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If you're thinking about getting an FHA loan in 2026-and you should if you're a first-time buyer or have less than perfect credit-you should know that closing costs will add thousands of dollars to your upfront costs on top of the down payment. The Consumer Financial Protection Bureau says that in 2023, buyers paid a median of $6,684 in total loan costs. This number is still going up in 2026 as home values go up and lender fees change to match the market.
Federal Housing Administration loans are still one of the easiest ways to buy a home. Since January 2025, they have insured more than 236,000 mortgages. But the ease of use comes with some costs, like the 1.75% of your loan amount that you have to pay up front for mortgage insurance. Conventional loans don't have this requirement. Before you even think about lender fees, title insurance, appraisals, and prepaids, you'll have to pay $6,125 in upfront MIP on a $350,000 FHA loan.
When a borrower comes into our office, I tell them that closing costs are not optional, but they are negotiable and manageable if you know what you're paying for and when. I've helped thousands of buyers in 37 states get FHA loans, so I know which strategies really lower closing costs and which ones are just wishful thinking. There can be a $3,000–$5,000 difference between being well-prepared and panicking at the closing table.
This in-depth guide explains exactly what FHA closing costs will be in 2026, how much you'll actually pay based on the amount of your loan and where you live, tried-and-true ways to lower these costs, common mistakes that make costs go up for no reason, and detailed answers to the most common questions buyers have. Understanding closing costs is important for making smart choices, whether you're planning to buy your first home or comparing FHA to traditional loans.
FHA closing costs represent the collection of fees, charges, and prepaid expenses you'll pay when finalizing your mortgage. The standard range sits between 2-6% of your total loan amount, though the Department of Housing and Urban Development estimates most borrowers pay closer to 3-4%. On real numbers, that means if you're financing $350,000, expect to bring $10,500-14,000 to closing in addition to your down payment.
Let me break down what that looks like at different purchase prices in 2026's market. On a $250,000 FHA loan (roughly a $258,000 home with 3.5% down), you're looking at $5,000-15,000 in closing costs, with most buyers paying $7,500-10,000. On a $350,000 loan ($362,000 home), expect $7,000-21,000 with typical costs around $10,500-14,000. And on a $450,000 loan ($466,000 home), you'll pay $9,000-27,000, typically landing at $13,500-18,000.
These aren't hypothetical ranges-they reflect actual costs from borrowers I've worked with across 37 states. Geographic location drives much of the variation. Buyers in Texas or Florida typically hit the lower end of the range because those states have minimal transfer taxes and no attorney requirements. Meanwhile, buyers in New York, New Jersey, or Illinois hit the upper end due to substantial transfer taxes, mandatory attorney fees, and higher title insurance costs.
The primary driver of higher FHA closing costs is the mandatory upfront mortgage insurance premium. Every FHA loan requires UFMIP equal to 1.75% of your loan amount, paid at closing or financed into the mortgage. Conventional loans have no equivalent upfront cost-they require private mortgage insurance only if you put down less than 20%, and PMI is monthly without any upfront component.
On a $350,000 FHA loan, the upfront MIP costs $6,125. That single line item represents roughly 60% of your total closing costs if you're in the $10,500 typical range. Remove that UFMIP, and FHA closing costs would actually be lower than conventional loans because FHA rates average 5.97% versus 6.25-6.50% for conventional-meaning lower origination fees calculated as percentages.
The question becomes whether the upfront MIP outweighs FHA's advantages. Lower rates save $50-100 monthly on a $350,000 loan ($18,000-36,000 over 30 years). The 3.5% down payment versus 5-20% conventional preserves $5,250-57,750 in cash for reserves and improvements. And FHA's 6% seller concession limit versus 3-6% conventional gives you more negotiating leverage. For most first-time buyers, FHA wins despite higher closing costs.
Let's start with the elephant in the room: the upfront mortgage insurance premium. This 1.75% charge applies to every FHA loan regardless of down payment size, credit score, or loan amount. On a $250,000 loan, UFMIP costs $4,375. On $350,000, it's $6,125. On $450,000, you're paying $7,875. There's no negotiating this fee-it's mandated by FHA to fund the mortgage insurance fund that protects lenders when borrowers default.
The good news: you can finance the UFMIP into your loan amount rather than paying cash at closing. Most borrowers choose this option to preserve cash for moving expenses, furniture, and reserves. The bad news: financing UFMIP means you pay interest on it for 30 years. On that $6,125 at 5.97%, you'll pay an additional $5,600 in interest over the loan term. Total cost: $11,725 instead of $6,125. But preserving $6,125 in cash today often makes the trade-off worthwhile, especially for first-time buyers with limited savings.
Your lender charges multiple fees to cover the cost of processing, underwriting, and originating your mortgage. The largest is typically the origination fee, ranging from 0.5-1% of your loan amount. On a $350,000 loan, that's $1,750-3,500. This compensates the lender for their work getting your loan approved and funded. Some lenders charge 0% origination but build costs into a higher interest rate-always compare the annual percentage rate (APR) to see the true cost.
Beyond origination, expect underwriting fees of $300-900 (covering the underwriter's time reviewing your application), processing fees of $300-800 (administrative costs of moving your file through the system), document preparation fees of $75-300 (assembling closing paperwork), and credit report fees of $25-100 per borrower. On a two-borrower application, these combined lender fees typically total $2,500-5,000 depending on your lender and loan amount.
Third-party fees cover services provided by professionals outside your lender. The FHA-required appraisal costs $400-700 depending on your property type and location. Single-family homes in standard markets run $400-500. Complex properties (multi-units, rural areas, unique features) can reach $600-700. This appraisal must be completed by an FHA-approved appraiser who verifies the home meets FHA's minimum property standards for safety and livability.
Title insurance and title search fees represent another substantial cost. Title insurance ($1,000-3,000) protects you and the lender if someone later claims ownership of the property or if liens surface after closing. The title search ($200-400) examines public records to verify the seller's ownership and identify any existing liens. Combined, expect $1,200-3,400 for title services, with higher costs in states requiring attorney closings.
Additional third-party fees include survey costs ($300-600) to establish property boundaries, recording fees ($50-250) charged by your county to record the deed and mortgage, and notary fees ($50-200) for witnessing document signatures. States like New York, New Jersey, Massachusetts, and Pennsylvania require attorney representation at closing, adding $500-1,500 in legal fees. All told, third-party fees typically range from $2,500-6,500 depending on location and property complexity.
Prepaid expenses aren't technically closing costs, but you'll pay them around the same time, so budget accordingly. Homeowners insurance requires the first year's premium paid upfront, typically $1,000-2,500 depending on coverage limits, home value, and location. Properties in flood zones need additional flood insurance ($400-2,000+ annually). Properties in high-risk wildfire areas carry elevated premiums. Get insurance quotes early-if coverage costs more than expected, it affects your overall affordability.
Property taxes get prorated based on your closing date. If you close mid-year and the seller already paid annual taxes, you reimburse them for your portion. If taxes are unpaid, you'll prepay several months into an escrow account. Prepaid interest covers the period from closing day until your first mortgage payment. Closing on the 15th means paying 15 days of interest upfront. Closing on the last day of the month minimizes prepaid interest-a strategy that saves $150-300 on a $350,000 loan at 5.97%.
Initial escrow deposits fund your escrow account, which pays taxes and insurance going forward. Lenders typically require 2-6 months of property taxes and 2-3 months of insurance as a cushion. On a $415,000 home with $6,000 annual taxes and $1,800 insurance, expect to deposit $1,000-3,000 for taxes plus $300-450 for insurance. These prepaid expenses and escrow deposits typically add $3,000-8,000 to your closing costs depending on your location and timing.
Where you buy dramatically impacts closing costs. Texas buyers on a $350,000 FHA loan typically pay $8,500-11,000 total. New York buyers on the same loan pay $12,000-17,000-a $3,500-6,000 difference driven entirely by state and local fees. The primary culprits: transfer taxes, attorney requirements, and title insurance rates.
Transfer taxes represent the biggest regional variation. Florida, Texas, and Nevada have minimal or zero transfer taxes. New York charges 0.4% state transfer tax plus local taxes (New York City adds 1.425-2.625%). New Jersey imposes county and municipal transfer taxes totaling 1-2%. On a $350,000 purchase, that's $0 in Texas versus $5,000-9,000 in New York.
Attorney requirements add cost in states mandating legal representation. Pennsylvania, New York, New Jersey, Massachusetts, Connecticut require attorneys at closing ($500-1,500). Most other states allow buyers to close without attorneys. Title insurance also varies-some states have regulated rates, others allow competitive pricing that can differ by 30-50%.
Real examples from borrowers I've worked with: A Dallas buyer on a $350,000 loan paid $9,200 total closing costs (2.6% of loan amount). A comparable buyer in northern New Jersey paid $14,800 (4.2%)-61% more for the same loan. The difference: $2,800 in transfer taxes, $1,200 more for title insurance, $1,100 for required attorney, and $500 in higher recording fees.
Within three business days of receiving your complete application, your lender must provide a Loan Estimate detailing projected closing costs. This isn't a guarantee-it's an estimate based on typical fees. Review it immediately. Compare origination fees across lenders (should be 0.5-1%), because fees vary greatly by lender, product, and rate selected. Check if title insurance seems high for your area. Question any unusual fees or charges you don't understand.
Use the Loan Estimate to shop effectively. Page 2 lists services you can shop for-title company, survey, inspections. Get quotes from 2-3 title companies and compare total charges. Some services like the appraisal and credit report are fairly standardized, and some fees (like these) can’t be shopped. But origination fees, processing fees, and title services vary widely. This is where you can save $1,000-3,000 through smart shopping.
Three business days before closing, you'll receive the Closing Disclosure with final figures. Compare line-by-line with your Loan Estimate. Small variations are normal (appraisal might have cost $450 instead of estimated $400). Large discrepancies require explanation. If origination jumped from $2,000 to $3,500 without notice, question it immediately. The 3-day requirement gives you time to resolve issues before closing.
FHA closing costs run $2,000-4,000 higher than conventional primarily due to the upfront mortgage insurance premium. On a $350,000 loan, FHA's 1.75% UFMIP costs $6,125 while conventional loans have no upfront PMI. If you're comparing $11,500 FHA closing costs to $7,500 conventional, the $4,000 difference is almost entirely UFMIP.
But context matters. FHA's lower rates (5.97% vs 6.25-6.50% conventional) save $50-100 monthly. Over 30 years, that's $18,000-36,000 in interest savings. The $4,000 higher closing cost is recouped in 40-80 months of lower payments. Plus, FHA's 3.5% down versus 5-20% conventional preserves tens of thousands in cash for reserves and furnishings.
FHA's 6% seller concession limit beats conventional's 3-6% sliding scale (3% with less than 10% down, 6% with 10%+, 9% with 25%+). If you're putting 3.5% down with FHA, you can get 6% seller concessions. A conventional buyer with 5% down can only get 3%. On a $350,000 purchase, that's $21,000 potential FHA concessions versus $10,500 conventional-doubling your negotiating leverage.
FHA allows sellers to contribute up to 6% of the purchase price toward your closing costs-the highest limit among major loan types. On a $350,000 home, that's $21,000 potential concessions covering all your closing costs plus down payment assistance. In 2026's more balanced market with 4.4 months of inventory, sellers have more incentive to negotiate than during the 2021-2022 frenzy.
The negotiation strategy depends on market conditions. In a true buyer's market (6+ months inventory, homes sitting 30+ days), request full concessions upfront. In balanced markets (4-6 months inventory), offer asking price in exchange for 3-4% concessions-sellers often prefer full price with concessions over lower price without. In hot markets (under 3 months inventory, multiple offers), concessions become harder but aren't impossible if the property has issues identified during inspection.
Lenders offer credits toward closing costs in exchange for accepting a higher interest rate-typically 0.25% rate increase provides 1-1.5% of the loan amount in credits. On a $350,000 loan, that's $3,500-5,250 toward closing costs. The math: accepting 6.22% instead of 5.97% costs roughly $50 monthly. To break even on $4,000 in credits takes 80 months. If you plan to refinance within 5-7 years (common for FHA buyers who later refi to conventional), credits make sense.
FHA allows gift funds from family members, employers, labor unions, close friends, charities, and government agencies toward down payment and closing costs. The donor must provide a gift letter stating the funds require no repayment. Parents gifting $15,000 toward your $11,500 closing costs and $12,250 down payment can make homeownership possible when savings fall short. Additionally, state and local down payment assistance programs exist in most markets-check HUD's database for your area.
Page 2 of your Loan Estimate identifies services you can shop for. Title insurance varies significantly-I've seen $1,200-2,800 quotes for identical coverage on the same property. Survey costs range $300-600 depending on provider. Even pest inspections ($75-200) and home warranties ($400-700) are negotiable. Spending 2-3 hours getting competing quotes can save $800-1,500 easily.
Closing at month-end minimizes prepaid interest. Closing on the 30th means paying one day of interest upfront instead of 15-20 days. On a $350,000 loan at 5.97%, daily interest is $57. Closing on the 5th costs $1,425 in prepaid interest (25 days). Closing on the 30th costs $57 (1 day)-saving $1,368. Sellers sometimes resist month-end closings because they're popular, but the savings are substantial if you can negotiate it.
Single biggest mistake I see: accepting the first loan offer without shopping. Origination fees vary 0.5-1% ($1,750-3,500 on $350,000). Interest rates differ 0.25-0.50% between lenders ($50-100 monthly). Over 30 years, that's $18,000-36,000. Get Loan Estimates from at least three lenders. Compare APRs (true cost including fees), not just rates. The $2,000-5,000 in savings easily justifies the 4-6 hours spent comparing.
Your lender will recommend title companies, surveyors, and other service providers. These recommendations often involve referral relationships where the lender gets kickbacks. You're not required to use them. Get independent quotes from 2-3 providers for title insurance, surveys, and inspections. Title insurance alone can vary $800-1,200 on the same property. That's money saved with three phone calls.
Most buyers never consider how closing dates affect prepaid interest. The difference between closing on the 3rd versus the 30th is $1,000-1,500 on a typical FHA loan. Request month-end closing in your purchase contract. If the seller resists, offer to split the difference or adjust the purchase price by $500 in exchange for a 28th-30th closing. The math heavily favors month-end closings.
It’s required by law that you receive the Closing Disclosure three business days before closing for a reason-to catch errors and discrepancies. Yet many buyers just sign without reviewing. Compare every line to your Loan Estimate. I've caught $2,000 in duplicate fees, $800 in inflated title charges, and $1,200 in incorrect prorations. If something looks wrong, call your lender immediately. They can issue a revised disclosure if errors exist.
Rolling $10,000 in closing costs into your FHA loan feels smart-you preserve cash for moving and furnishing. But at 5.97% over 30 years, you'll pay $11,500 in interest on that $10,000. Total cost: $21,500 instead of $10,000. Sometimes that's worth it if you need the cash. But if you have the funds, paying closing costs upfront saves substantial long-term interest.
FHA closing costs in 2026 typically range from $7,000-21,000 depending on your loan amount and location, with most buyers paying 3-4% of the loan amount. The mandatory 1.75% upfront mortgage insurance premium represents the largest single cost, but can be financed rather than paid in cash. Beyond UFMIP, you'll pay lender fees ($2,500-5,000), third-party services ($2,500-6,500), and prepaid expenses ($3,000-8,000).
Geographic location drives significant cost variations. High-tax states with attorney requirements can add $3,500-6,000 to closing costs versus low-cost states. Regional differences of 20-40% are common, making location awareness critical when budgeting. Review your specific state's transfer taxes, recording fees, and attorney requirements early in the process to avoid surprises.
The strategies that actually reduce closing costs: negotiate seller concessions up to 6%, shop multiple lenders to save $2,000-5,000, compare service provider quotes for title insurance and surveys, consider lender credits if you plan to refinance within 5-7 years, use gift funds from family when available, and time your closing for month-end to minimize prepaid interest. These aren't theoretical-I've seen them save buyers $5,000-8,000 combined.
Avoid the costly mistakes: not shopping lenders, accepting the first service quotes, ignoring closing date impacts, failing to review the Closing Disclosure for errors, and financing costs without understanding the interest implications. Each mistake can cost $1,000-5,000 unnecessarily. The educated buyer who shops carefully, negotiates seller concessions, and reviews documents thoroughly pays substantially less than the buyer who accepts everything at face value.
FHA loans remain the most accessible path to homeownership for first-time buyers and those with less-than-perfect credit despite higher closing costs than conventional loans. The 3.5% down payment, lower interest rates, flexible underwriting, and 6% seller concession limit typically outweigh the upfront mortgage insurance premium for buyers who couldn't otherwise qualify. Focus on what you can control-shopping aggressively, negotiating seller help, and timing your closing strategically-and FHA closing costs become manageable rather than prohibitive.
The main difference is that FHA loans require an upfront mortgage insurance premium of 1.75% of the loan amount, which conventional loans do not. That's an extra $6,125 in closing costs on a $350,000 loan. If you put down less than 20%, you only need PMI on a conventional loan. PMI is paid monthly and doesn't include any upfront costs. Aside from UFMIP, FHA closing costs are the same as those for conventional loans. They include lender fees (origination, underwriting, and processing), third-party costs (appraisal, title, and survey), and prepaid expenses (taxes, insurance, and interest). However, FHA has benefits that can make up for higher closing costs. For example, FHA rates are usually 0.25–0.50% lower (5.97% FHA vs. 6.25–6.50% conventional as of December 2025), the 3.5% down payment instead of 5–20% conventional keeps more cash, and FHA allows up to 6% seller concessions instead of 3–6% conventional, depending on the size of the down payment. When you add up all the FHA closing costs, including UFMIP, they usually cost $2,000 to $4,000 more than conventional closing costs. However, FHA is often more affordable for first-time buyers with limited savings because it has lower rates and down payment requirements.
Yes, but there are some important things to keep in mind. You can add most of the closing costs, like the upfront mortgage insurance premium, lender fees, and some third-party costs, to your FHA loan amount. You can't borrow money for your down payment (the 3.5% minimum required investment must be cash), and you can't borrow money for costs that are higher than the property's appraised value. If you're buying a house for $350,000 that is worth $355,000, you might be able to borrow $5,000 more to cover closing costs on top of your base loan amount. The details: You can get a $350,000 loan with a $12,250 down payment and $11,500 in closing costs. You pay for the $6,125 UFMIP and $5,000 in extra closing costs, which brings your loan total to $361,125. You put down $12,250 and pay the rest of the closing costs in cash, which is $6,500. The trade-off is that borrowing $11,000 at 5.97% for 30 years means paying $12,600 more in interest, bringing the total cost to $23,600 instead of $11,000. But if saving money for moving costs, furniture, and savings is important, financing costs often make sense for first-time buyers, even though they have to pay interest.
Look at your Loan Estimate and compare it to industry standards and other lenders. Origination fees should be between 0.5% and 1% of the amount of your loan. If they are higher, you need to explain why. Fees for underwriting usually range from $300 to $900, fees for processing from $300 to $800, and fees for preparing documents from $75 to $300. If you see $1,500 for underwriting or $1,200 for processing, those numbers are too high. Get loan estimates from at least three lenders and look at the total lender charges section. Look at the annual percentage rate (APR) in addition to the dollar amounts. This includes both your interest rate and the fees shown as a rate. If Lender A gives you 5.97% with a 5.99% APR Lender B has a lower rate of 5.90% with a 6.15% APR, but their fees are much higher. There are a lot of red flags, like junk fees that are higher than normal (like administrative fees, file review fees, and processing fees), origination fees that are higher than 1%, and big differences between the Loan Estimate and the final Closing Disclosure that don't make sense. Don't be afraid to haggle. If a competitor has better terms, ask your favorite lender to match them. Even if lenders say they don't, they often have some leeway when it comes to fees.
