Closing Costs
Direct definition
Fees and charges — typically 2–5% of the loan amount — paid at closing to complete a mortgage transaction.
Written by the Vabasso Mortgage Editorial Team · Reviewed against agency and federal sources · Read our editorial policy for how we research and review mortgage content
Plain-English explanation
Closing costs include lender fees (origination, underwriting), third-party fees (appraisal, title, recording), prepaid items (property taxes, insurance), and any discount points.
Why it matters
They're a real cash cost separate from your down payment and can materially affect how much home you can afford.
Where you may see it
- Loan Estimate
- Closing Disclosure
- Purchase contract
A real-world example
Educational and illustrative only
A common misunderstanding
Closing costs are not part of your down payment — they're separate cash needed on top of it, though some can sometimes be covered by credits.
Frequently asked
Can I roll closing costs into the loan?+
On a refinance often yes; on a purchase usually only via seller concessions or lender credits.
Are closing costs negotiable?+
Some lender-controlled fees are. Third-party fees like taxes and recording are not.
Ask Vabasso AI
- Author
- Vabasso Mortgage Editorial Team
- Reviewed by
- Vabasso Mortgage Licensed Advisory Team
- Last reviewed
- July 30, 2026