Closing Costs Calculator

How it works

Closing costs come in two kinds. Fees are charges for making the loan and transferring the home: the lender's origination and underwriting fees, the appraisal, title insurance, the settlement agent, and government recording fees and transfer taxes. Enter them from your Loan Estimate, or estimate them as a percentage of the loan.

Prepaids are your own housing costs paid in advance. Interest is charged daily from the closing date to the end of that month, because your first regular payment covers the following month. Most lenders also want the first year of homeowners insurance paid, and a reserve of a few months of property tax and insurance deposited in the escrow account.

Cash to close is your down payment plus all closing costs, less money you have already paid (the earnest money deposit) and any credits from the seller or lender. If the deposit and credits are more than that, you bring nothing and the difference is shown as cash back to you.

Formula

fees = loan × fee % ÷ 100        (or the sum of the itemized fees)
daily interest = round(loan × rate ÷ 100 ÷ 365 (or 360), to the cent)
prepaid interest = daily interest × days
insurance premium = annual insurance ÷ 12 × months
escrow reserve = (annual tax + annual insurance) ÷ 12 × months
closing costs = fees + prepaid interest + insurance premium + escrow reserve
due = (price − loan) + closing costs − deposit and credits
cash to close = max(0, due)        cash back to you = max(0, −due)

Example

A $400,000 home with a $360,000 loan at 6.5%: fees assumed at 3% of the loan (an illustration, not a typical figure) are $10,800.00. Daily interest is $360,000 × 6.5% ÷ 365 = $64.11, so 15 days cost $961.65. A year of insurance is $1,800.00, and two months of tax and insurance in escrow ($4,800 + $1,800 a year) is $1,100.00.

Closing costs total $14,661.65, or 4.07% of the loan. With the $40,000 down payment the cash to close is $54,661.65.

Assumptions and limitations

• The fee percentage is an assumption you enter, not a quote or a published typical figure. Fees vary widely by state, lender and loan size; your Loan Estimate lists the actual charges, so use the line-by-line option with its figures when you have one.
• Prepaid interest assumes the first payment is due on the first day of the second month after closing, the usual arrangement. The insurance premium and escrow reserve use the months you enter; the escrow cushion a lender may hold is limited by federal rules and varies with your tax due dates.
• Property tax prorations between buyer and seller, mortgage insurance premiums, VA funding fees and FHA upfront premiums are not included; add them to Other Fees if they apply.
• This is an estimate for planning, not financial, tax or legal advice.

Frequently asked questions