Who Pays Closing Costs on a Home?
2026
At the end of a real estate transaction, who pays closing costs on a home? Buyers? Sellers? Both? Here’s what you need to know.
1. Buyers have more items. In a closing, both buyers and sellers have costs. Typically, buyers have more line-item expenses than sellers. For starters, most buyers are getting loans to make the purchase; many of the charges stem from the loan.
Also, a buyer’s expenses must sometimes be paid up front, at the time of closing. For example, if you’re purchasing a condo and you close on the 30th, you may need to pay the homeowner’s association dues up front. The same holds true for pre-paid loan interest. If you close towards the end of the month, the lender may ask for the first month’s payment up front.
Typically, buyers getting a loan will see some of the following costs:
* Appraisal fee
* Origination fee
* Pre-paid interest
* Pre-paid insurance
* Flood certification fee
* Tax servicing fee
* Credit report fee
* Bank processing fee
* Recording fee
* Notary fee
* Title insurance (owner’s and lender’s polices)
You should go through these fees line by line with your mortgage professional to understand exactly what they are and how they apply to your loan.
2. Sellers pay the real estate commission. Sellers face fewer line items on an estimated closing statement. But they generally must pay the biggest of the fees: the real estate commission. In addition to the real estate commission, the seller may have to pay the balance of their property taxes due.
3. There’s usually room to negotiate. All fees and charges can be negotiated during the real state transaction. For example, for buyers, coming up with the extra 1 to 2 percent in closing costs can be a bigger deal than that $5K reduction in the purchase price. A credit for $5K to go towards closing costs will be a much bigger bang for your buck for the buyer. The price reduction won’t amount to much more than a few dollars per month over the length of the home loan. But saving $5K at the closing will be money right back in the buyer’s pocket.
