Who Should Pay Closing Costs — Buyer or Seller?

Quick answer: The buyer typically pays most closing costs — usually 2% to 5% of the purchase price. The seller pays agent commissions, transfer taxes, and often the owner's title policy. Either side can negotiate seller concessions to shift some buyer costs to the seller, within loan-type limits (FHA 6%, conventional 3% to 9%, VA 4%).

Nothing is fixed by law in most states. Your purchase contract decides who pays what.

Total closing cost range: Industry guides cite 2% to 5% of the purchase price. LodeStar's 2024 data shows a national average of $4,661 (1.06%) including recording fees and taxes — but lender fees, prepaids, and title push most buyers closer to 2% to 3% out of pocket.

What the Buyer Typically Pays

Buyers pay fees tied to getting the mortgage and taking ownership. On a $350,000 home, expect $7,000 to $17,500 in buyer closing costs.

Common buyer costs:

Fee	Typical range
Loan origination fee	0.5% to 1% of loan amount ($1,400 to $2,800 on a $280,000 loan)
Appraisal	$400 to $700
Credit report	$25 to $75
Lender's title insurance	$500 to $1,200
Prepaid interest	$500 to $1,500 (depends on closing date)
Escrow setup	$500 to $1,000 (taxes and insurance reserves)
Homeowners insurance (1 year prepaid)	$1,200 to $2,500
Recording fees	$50 to $250

These are separate from your down payment. On an FHA loan with 3.5% down on $350,000, you need $12,250 for the down payment plus closing costs on top.

Prepaids vs. fees: About half of buyer closing costs are prepaids — property taxes, insurance, and interest you would pay anyway after closing. The other half are one-time fees for services like appraisal, title, and loan origination.

See how to get closing costs waived for ways to reduce these fees.

What the Seller Typically Pays

Sellers pay costs tied to transferring ownership and marketing the home. On a $400,000 sale, seller costs often run $25,000 to $30,000 — mostly agent commissions.

Common seller costs:

Fee	Typical range
Real estate agent commission	5% to 6% of sale price ($20,000 to $24,000 on $400,000)
Transfer taxes / doc stamps	Varies by state ($0 to $12,000+)
Owner's title insurance	$800 to $2,000 (custom varies by state)
Prorated property taxes	Depends on closing date
HOA transfer fee	$100 to $500
Attorney or closing agent fee	$500 to $1,500 (in attorney states)

Seller costs do not come out of the buyer's pocket — but a seller paying buyer closing costs (concessions) reduces the seller's net proceeds at closing.

Seller Concessions: When the Seller Covers Buyer Costs

Seller concessions are credits the seller gives the buyer at closing to cover buyer closing costs, prepaid items, or discount points. The seller does not write a separate check — the credit reduces what the buyer brings to closing.

Limits by loan type (based on purchase price or appraised value, whichever is less):

Loan type	Max seller concession
FHA	6%
Conventional (<10% down)	3%
Conventional (10%–25% down)	6%
Conventional (25%+ down)	9%
VA	4% for certain extras; standard closing costs separate
USDA	6%
Conventional investment property	2%

Example: On a $300,000 FHA purchase, the seller can contribute up to $18,000 (6%) toward buyer closing costs. That could cover most or all of the buyer's fees.

Concessions cannot be used for the buyer's down payment on FHA or conventional loans.

See why a seller would pay closing costs for when sellers agree to concessions.

How to Negotiate Who Pays

Who pays depends on the market and how strong your offer is.

Buyer's market: More inventory, homes sit longer. Buyers have leverage to ask for 2% to 3% in seller concessions. A home listed 45+ days without an offer is a good candidate.

Seller's market: Low inventory, multiple offers. Sellers rarely agree to concessions. A clean offer at full price with no concession request wins over a lower offer asking for $10,000 back.

How to ask: Write the concession into the purchase contract as a dollar amount or percentage. Example: "Seller to credit buyer $8,000 toward closing costs at settlement."

What sellers accept: Concessions that close the deal without dropping the sale price. A $12,000 concession on a $400,000 home keeps the recorded sale price at $400,000 — which matters for comparable sales in the neighborhood.

What sellers reject: Asking for concessions above the loan limit, or asking for concessions plus a large price reduction.

Splitting costs: A common compromise on a $380,000 home: seller pays $7,600 (2%) in concessions and buyer covers the remaining $3,000 to $5,000 in fees. Both sides share the burden without exceeding loan caps.

Earnest money: Your $5,000 earnest deposit is separate from closing costs. It applies toward your down payment at closing — not toward lender fees.

Which Costs Are Always the Buyer's?

Some fees must be paid by the buyer regardless of seller concessions — or count against the concession cap.

Always buyer-paid (cannot be shifted on most loans):

• Down payment — seller concessions never cover this
• VA funding fee — can be financed into the loan but has special rules
• Home inspection — paid before closing, not part of concessions
• Moving costs — not a closing cost

FHA rule: If concessions exceed 6%, the excess is treated as a price reduction, not a credit toward closing.

Conventional rule: Concessions above the LTV-based cap must be returned or restructured before closing.

On a $250,000 conventional loan with 5% down, the seller concession cap is 3% — only $7,500. Asking for $12,000 exceeds the limit.

VA special rule: Standard closing costs (title, recording, appraisal) can be paid by the seller without counting toward the 4% concession cap. Only extras like temporary rate buydowns and debt payoff count toward 4%.

USDA rule: Seller concessions up to 6% — same as FHA — but the home must be in an eligible rural area.

Frequently Asked Questions

Who pays closing costs?

The buyer pays most loan-related costs. The seller pays commissions and transfer costs. Either side can negotiate concessions.

Can the seller pay all closing costs?

On FHA, up to 6% of the price. On conventional with 5% down, only 3%. The seller rarely covers 100% of buyer costs unless the buyer's fees fit within the cap.

What are seller concessions?

Credits from the seller to the buyer at closing for buyer closing costs, prepaids, or points — within loan-type limits.

How much are closing costs for the buyer?

Typically 2% to 5% of the purchase price. On a $350,000 home, that is $7,000 to $17,500.

Can closing costs be split between buyer and seller?

Yes. The contract can specify any split. A common split: seller pays 3% in concessions and buyer covers the rest.

Ready to compare closing cost estimates? Get free quotes through LendingTree to see what lenders charge and find the best deal.