Buying your first home is thrilling—but closing costs can feel like an unexpected curveball. You’re already saving for a down payment, and then you find out there are more fees to cover. Here’s the good news: you don’t have to pay all of them alone, and many of these costs are actually negotiable. Let’s break down exactly what you’ll owe versus what the seller covers, so you can plan accordingly.

Understanding Closing Costs

When you’re getting a mortgage, closing costs typically add up to about 3% to 5% of your total loan amount. That’s a significant chunk of change, which is why it’s important to understand what you’re actually paying for.

The lender will give you a document called a Good Faith Estimate (GFE) during your mortgage pre-approval process. This outlines each closing cost upfront, so there are no surprises at the finish line. Keep in mind it’s an estimate, but it gives you a solid picture of what to expect.

What You’ll Pay as the Buyer

As the buyer, you’ll cover most of the closing costs—since you’re working directly with the lender and using most of the services involved. Here’s what typically falls on your shoulders:

Mortgage origination fee
The cost to process your application and underwrite the loan. This covers the time and paperwork involved in getting your mortgage approved. These fees usually range from 0.05% to 1% of your total loan amount—and yes, they’re negotiable, so don’t be shy about asking.

Credit report fee
A smaller fee that covers pulling your credit reports. It’s not huge, but it adds up.

Appraisal fee
Your lender requires an appraisal to confirm the home is actually worth what you’re paying. You cover this cost.

Prepaid interest
If you close mid-month, you’ll need to pay prorated interest for the days you own the home before your first official mortgage payment kicks in.

Prepaid insurance
Your first year of homeowners insurance is typically due at closing.

Escrow fees
These go to the escrow company or attorney handling the transaction. Escrow fees usually equal around 1% of the purchase price and are typically split between you and the seller.

What the Seller Pays

The seller has their own set of closing costs—often totaling around 10% of the sale price. Here’s what they’re responsible for:

Transfer taxes or recording fees
The cost to officially transfer the title from their name to yours.

Title insurance
This protects you in case there’s any debt or claims against the property that weren’t disclosed.

Real estate agent commission
This is usually the biggest expense for sellers. They pay their agent a percentage of the sale price.

Additional seller obligations
Depending on the situation, the seller may also owe outstanding property taxes, HOA dues, or any remaining mortgage balance on the home.

The Bottom Line

You don’t have to shoulder all closing costs alone—the seller covers their share, too. Plus, many of these fees are up for negotiation. Use your Good Faith Estimate to understand exactly what you’re paying, and remember: asking questions and negotiating is part of the process. When you have a clear picture of your closing costs upfront, you can plan better and move toward homeownership with confidence.