US buyer is under contract on a $485,000 home with a $388,000 loan and 20% down. The lender's loan estimate arrived but they want an independent check of whether the total closing costs and cash to close look reasonable.
US Closing Costs Estimator
Closing Costs
Stamp duty (transfer duty) is a state government tax on property purchases. Rates and concessions vary significantly by state and buyer type. First home buyers often receive full or partial exemptions up to certain thresholds.
⚠️ These are estimates based on standard rates. Always verify with your state revenue office before settlement. ASIC MoneySmart
Results are estimates for planning purposes. Verify with current standards and a qualified professional.
1 What this calculator does
Estimates total US closing costs including lender fees, title and settlement fees, transfer tax, prepaid items (insurance and property tax escrow) and recording fees. Flags whether PMI applies. Shows total cash needed to close including the down payment.
2 Formula & professional reasoning
Origination fee: 1% of loan amount
Appraisal: $600-$800 depending on price
Title insurance: max($800, 0.5% of price)
Transfer tax: price x state rate (varies 0.1%-2%+)
Prepaids: 3 months insurance + 3 months property tax
Total closing costs typically 2-5% of purchase price
Total cash to close = Down payment + Total closing costs
US closing costs are split between lender fees (for processing and underwriting the loan) and third-party fees (title, settlement, transfer tax, government recording). The total typically runs 2-5% of the purchase price. Prepaids are funds collected at closing to pre-fund the escrow account -- they are not fees but cash requirements at closing. Transfer tax rates vary enormously by state (near zero in some states, over 2% in others).
3 Worked examples
⚠️ Illustrative example only — not clinical or professional instruction.
Basic
Standard 20% down conventional loan
Given: Price: $485,000 | Loan: $388,000 | Down payment: $97,000 (20%) | State: national average
Working:
Origination: $388,000 x 0.01 = $3,880 | Appraisal: $800 | Title insurance: max($800, $485K x 0.005) = $2,425 | Settlement: $900 | Transfer tax: $485K x 0.5% = $2,425 | Prepaids (est): $1,940+$2,910 = $4,850 | Recording: $125 | Total closing: ~$15,405Answer: Estimated closing costs: ~$15,400 (3.2%) | Cash to close: ~$112,400
💡 No PMI with 20% down. Total cash to close of $112,400 means the buyer needs $112,400 in addition to any earnest money already deposited.
Standard
10% down with PMI -- higher-tax state (NY)
Given: Price: $620,000 | Loan: $558,000 | Down: $62,000 | State: NY (transfer tax ~1.4%)
Working:
Origination: $5,580 | Appraisal: $800 | Title: $3,100 | Transfer tax: $620K x 0.014 = $8,680 | Prepaids: ~$6,500 | Closing total: ~$27,500 | PMI: $558K x 0.0065/12 = $302/moAnswer: Closing costs: ~$27,500 (4.4%) | Cash to close: ~$89,500 | PMI: ~$302/month until 80% LTV
💡 High-transfer-tax states like NY significantly increase closing costs. The $8,680 transfer tax alone exceeds the origination fee.
Advanced
Seller concessions reducing cash to close
Given: Price: $400,000 | Loan: $380,000 (5% down) | Seller concessions: $8,000
Working:
Estimated closing costs: ~$14,500 | Seller concessions: -$8,000 | Net closing costs: $6,500 | Down payment: $20,000 | Cash to close: $26,500Answer: Closing costs net of concessions: $6,500 | Cash to close: ~$26,500
💡 Seller concessions (up to 3-6% of price on conventional loans) are a common way to reduce cash to close, particularly for buyers with limited liquidity. The seller effectively credits the buyer for part of their closing costs.
4 Sanity check
Typical closing cost range
2-3% on large loans | 3-5% on smaller loans | High-tax states (NY, CT, PA): 4-6%
Lower loan amounts have proportionally higher closing costs because fixed fees make up a larger share.
Items NOT in this estimate
Home inspection: $400-$600 | Moving costs | Utility deposits | HOA fees | Pre-purchase repairs
PMI cost range
0.2-1.5% of loan per year depending on credit score | Cancelled when LTV reaches 80%
Loan estimate vs this calculator
The lender's official Loan Estimate (LE) is the binding document -- use this calculator to check whether the LE figures are in a reasonable range
5 Common errors
| Error | Cause | Consequence | Fix |
|---|---|---|---|
| Confusing closing costs with the down payment | Treating them as the same thing | Planning only the down payment and having insufficient cash at closing | Total cash to close = Down payment + Closing costs. A 20% down payment on a $500,000 home ($100,000) still requires an additional $10,000-$20,000 in closing costs from savings. |
| Not accounting for prepaid items | Focusing only on fees and not the escrow prepaids | Closing costs understated by $3,000-$8,000 | Prepaids (homeowners insurance, property tax, prepaid interest) are real cash requirements at closing even though they are not fees. They fund the initial escrow account balance. |
| Using the rate sheet interest rate for the prepaid interest calculation | Not knowing how many days of prepaid interest to expect | Cash to close understated by several hundred dollars | Prepaid interest covers the period from closing day to the end of the month. Closing near the end of the month minimises prepaid interest (1-3 days). Closing on the 1st means paying nearly a full month of prepaid interest. |
| Accepting the first lender's Loan Estimate without comparison | Not shopping around | Paying thousands more in origination fees and points than necessary | Get Loan Estimates from at least 3 lenders within a 45-day window (credit inquiries within this window count as one for scoring purposes). Origination fees vary significantly between lenders. |
6 Reference & regulatory links
7 Professional workflow
Common tools used alongside this one: