Mortgage Loan Closing Costs Calculator

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Reviewed by: David Chen, CFA | Last Updated: December 2025

Use this comprehensive Mortgage Loan Closing Costs Calculator to estimate the total expenses you will incur when finalizing your home loan. Closing costs typically range from 2% to 5% of the loan amount and include lender fees, third-party services, and prepaid escrow items.

Mortgage Loan Closing Costs Calculator

Estimated Total Closing Costs
$0.00

Mortgage Loan Closing Costs Calculator Formula

Total Closing Costs = Lender Fees + Third-Party Fees + Prepaid & Escrow Items

Lender Fees = Loan Amount × (Origination Fee % / 100) + Fixed Lender Fees
Prepaid Interest = (Loan Amount × Interest Rate / 36500) × Prepaid Days
Prepaid Tax/Insurance = Annual Insurance Premium + (Annual Tax / 12) × 6 Months Escrow

Formula Sources: CFPB Closing Disclosure Guide, Investopedia – Closing Costs

Variables

  • Loan Amount ($): The principal amount borrowed from the lender.
  • Interest Rate (%): The annual rate used to calculate per-day prepaid interest.
  • Origination Fee (%): A fee charged by the lender to cover administrative costs, expressed as a percentage of the loan amount (e.g., 1% of $300,000).
  • Total Fixed Lender Fees ($): Lump sum for underwriting, document preparation, and other specific lender services.
  • Total Fixed Third-Party Fees ($): Costs for services provided by external vendors, such as appraisal, title search, attorney, and credit report.
  • Annual Property Tax Amount ($): The total property taxes paid annually, used to calculate the required initial escrow deposit (typically 6 months).
  • Annual Homeowner’s Insurance Premium ($): The annual cost of the insurance policy, which is typically prepaid for the first year at closing.
  • Prepaid Interest Days: The number of days between the closing date and the first day of the following month. Interest must be paid for this period at closing.

Related Calculators

What is a Mortgage Closing Cost?

Mortgage closing costs are fees paid at the end of a real estate transaction. These costs are a collection of expenses beyond the purchase price of the property and the down payment. They cover the services required to process and close the loan, including underwriting, appraisal, title search, and taxes. They represent the final hurdle before the loan is officially granted and the property’s title is transferred to the buyer.

Closing costs are legally itemized in a document called the Closing Disclosure (CD), which lenders are required to provide to borrowers three business days before closing. These costs are generally divided into three main categories: lender charges (origination fees, points), third-party service charges (appraisal, title insurance, attorney fees), and prepaid items/escrow deposits (property taxes, homeowner’s insurance).

How to Calculate Mortgage Closing Costs (Example)

  1. Determine Percentage-Based Fees: If the loan is $300,000 and the origination fee is 1.0%, the fee is $300,000 * 0.01 = $3,000.
  2. Sum Fixed Fees: Add all fixed charges, such as $1,500 for underwriting (Lender) + $2,500 for appraisal and title services (Third-Party) = $4,000.
  3. Calculate Prepaid Interest: Assume a 6.0% rate and 15 days prepaid. Daily interest = ($300,000 * 0.06) / 365 ≈ $49.32. Prepaid Interest = $49.32 * 15 days = $739.80.
  4. Account for Prepaids & Escrow: Add 1 year of insurance ($1,200) and 6 months of property tax escrow (If annual tax is $7,200, 6 months = $3,600). Total Prepaids = $1,200 + $3,600 = $4,800.
  5. Calculate Total Costs: Sum all categories: $3,000 (Origination) + $4,000 (Fixed Fees) + $739.80 (Interest) + $4,800 (Prepaids) = $12,539.80.

Frequently Asked Questions (FAQ)

  • Are closing costs included in the mortgage loan?

    No, typically they are not. Closing costs are paid upfront at the time of closing. However, some lenders offer a “no-closing-cost” mortgage, where the fees are rolled into the loan principal, increasing your interest rate and total loan cost.

  • What is the average percentage range for closing costs?

    Closing costs generally range from 2% to 5% of the total loan amount, although this can vary significantly based on state regulations, lender fees, and the cost of third-party services like title insurance and appraisals.

  • Can closing costs be negotiated?

    Yes, many components of closing costs are negotiable. Specifically, third-party fees like appraisal fees, attorney fees, and title insurance can often be shopped for, while the lender’s origination fee may also be reduced by paying “points.”

  • What is the difference between lender fees and third-party fees?

    Lender fees are charges the bank imposes directly (like origination and underwriting). Third-party fees are charges for outside services required for the loan, such as the appraisal, credit report, title search, and attorney review.

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