Sellers can help pay for your closing costs, prepaid expenses, discount points, and other financing costs up to 6% of the lower of the purchase price or appraised value. The seller can pay up to $21,000 on a $350,000 purchase that is worth $355,000 (6% of $350,000, the lower number). This 6% limit is the highest for most types of loans. Conventional loans let you borrow 3% to 6% of the amount you need, and VA loans only let you borrow 4% of the amount you need. You can use eligible costs to pay for all closing costs (lender fees, third-party charges, prepaids), discount points to lower your rate, and even put money into your escrow account. The way you negotiate depends on the state of the market. In buyer's markets where inventory is growing and homes are on the market for longer periods of time, ask for 4–6% concessions up front as part of your first offer. In balanced markets, you should offer the full asking price or a little bit more in exchange for 3–4% seller concessions. Many sellers would rather get their asking price even if they have to pay costs. It's harder to get concessions in hot markets, but it's still possible if an inspection shows problems or an appraisal comes in low. Put all of the seller's concessions in writing in your purchase contract. Verbal agreements don't count. When your lender looks over the contract, they will make sure that the concessions don't go over the 6% limit.
During the mortgage process, you will get information about closing costs at three specific times. First, your lender must give you a Loan Estimate with estimated costs within three business days of receiving your full application. This first estimate is based on the average fees for your type of loan and where you live, but it may not be the final one. Second, your lender may give you new estimates as your loan goes through underwriting if things change. For example, if the appraisal costs more than expected or if you need more services. Last but not least, you'll get the Closing Disclosure with final, binding numbers at least three business days before your scheduled closing date. The federal government requires this three-day waiting period so you have time to look over the numbers and ask questions about any differences before you sign. The Closing Disclosure locks in your costs. Unless something very unusual happens, like a last-minute rate change or extra fees you agree to, what you see on that document is what you'll pay at closing. There is usually some difference between the Loan Estimate and the Closing Disclosure (the actual appraisal fee might be different from the estimated fee, title insurance might be slightly different, and prepaid amounts depend on the exact closing date), but if there are big differences, like origination fees going from $2,000 to $3,500 or unexpected charges showing up, you should contact your lender right away.
Yes, you can negotiate some of the closing costs. Lender fees, especially those for origination, processing, and administration, can be changed. If a competitor has lower fees, ask your current lender to match or lower their fees as well. If you ask, a lot of lenders will drop small fees like document prep, wire transfer, or courier fees that are between $50 and $300. Provider shopping makes it easy to negotiate the prices of third-party services. On page 2 of your Loan Estimate, you can find services you can shop for, such as title insurance, a survey, a pest inspection, and a settlement agent. For the same coverage, title insurance can cost anywhere from $800 to $1,500 more or less depending on the provider. Costs for surveys range from $300 to $600. Even the costs of hiring a lawyer in states that require it can be different by $200 to $400 between firms. The costs that can't be changed are the upfront mortgage insurance premium (1.75% set by FHA rules), the recording fees set by the county, and the transfer taxes set by the state and local governments. You can bargain or shop for everything else. Your plan is to use the Loan Estimate's list of service providers to get quotes from different companies, ask your lender to match the lower fees of competitors, and negotiate with the seller to cover costs you can't get rid of. Even small savings add up. For example, saving $200 here and $300 there on a dozen line items can lower your closing costs by $2,000–3,000.
To figure out how much cash you need, add up your down payment and closing costs, then subtract any seller concessions and lender credits. For a typical FHA loan of $350,000, this is how it breaks down: You need $22,750 to $26,250 in cash to buy a home. This includes a $12,250 down payment (3.5%) and $10,500 to $14,000 in closing costs (3 to 4% of the loan amount). If you get $10,000 in seller concessions and $2,000 in lender credits, you only need $10,750–14,250 in cash. Add a 10% cushion ($1,000–1,500) for costs or changes that you didn't see coming. This means you need to have $11,750–15,750 in cash on hand at closing. Most experts recommend that you have 3 to 6 months' worth of housing costs saved up for emergencies after closing. This is not included in this amount. The amount will be different for each person. It will be higher if you live in a state with high taxes and a lot of prepaid expenses, and lower if you close at the end of the month with little prepaid interest. It will also depend on the annual taxes and insurance costs for your property. Look over your Loan Estimate and ask your lender to estimate the final cash to close based on your desired closing date. Then, for safety, add 10% to that number.
