First time home buyer closing costs generally run 2% to 5% of the purchase price, and they are separate from your down payment. A large share of them can be paid by the seller, by a lender credit, or by an assistance program — if you set it up in the contract.
By Julia LuisMortgage Loan Officer · Mortgage-World.comClosing costs are lender fees, third-party fees, and prepaid taxes and insurance, and together they usually total 2% to 5% of the purchase price on top of your down payment. The figure to compare between lenders is cash to close, on page one of the Loan Estimate. A seller concession negotiated into your offer is the most effective way to reduce what you bring.
What you are paying for
What First-Time Home Buyer Closing Costs Actually Cover
"Closing costs" is one word for three very different piles of money, and knowing which pile a fee lives in tells you whether you can do anything about it.
Lender fees are the shoppable ones. Third-party fees are partly shoppable. Prepaids are your own taxes and insurance, collected early.
Lender fees are what the lender charges to make the loan: origination, underwriting, processing, and discount points if you choose to buy the rate down. Third-party fees pay the people the lender requires — the appraiser, the title company, the attorney, the county recorder. Prepaids and escrows are not really costs at all: they are your first year of homeowners insurance, a few months of property taxes, and the interest from your closing date to the end of that month, collected up front so the account starts funded.
The number
How Much Are First-Time Home Buyer Closing Costs?
Plan on 2% to 5% of the purchase price in first time home buyer closing costs. The range is wide because property taxes vary enormously between towns, and because escrow is the largest line on many closing statements. A high-tax New Jersey township and a low-tax Florida county can differ by thousands on the same purchase price.
| Line item | Typical range | Shoppable? |
|---|---|---|
| Origination and underwriting | $0 – 1% of loan | Yes |
| Appraisal | $550 – $900 | No — lender orders it |
| Title insurance and settlement | 0.5% – 1% of price | Sometimes |
| Attorney (NJ and CT) | $1,000 – $2,000 | Yes — you pick |
| Recording and transfer taxes | Varies by state | No |
| Prepaid taxes and insurance | Often the largest line | No — but it is your money |
The number that matters is not the closing costs total. It is cash to close: down payment, plus closing costs, minus any credits. That single figure appears on page one of every Loan Estimate and Closing Disclosure, and it is the one to compare between lenders.
Local rules
First-Time Home Buyer Closing Costs in New Jersey, Connecticut and Florida
Same loan, three different closing tables. This is why a national average is close to useless as a budget.
In New Jersey and Connecticut you close with an attorney, and New Jersey purchase contracts run through a three-day attorney review window that has no equivalent in Florida. The seller pays the transfer tax in both states, but a New Jersey buyer purchasing above $1 million pays the 1% mansion tax — a line that catches first-time buyers in Bergen and Hudson counties by surprise. Florida closings run through a title company, and the state’s documentary stamp tax and intangible tax on the mortgage replace what the northeast calls a transfer tax. Florida insurance is also the wild card: a windstorm or flood premium can double the escrow line, so get a real quote before you commit to a price.
Who pays
You Do Not Have to Pay All of Them Yourself
There are three ways first time home buyer closing costs get covered other than out of your savings, and a first-time buyer should understand all three before writing an offer.
- Seller concessions. The seller credits you a dollar amount toward costs, written into the contract. Program caps apply and they scale with your down payment, but on a low-down-payment purchase the allowance is usually generous enough to cover most of the bill. This is the biggest lever you have.
- Lender credits. You accept a slightly higher rate and the lender pays some of your costs. It is the mirror image of buying points. Worth it if you are short on cash today, expensive if you keep the loan for fifteen years.
- Assistance programs. Many state and county programs cover closing costs as well as down payment, sometimes as a forgivable second. Availability changes year to year, so ask what is currently funded rather than what was funded last year.
Negotiating a $10,000 seller credit usually helps a first-time buyer more than negotiating $10,000 off the price.
Why? Because a lower price saves you a few dollars a month over thirty years, while a credit hands you cash on the day you have the least of it.
How to compare offers
Read the Loan Estimate, Not the Rate Sheet
Every lender must give you a standardized Loan Estimate within three business days of your application, and the form is identical everywhere by design so you can lay two side by side. Compare section A (lender fees), the cash to close, and the APR — not the headline rate. A rate that looks a quarter point better with $4,000 in points is not better. The CFPB publishes an annotated Loan Estimate that walks through every box.
Three business days before closing you receive the Closing Disclosure. Read it against the Loan Estimate. Some fees are allowed to change, some may only change within a 10% tolerance, and lender fees may not increase at all without a valid change of circumstance. If something moved, ask before you sign, not at the table.
- Closing costs are 2%–5% of the price and sit on top of the down payment.
- Only lender fees are truly negotiable with the lender; prepaid taxes and insurance are your own money, collected early.
- Cash to close is the comparison number — not the rate, not the fee total.
- A seller concession in the contract is usually worth more to a first-time buyer than the same dollars off the price.
- NJ and CT close with an attorney; FL closes with a title company and has doc stamps plus higher insurance escrows.
- Compare two Loan Estimates side by side, then check the Closing Disclosure against them three days before closing.
Common questions
First-Time Home Buyer Closing Cost Questions
Can closing costs be rolled into the loan?
On a purchase, generally no — the loan amount is limited by the price and the appraised value. The practical equivalents are a seller credit or a lender credit in exchange for a slightly higher rate. On a refinance, costs can genuinely be financed.
How much can the seller contribute?
It depends on the program and your down payment, and the caps are expressed as a percentage of the price. On low-down-payment purchases the allowance is usually enough to cover most or all of the costs, provided the seller agrees and the appraisal supports the price.
Are closing costs due at the table?
They are due at closing, usually by wire sent a day or two ahead. Never accept wiring instructions by email without calling your attorney or title company at a number you already had — wire fraud targets first-time buyers specifically.
Does a no-closing-cost loan exist?
Not really. There are loans where the lender pays the costs and charges a higher rate, which is a fair trade if you are short on cash or expect to move in a few years. The money is still there; it moved into the rate.
Is the appraisal fee refundable if the deal falls apart?
No. The appraisal is paid to a third party for work performed, and it is usually the only cost you incur before closing. That is one reason to get fully pre-approved before you spend money on a property.
Do I pay a fee to use a mortgage broker?
Compensation is disclosed on your Loan Estimate like every other fee, and in most transactions it is paid by the lender rather than by you at the table. Ask for it to be shown to you plainly — a straight answer here is a good test of any originator.
Keep reading
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Written and reviewed by Julia Luis, Mortgage Loan Officer of Mortgage-World.com, NMLS #1630225. About the author
Mortgage-World.com LLC is a licensed mortgage brokerage serving New Jersey, Connecticut and Florida. NMLS #1630225 (verify on NMLS Consumer Access) · Florida license MLB 1987 · Family owned since 2017.
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Last reviewed August 2026. This article is general information for educational purposes, not a loan approval, a rate quote, or a commitment to lend. Program guidelines, rates and limits change, and every file is underwritten on its own facts. Mortgage-World.com is not an agency of the state or federal government and is not affiliated with the Federal Housing Administration. Equal Housing Lender.
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