Chandler Sawyer
July 17, 2026
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Who Pays Closing Costs, and How Much Are They Really?
Maybe you’re just starting to look at homes and someone mentioned that the down payment isn’t the only cash you’ll need. Maybe you’re about to get pre-approved, or about to refinance, or you’re mid-transaction staring at an estimate full of numbers nobody explained. Wherever you are in the process, closing costs are the part of the deal that surprises the most people, and the part where the most money quietly moves around.
This guide covers what closing costs on a house actually include, who pays closing costs (buyer or seller, and the honest answer is “it’s negotiable”), how much they run, and the strategies that change the math: seller concessions, lender credits, and structuring your offer so your cash works harder.
And if you get to the end with a question about your own situation, ask us. That’s the whole point of writing this.
What Are Closing Costs on a House?
Closing costs are the fees it takes to actually complete the purchase and the loan. Both sides have them: there are closing costs for the buyer and separate closing costs for sellers (theirs are mostly commissions and their half of title and escrow). Yours break into three buckets:
- Lender fees. This is the loan origination fee, underwriting fee, processing fee, admin fee, doc prep fee. Different lenders slice the same charge under different names, which matters a lot when you’re comparing quotes. More on that in the Loan Estimate section below.
- Third-party fees. The appraisal, credit report, title work, and escrow services. These are performed by outside companies, and the standard ones cost about the same no matter which lender you use.
- Government fees. Recording fees charged by the county to record your deed and your mortgage.
Closing Costs vs Prepaids: Not the Same Thing
Here’s the distinction that saves people from panicking at the bottom-line number. When you get your estimate, the total includes prepaids and your initial escrow account funding, and those are not fees. Prepaid property taxes, prepaid homeowners insurance, and the impound account (impound account and escrow account are two names for the same thing) are your own money, being set aside in advance to pay bills you’d owe as a homeowner anyway. Think of it as pre-loading your escrow piggy bank, not paying a cost.
How Much Are Closing Costs?
The industry-standard range for average closing costs is 2% to 5% of the purchase price. On a $300,000 house, that’s roughly $6,000 to $15,000. That’s a wide range, and in Oregon there’s a specific reason it swings so much: property taxes.
Oregon property taxes don’t reassess when a house sells. The tax bill rides on the previous assessed value, with a maximum increase of about 3% per year in assessed value. That means two similar houses in the same neighborhood, same size, can carry very different tax bills, and since you prepay roughly a year of property taxes at closing to fund your escrow account, the tax bill on your specific house is the single biggest swing factor in your total. It also means no horror stories about a massive reassessment spiking your payment after you buy, which happens in a lot of other states.
Who Pays Closing Costs: Buyer or Seller?
The honest answer: it’s a bit tomato-tomato, because everything ultimately gets baked into the price of the deal. But mechanically, you as the buyer have mandatory closing costs that must be covered, and right now, who actually covers them is completely up for negotiation.
Most sellers, somewhere in the back of their mind, already expect to contribute something when they list. Seller paid closing costs are normal, customary, and happening in most deals we see. This is the one time in the transaction where someone else is allowed to pay your bill, and it’s a big perk worth asking for even if the answer comes back no.
Seller Concessions: What They Are and the Limits by Loan Program
A seller concession (you’ll also hear seller credit, seller contribution, or seller assist, they all mean the same thing) is money the seller agrees to put toward your closing costs as part of the accepted offer. What is a seller credit doing on your paperwork? Reducing what you bring to closing, dollar for dollar.
Each loan program caps how much the seller is allowed to contribute. These are program rules, not our rules:
- Conventional loans: with 3% to under 10% down, the max seller concession is 3% of the purchase price. Put 10% or more down and it jumps to 6%. Yes, that means your down payment size changes how much help you’re allowed to receive, remember that for the strategy section below.
- FHA loans: 6% seller concessions allowed with the standard 3.5% down payment and above. That’s one of the most generous caps out there.
- VA loans: this is the one everyone gets wrong, so it gets its own paragraph.
Max seller concessions on a conventional loan, max FHA seller concessions, the VA seller concessions limit, these caps move deals, and in practice it’s simple: your realtor asks us for a breakdown of what to request, and we send exactly what your program allows before the offer goes out.
The Same Cash, Structured Smarter
Everyone asks whether closing costs are included in the down payment. They’re not, they’re separate, and they compete for the same pot of cash. Which means how you split that pot is a decision, and most people never get shown the options. Here’s a real example of the kind of restructuring we do all day.
Say you’ve saved 21% of the purchase price, and closing costs will run about 3%.
