Who Pays Closing Costs? A Buyer vs. Seller Breakdown (2026)

Who pays closing costs is one of the most Googled questions in real estate — and the answer is more complicated than "the buyer" or "the seller." Both sides pay closing costs, but they pay for different things, and several of those costs are negotiable if you know which ones to push back on.

Most first-time buyers fixate on the down payment and forget about closing costs entirely. Then they get to the settlement table and discover an additional $8,000-$20,000 in fees they weren't expecting. This article breaks down every closing cost line by line, explains who typically pays each one, identifies which fees are negotiable, and covers how closing costs differ in the US, UK, Canada, and Australia.

What are closing costs?

Closing costs are the fees and expenses you pay to finalize a real estate transaction, beyond the purchase price of the home. They cover the services of the lender, the title company (or solicitor/conveyancer), the government (taxes and recording fees), and various third parties involved in the transaction.

In the US, closing costs for buyers typically range from 2-5% of the purchase price. On a $400,000 home, that's $8,000-$20,000 in addition to your down payment.

Buyer's closing costs: what you pay

These are the fees that come out of the buyer's pocket at closing:

Loan-related fees

  • Origination fee (0.5-1% of loan amount). This is the lender's fee for processing your mortgage. On a $350,000 loan, that's $1,750-$3,500. This fee is sometimes negotiable, especially if you're choosing between multiple lenders.
  • Discount points (optional, 1% of loan per point). You can pay upfront to reduce your interest rate. Each "point" costs 1% of the loan amount and typically reduces the rate by 0.25%. Worth it if you'll stay in the home long enough to recoup the upfront cost through lower monthly payments — usually 4-7 years.
  • Application fee ($300-$500). Some lenders charge a fee just to apply. Others don't. Ask upfront and compare.
  • Credit report fee ($25-$50). The lender pulls your credit from all three bureaus.
  • Underwriting fee ($400-$900). The cost of the underwriter reviewing your loan file and approving you.

Title and escrow fees

  • Title search ($200-$400). A search of public records to verify that the seller actually owns the property and there are no outstanding liens or claims.
  • Title insurance ($1,000-$3,000). Protects the lender (and optionally you) against title defects that the title search missed. Lender's title insurance is required. Owner's title insurance is optional but recommended — it protects you if someone later claims ownership of the property.
  • Escrow/settlement fee ($500-$2,000). The fee for the title company or attorney managing the closing process.
  • Recording fees ($50-$250). The county charge for recording the deed and mortgage in public records.

Prepaid items

  • Homeowner's insurance (first year, $1,200-$3,000+). Your lender requires you to have homeowner's insurance before closing. You'll often prepay the first year upfront.
  • Property taxes (prorated). You'll prepay property taxes for the remaining portion of the tax period, plus an escrow cushion of 2-3 months.
  • Prepaid interest. Interest charges from your closing date to the end of the month.
  • Escrow account setup. Your lender collects 2-3 months of property tax and insurance payments upfront to establish your escrow account.

Inspection and appraisal

  • Home inspection ($300-$600). You arrange and pay for this. It's typically paid at the time of inspection, not at closing.
  • Appraisal ($400-$700). The lender requires an independent appraisal to verify the home's value supports the loan amount. You pay for it, but the lender orders it.
  • Sewer scope, radon test, pest inspection ($100-$400 each). Additional inspections you may choose to get. Paid separately at the time of service.

Seller's closing costs: what they pay

The seller has their own set of fees, and they're typically higher than the buyer's in total dollar amount:

  • Real estate agent commissions (5-6% historically, now negotiable). This has been the largest closing cost in any transaction. The 2024 NAR settlement changed how commissions work — they're no longer automatically offered on the MLS, and buyer agent compensation is now negotiated directly. This is still the seller's biggest expense.
  • Transfer taxes (varies by location). State and local taxes on the transfer of property. In some areas, the seller pays all of it. In others, it's split.
  • Title insurance (owner's policy in some states). In some states, the seller customarily pays for the buyer's owner's title insurance policy. This varies by local custom.
  • Seller concessions (negotiable). The seller may agree to pay some of the buyer's closing costs as part of the negotiation. This is common — sellers can often contribute 2-6% of the sale price toward buyer closing costs, depending on the loan type.
  • Prorated property taxes and HOA dues. The seller pays their share of taxes and fees up to the closing date.
  • Repairs and credits. If the inspection revealed issues, the seller may pay for repairs or provide a closing credit.

Which closing costs are negotiable?

More than you think. Here's where you can push back:

Lender fees. The origination fee, application fee, and underwriting fee are all negotiable. Get Loan Estimates from three lenders and use them as leverage. Tell lender B that lender A offered a lower origination fee — lenders will often match to get your business.

