Closing costs are the fees and charges — separate from your down payment — required to finalize a home purchase and mortgage. They surprise a lot of first-time buyers not because they're hidden, but because nobody explained upfront what they're actually paying for.
Broadly, closing costs fall into a few buckets: lender fees (like an origination fee for processing the loan), third-party fees (an appraisal to confirm the home's value, a title search and title insurance to confirm clean ownership, a survey in some areas), prepaid items (setting up your escrow account with the first months of taxes and insurance), and, depending on your market and negotiation, transfer taxes or recording fees.
By law, lenders must give you a Loan Estimate within three business days of applying for a mortgage, which itemizes these costs in a standardized format — and a Closing Disclosure before closing that shows the final numbers. Comparing the two is one of the most important checks a buyer can make before signing; the Close stage later in this Academy walks through reading a Closing Disclosure line by line.
Who pays what is often negotiable. In many markets, buyers can ask sellers to contribute toward closing costs as part of an offer (sometimes called seller concessions), and some loan programs and down payment assistance programs specifically help cover this expense. It's worth exploring the Program Finder on this site and asking your agent about this directly when you get to the Offer stage.
As a rough planning range, many buyers see total closing costs land somewhere around 2–5% of the loan amount — but the only number that matters for your purchase is the one on your actual Loan Estimate, since fees vary by lender, location, and loan type.