The Default Move
- 18% down payment
- 3% to closing costs
- Under 20% down means monthly mortgage insurance
- Higher pricing tier on the loan
The Restructured Offer
- Offer slightly more, ask the seller to pay the 3% in closing costs
- Your entire 21% goes to the down payment
- 20%+ down: no mortgage insurance at all
- Better pricing tier, and a higher recorded purchase value working for you on a future refinance
Same cash out of pocket. No private mortgage insurance. That’s not a trick, it’s just using your money better.
The same thinking applies smaller: putting more down to cross from under 10% to over 10% doubles your allowed conventional concession from 3% to 6%. And sometimes the best use of a concession isn’t costs at all, it’s asking the seller to buy your rate down instead of cutting the price. If you’re deciding between a bigger down payment and covering closing costs, or wondering about a down payment to avoid mortgage insurance, that’s exactly the conversation to have with us before you write the offer, not after.
Lender Credits and the “No-Closing-Cost” Mortgage
Let’s be straight about the phrase, because mortgage no closing costs advertising is everywhere: there is no such thing as a no closing cost mortgage. The costs always exist. What’s real is coming to the table with no out-of-pocket money, and there are exactly three places that money can come from:
- Assistance programs. Oregon’s grant and assistance programs can be used toward closing costs and down payment. If you’re using down payment assistance or a zero-down program, it shows up right on your Loan Estimate and offsets your cash to close. We covered the Oregon Flex program here.
- The seller. Concessions, covered above.
- A lender credit. Lender credits meaning, in plain English: you accept a somewhat higher interest rate, and in exchange the lender contributes money toward your closing costs. It’s a trade, not a gift.
The money has to come from somewhere. The skill is in the strategy: which source, in what combination, for your specific deal.
Refinance Closing Costs: The Fees You Never See Leave Your Pocket
This is where people get hurt, so read this part twice. Yes, you pay closing costs when you refinance. Refinance closing costs can run a little cheaper than a purchase, but they’re real, and on a refinance there’s a mechanism that doesn’t exist on a purchase: the fees can be rolled straight into your new loan amount. No cash leaves your pocket, so it doesn’t feel like you paid anything. You did. It’s fully tacked on, and now you’re paying interest on it.
Here’s how the trap runs in the real world. Someone who bought a year ago gets a call from a big online lender offering a rate a full point or more below what they have, while the actual market hasn’t moved anywhere near that. They fixate on the rate, they’re thrilled, they sign. What they never see is the tens of thousands of dollars in costs packed onto the loan balance to buy that rate. The deal doesn’t actually pencil out for years and years, if ever. And there’s no safeguard in place to stop it. Nobody is watching your back on that phone call.
A no closing cost refinance is the same story as the purchase version: the costs moved, they didn’t vanish. This is also why we talk strategy at purchase, sometimes it makes sense to buy your rate position knowing a future refinance has its own price tag. It’s all one scenario, and we build it that way.
Earnest Money, Explained
Earnest money is your deposit on the house. In our markets it generally runs about 1% of the purchase price, it’s held by the escrow company (not the seller), and it tells the seller you’re serious.
The misconception we correct most: people think earnest money is money at risk the moment they write the check. Honestly, it’s pretty safe. If the inspection turns up problems and you can’t reach agreement on repairs or price, you get your earnest money back. If your loan is denied, you generally get your earnest money back. The contract is built with outs. The real way you lose your earnest money is deciding not to buy the house at the closing table, walking away without a contingency. At that point it becomes the seller’s compensation for taking their home off the market for you.
At closing, your earnest money isn’t an extra cost, it’s credited back to you, applied toward your down payment and closing costs on the final numbers.
Cash to Close vs Closing Costs
These get confused constantly, and the difference matters. Closing costs are the fees. Cash to close is the net of everything: purchase price, loan amount, down payment, earnest money credit, seller concessions, lender credits, closing costs, and prepaids, all rolled together into the one number you actually bring to the closing table.
Why the distinction protects you: predatory refinances exploit it. You’ll see an offer with a tiny cash to close, sometimes zero dollars, next to a good-looking rate, and it feels like winning. The closing costs on that deal are sky high. They’re just hiding inside a massively inflated loan amount, and the $0 out-of-pocket is the misdirection. Low cash to close tells you nothing about what a deal costs. The Loan Estimate tells you that, so let’s read one.
How to Read Your Loan Estimate (and Compare It to Your Closing Disclosure)
Every lender must give you a Loan Estimate, the standardized document that breaks your costs into lettered sections. At the end of your transaction you’ll get a Closing Disclosure in a nearly identical format. That’s not a coincidence, the two documents exist to be compared: your locked Loan Estimate is the promise, the Closing Disclosure is the delivery, and lining up the LE and the CD side by side at the end is how you make sure nothing moved that shouldn’t have.
