The first step in buying a home is deciding on a budget. How much house can you afford? Within what price range will you shop?

A down payment is, unfortunately, only one part of that budget. To correctly determine the affordability of a home, it’s essential that prospective buyers consider the costs that arise at the time of closing.


Closing costs vary from state to state. There are different kinds of closing costs, too: lender costs, including origination and document preparation fees, and nonlender costs, including appraisal and survey fees. Some of these costs are required in certain states, while others are not. It’s also important to note how the market can impact closing costs. In New York City, for example, home prices are higher, which can result in higher lender fees.

In today’s market, buyers seeking a conventional loan typically need a 20% down payment to receive optimal rates. As buyers plan their purchase, it’s important to factor in closing costs on top of this 20%.


The final total is dependent on the location of the property. Consult with your real estate agent about closing costs in your area – he or she knows the local market best. Your Realtor can also share some creative loan products that can reduce your closing cost amounts as well as tweak and offer so that a portion of the closing costs can be wrapped into the loan. There are many options! Good agents think out of the box. Ask your Realtor for some recommendations of good local lenders to get you started!

Allison Cobb