The Core Closing Cost Rules of Thumb
Closing cost rules of thumb for 2025
| Rule | Benchmark | When It Applies |
|---|---|---|
| Total closing costs (excl. prepaids) | 1.5–3% of purchase price | Conventional, moderate-tax state |
| Prepaids and escrow | 1–2% of purchase price | All transactions |
| Total cash to close | 2.5–5% of purchase price | Including down payment variation |
| Origination fee maximum | 1% of loan amount | For well-qualified borrowers |
| Title insurance (combined) | 0.5–1% of loan amount | Owner + lender policies combined |
| Seller concession request | 1–2% in seller’s market, 2–3% in buyer’s market | All transactions |
Budgeting 3% of purchase price for closing costs (excluding down payment) covers most buyers in most states. On a $350,000 home: $10,500. This budget is accurate for 75% of purchase transactions. The exceptions: high-transfer-tax states (Delaware, DC) where costs reach 5%+, or very low-cost states where 1.5% is sufficient.
State-Based Adjustment Rules
Apply these state-based adjustments to the 3% baseline: Add 1–2% for: New York, Delaware, Maryland, DC (high transfer taxes). Add 0.5% for: New Jersey, Pennsylvania (moderate transfer taxes). Subtract 0.5% for: Texas, Montana, Idaho (no transfer taxes). Subtract 1% for: cash purchases (no lender fees or mortgage recording taxes).
The Quick Seller Concession Rule
Rule of thumb for concession requests: request what you need, cap at what the loan type allows. In a neutral market: request 1.5–2% of purchase price. In a buyer’s market: request 2–3%. In a seller’s market: request 0.5–1% (or none, if competition is high). Maximum: 3% conventional (low down payment), 6% FHA.
Verify Your Rule-of-Thumb Estimate With the Full Calculation
Rules of thumb are starting points — the calculator gives the state-specific accurate number.