Title insurance. In some states, you can shop for title insurance rather than using the title company the lender or agent recommends. The difference can be $500-$1,000.

Seller concessions. In a buyer's market, asking the seller to contribute 2-3% toward your closing costs is common and reasonable. In a seller's market, you'll have less leverage. Your agent can structure this in the offer.

"Junk fees." Watch for vague line items like "processing fee," "administrative fee," or "document preparation fee." These are often padding. Ask what each fee covers and whether it can be removed or reduced.

Escrow/title company. Unless your purchase contract specifies who chooses the escrow company, you can shop around. Fees vary by hundreds of dollars between companies.

How closing costs differ by country

United Kingdom

In the UK, the equivalent of "closing costs" includes:

  • Stamp Duty Land Tax (SDLT). This is the biggest cost. First-time buyers in England and Northern Ireland pay 0% on the first £300,000 and 5% on the portion between £300,001 and £500,000. Above £500,000, first-time buyer relief doesn't apply. Scotland has its own Land and Buildings Transaction Tax (LBTT) with different thresholds.
  • Solicitor/conveyancer fees (£1,000-£2,500). Your solicitor handles the legal transfer, conducts property searches, and manages the exchange of contracts.
  • Property searches (£250-£400). Local authority searches, environmental searches, and water/drainage searches to check for planning issues, flood risk, and contamination.
  • Survey (£300-£1,500). The UK equivalent of a home inspection. Ranges from a basic Condition Report to a comprehensive Building Survey.
  • Mortgage arrangement fee (£0-£2,000). Some mortgage products charge an upfront fee in exchange for a lower interest rate.

Who pays: In the UK, buyers and sellers each pay their own costs. The seller typically pays the estate agent commission (1-3% plus VAT). There's no equivalent of the US system where sellers contribute to buyer closing costs.

Canada

  • Land Transfer Tax. This varies by province and can be significant. Ontario charges 0.5-2.5% on a sliding scale. Toronto has an additional municipal land transfer tax. British Columbia charges 1-3%. Alberta has no land transfer tax — just a flat transfer fee.
  • Legal fees ($1,000-$2,500 CAD). Your lawyer handles the closing, title search, and registration.
  • Title insurance ($250-$500 CAD). Common but not universal across Canada.
  • Home inspection ($400-$600 CAD).
  • Appraisal ($300-$500 CAD). Required by most lenders.
  • GST/HST on new builds. If you're buying a new construction home, GST or HST applies — this can add thousands to the price. Some provinces offer rebates for first-time buyers.

First-time buyer relief: The federal First-Time Home Buyer Incentive and the First Home Savings Account (FHSA) can help offset costs. Some provinces offer land transfer tax rebates for first-time buyers (Ontario rebates up to $4,000).

Australia

  • Stamp duty. The single largest closing cost for Australian buyers, and it varies dramatically by state. In New South Wales, stamp duty on a $600,000 property is approximately $22,000. First-home buyers get exemptions or concessions in most states — in NSW, properties under $800,000 are exempt from stamp duty for first-home buyers. Each state has different thresholds and rules.
  • Conveyancer/solicitor fees ($1,500-$3,000 AUD).
  • Building and pest inspection ($400-$700 AUD). Standard and essential.
  • Lenders Mortgage Insurance (LMI). If your deposit is less than 20%, you'll pay LMI — which protects the lender, not you. LMI can cost $5,000-$30,000+ depending on the loan amount and deposit size. This is a major cost that catches first-time buyers off guard.
  • Strata report ($200-$350 AUD). If buying a unit or apartment, this report reveals the financial health of the strata (body corporate) and any planned special levies.

In Australia, "settlement" replaces "closing." The process is typically handled by a conveyancer rather than an attorney.

The closing cost worksheet

Before you make an offer on any property, estimate your total cash to close:

  1. Down payment: Purchase price × your down payment percentage
  2. Closing costs: Purchase price × 3% (conservative estimate for US)
  3. Moving costs: $2,000-$5,000 depending on distance
  4. Immediate repairs and supplies: $2,000-$3,000 (locks, blinds, cleaning, minor repairs)
  5. Emergency reserve: 3 months of housing payments

Add those up. That's the real number you need in the bank before you start making offers. If you only have the down payment, you're not ready — or you need to negotiate seller concessions into your offer to cover the gap.

Get the complete closing cost breakdown worksheet. The First-Time Homebuyer Toolkit includes a detailed, line-by-line closing cost estimator for the US, UK, Canada, Australia, and New Zealand — plus a "True Affordability" calculator, inspection checklists, and every other worksheet you need from pre-approval to move-in day. $14 instant download.