FHA rules say that family members, employers, labor unions, close friends with a clear interest in the borrower, charitable organizations, and government agencies can give money to cover both the down payment and closing costs. The most important thing is that the gift must be a gift and the person giving it should not expect to get it back. It's okay if your parents give you $15,000 to help with your $12,250 down payment and $11,500 closing costs. The person giving you the gift must write a letter that includes their name, address, relationship to you, the amount of the gift, confirmation that no repayment is expected, and where the money came from. Your lender will check the gift by looking at bank statements that show the money moving from the donor's account to yours. FHA requires proof that the donor has a clear interest in helping you, such as an employer giving home buyer assistance as an employee benefit. Gifts from people who are not related to you are looked at more closely. Gifts can't be loans in disguise. If you have to pay back the money, it counts as debt against your debt-to-income ratio and could make you ineligible. Some common family gift situations are when parents help with the down payment, grandparents pay for closing costs, or siblings pool their money to help with upfront costs. As long as it is properly documented, the gift can come at any time before closing. Many buyers get gifts early to create a longer paper trail, but last-minute gifts are fine as long as all the paperwork is in order.
If you're running low on money as closing time approaches, you have a few choices based on how much you're short and how much time you have left. If you haven't reached the 6% limit yet, you can raise the seller's concessions. If you agreed to 3% concessions and the closing costs were higher than you thought, ask for an amendment that raises the concessions to 5%–6%. Sellers often agree to things so that the deal doesn't fall through. Option 2: Take a slightly higher interest rate in exchange for lender credits. A loan of $350,000 with an extra 0.25% interest rate can get you $3,500 to $5,250 in credits. Option 3: If you can get gift money from family members and have the right paperwork, you can use it. Option 4: If your property appraised for more than you paid for it, you can add some closing costs to your loan amount. Option 5: Put off closing for 2 to 4 weeks to get more money, but this needs the seller's permission and may mean extending your rate lock. Option 6: Save $1,000 to $1,500 in prepaid interest by scheduling your closing for the end of the month. What doesn't work: getting new loans or credit cards while the process is going on (underwriters check credit again before closing and will find new debts), borrowing money that has to be paid back (this counts as debt), or hoping to pay later (all costs must be paid at closing). If you have to cancel the purchase, you'll lose the appraisal fee and possibly the earnest money, so make sure you've tried everything else first.
FHA closing costs vary a lot from state to state because of different transfer taxes, attorney requirements, title insurance rules, and recording fees. Texas, Florida, Nevada, Arizona, and most of the Midwest are all states where living is cheap. In these areas, closing costs on a $350,000 FHA loan are usually between $8,500 and $11,000 (2.4% to 3.1% of the loan amount). This is because there are few or no transfer taxes, attorneys are not needed, and title insurance is reasonably priced. New York, New Jersey, Pennsylvania, Massachusetts, Connecticut, California, and Washington are all states with high costs. In these markets, the same $350,000 loan costs $12,000–17,000 to close (3.4–4.9%) because transfer taxes can be as high as 1–3% of the purchase price, mandatory attorney representation can add $500–1,500, and title insurance is more expensive and has higher premiums. Some examples are: A buyer in Dallas pays about $9,200 in closing costs on a $350,000 loan. A buyer from northern New Jersey pays $14,800. A buyer from Seattle pays $11,500. A buyer in New York City pays $16,200. These differences of 20–60% show how important location is when making a budget. When you buy a home, look into the transfer taxes in your state and county, whether you need a lawyer, how much title insurance usually costs, and how much it costs to record the deed. Instead of using national averages that might not be accurate for your market, use these regional facts to help you figure out how much cash you need to close.
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