Closing Costs Calculator
The deposit is the number everyone plans for. The fees on top of it are the number that catches people out, and they routinely run to two to five per cent of the loan.
Cash to close
$70,900.00
- Loan amount
- $300,000.00
- Origination
- $3,000.00
- Points
- $0.00
- Title and legal
- $2,200.00
- Closing costs
- $6,700.00
- Costs as % of loan
- 2.23%
- Deposit
- $60,000.00
- Prepaid and escrow
- $4,200.00
- Cash to close is the deposit plus the fees plus anything prepaid — taxes and insurance collected in advance. The prepaid part is not a fee: it is your own money held on account, but you still have to bring it on the day.
- Two to five per cent of the loan is the usual range for the fees themselves. Well outside that in either direction is worth questioning line by line.
- Some of these are negotiable and some are not. Lender fees and title services often are; recording fees and transfer taxes are set by government and are not.
About closing costs
Cash to close is three things added together: the deposit, the fees, and anything collected in advance. They behave differently and it is worth separating them.
The fees are the real cost — origination, points, title and legal work, valuation, recording. On a $300,000 loan those commonly come to $6,000 to $15,000. Two to five per cent of the loan is the usual range, and something well outside it in either direction is worth going through line by line.
Prepaid items are different. Property tax and insurance collected up front, and any escrow cushion, are your own money held on account rather than a fee — you are paying them early, not paying them twice. They still have to be found on the day, which is why they belong in this total, but they are not a cost of borrowing.
Some of the fees are negotiable and some are not. Lender charges and title services often are, and shopping them can save real money. Recording fees and transfer taxes are set by government and are not. Comparing two lenders on rate alone misses thousands of pounds of difference in this column.
What it works out
- Total cash needed on the day
- Fees separated from prepaid items
- Fees as a percentage of the loan, to sanity-check a quote
- Origination and points worked out from the loan size
The formula
Cash to close = Deposit + Fees + Prepaid, where Fees = (Loan × Origination%) + (Loan × Points%) + fixed charges
The loan is the price less the deposit — $300,000 here. The percentage-based fees are worked out on that rather than on the price, which is a distinction that matters on a large deposit.
A 1% origination fee on $300,000 is $3,000. Add $2,200 of title work, a $600 valuation and $900 of other charges and the fees come to $6,700 — 2.23% of the loan, at the bottom of the normal range.
Add the $60,000 deposit and $4,200 of prepaid items and you need $70,900 on the day. Only $6,700 of that is genuinely a cost of borrowing; the deposit becomes equity and the prepaid items are your own money held on account.
The percentage figure is the one to sanity-check a quote against. Fees much above five per cent of the loan need explaining line by line, and the answer is often points bundled in without being called points.
- Loan
- Price less deposit. The percentage fees are calculated on this, not on the price.
- Origination
- The lender's own charge for making the loan, usually 0.5% to 1%.
- Points
- Optional, and buying down the rate rather than a fee for anything.
- Prepaid
- Taxes and insurance collected early. Cash you need, but not a cost.
A worked example
A $360,000 purchase with $60,000 down, a 1% origination fee, $2,200 of title work, a $600 valuation, $900 of other fees and $4,200 prepaid.
That works out to $70,900.00 .
- Loan amount
- $300,000.00
- Origination
- $3,000.00
- Points
- $0.00
- Title and legal
- $2,200.00
- Closing costs
- $6,700.00
- Costs as % of loan
- 2.23%
- Deposit
- $60,000.00
- Prepaid and escrow
- $4,200.00
Questions
How much are closing costs?
Two to five per cent of the loan is the usual range for the fees themselves. On a $300,000 loan that is $6,000 to $15,000, and prepaid taxes and insurance sit on top of it.
What is the difference between fees and prepaid items?
Fees are money spent — you do not get them back. Prepaid taxes and insurance are your own money collected early and held on account. Both have to be found on the day, but only the fees are a cost of borrowing.
Can I negotiate closing costs?
Some of them. Lender charges and title services often move, and getting quotes from more than one lender is worth real money. Recording fees and transfer taxes are set by government and do not.
Can I roll closing costs into the loan?
Often, on a refinance and sometimes on a purchase. It avoids finding the cash but it is not free — you are borrowing the fees at the mortgage rate for the whole term, which costs several times the amount over thirty years.
What is an origination fee?
The lender's charge for arranging the loan, usually 0.5% to 1% of it. Some lenders charge none and price it into the rate instead, which is why comparing rate alone is misleading.
Who pays closing costs, the buyer or the seller?
Mostly the buyer, though it varies by market and is negotiable. A seller contribution towards costs is a common concession, particularly in a slow market, and it is worth asking for.
Do closing costs count towards my deposit?
No. They are separate money on top of it. A common and expensive surprise is saving exactly the deposit and finding that several thousand more is needed to complete.