures greater confidence on closing day.

Preparing for Closing Day

While the details of closing costs may seem complex at first, understanding how they’re calculated and planning for them makes the process far more manageable.

At Perry Homes, we believe clarity builds confidence. From helping you understand homebuyer closing costs to guiding you through every milestone of your new home journey, our team is here to support you at every step.

If you're ready to take the next step, browse available new homes or explore current move-in ready homes. Have questions about closing costs or the homebuying process? Connect with our team anytime through our Contact Us page.