One thing to know before you compare anything: until your rate is locked, a lender is not required to show the true points and fees for the rate on your Loan Estimate. We see online lenders work this constantly: a beautiful rate up front, then at lock a huge fee appears, with a “too late to switch if you want to close on time.” Get a locked Loan Estimate. The locked LE is the document that means something, and it’s the one you’ll hold your CD against.
A sample Loan Estimate cost breakdown, section by section.
Section A: Lender Charges
This is where you shop. Every lender fee lives here regardless of what it’s called: origination fee, underwriting fee, processing fee, admin fee, doc prep fee. Some lenders slide a fee or two into Section B as well, so compare all lender-controlled fees together as one total, never a single line item. And check Section J for lender credits, a lender with a slightly higher Section A but a big credit in J can beat a “low fee” quote. If you’re paying discount points for your rate, they show here too, and points versus credits is a whole strategy conversation of its own (separate post coming). More on shopping rates here.
Section B: Appraisal, Reports, and Program Fees
The appraisal, credit report, and other required services. This is also where program-level charges show up: on a VA loan your VA funding fee appears here (veterans receiving disability compensation are exempt from the funding fee entirely, a full VA closing costs post is coming), and on an FHA loan it’s the FHA upfront mortgage insurance premium, the UFMIP. Neither is a lender fee, but both belong in your comparison of the total deal.
Section C: Title and Escrow Fees
Title insurance and escrow services. In Oregon these numbers look genuinely strange on the page, strange enough that we gave them their own section below.
Section E: Recording Fees
County recording fees for your deed and your mortgage. Third-party, standardized, not worth shopping.
Section F: Homeowners Insurance
One year of homeowners insurance, from the company you choose.
Section G: Prepaids and Initial Escrow
Months of homeowners insurance and property taxes to establish your escrow account, the piggy bank funding from earlier. Remember: this is your money, not a fee.
Questions About Closing Costs?
Whether you’re just starting to look, about to make an offer, refinancing, or staring at an estimate that doesn’t add up, tell us what’s going on and we’ll walk you through it in writing. Already have a Loan Estimate? Even easier. Send it over and it usually takes about five minutes to tell you exactly what you’re looking at. No application, no credit pull, no sales calls.
About a minute. A real reply from Matt, Lauren, or Chandler, not a drip campaign.
Title Insurance and Escrow: Who Pays, and Why the Numbers Look Weird in Oregon
First, the question everyone secretly wants answered: is title insurance a waste of money? It doesn’t matter, because you can’t get a loan without it. Lender’s title insurance is required, full stop. What it does is real, it protects against liens and ownership claims from before you owned the place, and the owner’s title insurance policy does the same for your own stake. But nobody’s debating their way out of it, so let’s talk about who pays for title insurance instead.
In Oregon, the custom is that the seller pays for the owner’s title insurance policy and the buyer pays for the lender’s policy. Technically, the buyer is in charge of picking the title and escrow company. In practice, the seller’s side usually dictates it. That’s just how it works here.
Now the genuinely confusing part, the reason your Loan Estimate’s title numbers look inflated. Federal disclosure rules require the lender’s title policy to be shown at its full standalone premium, even though that’s not what anyone actually pays. On a recent Oregon quote, the disclosure showed a $1,711 lender’s policy premium and a strange $134 owner’s policy figure. What actually happened: the buyer paid $495 for the lender’s policy at the simultaneous-issue rate (the discounted rate when both policies are issued together), and the seller paid the owner’s policy per Oregon custom. The disclosed math is a formula, not a bill. So when your title lines look thousands of dollars too big, they probably are, and the credits netting them back down appear as the transaction gets papered. If your estimate’s title section is scaring you, send it over, this is a two-minute explanation with your actual numbers in front of us.
Escrow fees, meanwhile, are customarily split between buyer and seller in Oregon. Washington and Colorado run their own customs on who pays which title and escrow pieces, if you’re buying there, ask us and we’ll walk you through your state’s version.
Frequently Asked Questions
Who pays most of the closing costs?
Both sides pay closing costs. The seller has their own set, mostly commissions and their customary share of title and escrow, and the buyer has theirs: lender fees, third-party fees, and prepaids. Who ultimately covers the buyer’s share is negotiable, and seller concessions can shift some or all of it to the seller.
What are typical closing costs on a $300,000 house?
Roughly $7,000 to $12,000 in our markets, and the honest reason that range is wide is Oregon’s property tax system. Taxes don’t reassess at sale here, so two similar houses can carry very different tax bills, and prepaying about a year of taxes at closing is the biggest single swing in the total. It genuinely comes down to the specific house.
Can closing costs be included in the loan?
On a purchase, no, but seller concessions can accomplish the same thing by having the seller pay them as part of the accepted offer. On a refinance, yes, costs can be rolled into the new loan amount, and that is exactly where people get taken advantage of, because it hides tens of thousands in costs inside a balance nobody looks at. Always compare your new loan balance to your current one.
Is it possible to buy a house with no closing costs?
There is no such thing as a mortgage with no closing costs, but coming to the table with no out-of-pocket money is real. The money comes from one of three places: assistance programs like Oregon’s grants, the seller through concessions, or a lender credit in exchange for a somewhat higher interest rate. The costs always exist, the strategy is in who pays them.
What can I do if I can’t afford closing costs?
Ask the seller for concessions, use a lender credit, or use an assistance program, and often some combination of the three. There are a lot of doors here. Tell us your situation and we will tell you which ones are open for you.
Can seller concessions cover my down payment?
No. Concessions can pay closing costs and prepaids, but your minimum down payment has to come from your own funds or allowed gift funds. That said, concessions free up your own cash, which often lets you put more down, and that opens other doors.
Can seller concessions pay off my debts at closing?
Only on a VA loan. VA allows up to 4% of the purchase price in seller concessions on top of normal closing costs, and that 4% can even be used to pay off the buyer’s debts at closing. It is the only program with this feature, and most people, including plenty of agents, have never heard of it.
Should I put more down or use my cash for closing costs?
Closing costs are separate from your down payment, but they compete for the same savings, and the split is a strategy decision. Sometimes restructuring the offer, putting more down while the seller covers costs through concessions, removes mortgage insurance or improves your pricing tier with the same cash out of pocket. Run the split by us before you write the offer.
What happens to my earnest money if the deal falls through?
In most cases you get it back. Inspection issues you can’t resolve, a loan denial, and other contract contingencies generally return your earnest money. The real way to lose it is walking away from the purchase without a contingency, at which point it becomes the seller’s compensation for taking the home off the market.
Do I pay closing costs again when I refinance?
Yes. A refinance has its own closing costs, sometimes a bit cheaper than a purchase, but you pay for title insurance again, escrow again, and you re-establish your impound account. That future cost is exactly why rate and point decisions at purchase should be made with the bigger picture in mind.
Who pays for title insurance in Oregon?
By Oregon custom, the seller pays for the owner’s title insurance policy and the buyer pays for the lender’s policy, usually at a discounted simultaneous-issue rate when both are issued together. The disclosed title numbers on a Loan Estimate look bigger than what actually gets paid because federal rules require showing the full standalone premium.
Why did my cash to close change right before closing?
Either your scenario genuinely changed, or your loan officer gave you loose estimates that were never accurate to begin with. Comparing your Closing Disclosure against your locked Loan Estimate line by line shows you exactly what moved, and if the explanation you got doesn’t make sense, get a second set of eyes on it.
Do closing costs change if I switch lenders mid-transaction?
The lender fees and the cost of the rate change, because those belong to the lender. The standard third-party fees, appraisal, title, escrow, recording, stay essentially the same. That is why Section A of the Loan Estimate, plus any lender credits, is the true comparison between lenders.
What is the difference between closing costs and prepaids?
Closing costs are fees paid to lenders, third parties, and the county. Prepaids and impounds are your own money, property taxes and homeowners insurance paid in advance to establish your escrow account. They appear together on your estimate, but only one of them is actually a cost.
Let’s Look at Your Scenario
Every deal is a set of numbers waiting to be arranged well, and most of the money in this post gets won or lost before the offer is even written. Whether you’re buying your first place, comparing quotes, thinking about a refinance, or sitting in a transaction that stopped making sense, give us five or ten minutes and let’s see what we can do for you. We answer in writing, we’ll never blow up your phone, and no question is too small. Oregon and Colorado we handle directly, and for Washington we work with licensed loan officers in our office, same process either way. The form below is the fastest way to reach us.
Questions About Closing Costs?
Whether you’re just starting to look, about to make an offer, or staring at an estimate that doesn’t add up, tell us your situation and we’ll walk you through it. Or send us your Loan Estimate. It usually takes about five minutes to tell you exactly what you’re looking at.
Chandler Sawyer
Direct: 541-729-1975
NMLS 2507118
NMLS 2552455
Chandler@BendMortgageBrokers.com
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