One of the top pieces of advice for anyone planning to buy a house is to make a watertight budget. However, it’s worth noting that your budget needs to account for many things beyond the down payment.

Closing costs are easy to overlook, but to do so would be a costly mistake that could cause you to fall into debt or lose out on your dream home. With that in mind, let’s examine just how much you can expect to pay in closing costs.

The amount you pay on closing costs depends on several variables. However, on average, buyers in the U.S. can expect to pay anything between 2% and 5% of the total sale price. Meanwhile, the figure is generally slightly lower in Canada, usually between 1.5% and 4% for a typical house purchase.

How Much Are Refinancing Closing Costs?

If you’re planning to refinance your home, you’ll also need to pay closing costs, typically between 2% and 6% of the total loan amount. These closing costs comprise several services, some with a flat fee and others charged as a percentage.

How Much Are Closing Costs for the Seller?

If you’re also selling your home while buying a new one, you must budget for the closing fees on both transactions. It’s usually the seller’s responsibility to pay any real estate agent commissions, which can add a hefty chunk to the closing costs, typically around 5% to 6% of the sale price. In addition, you can expect to pay an extra 1% to 3% in other closing fees, taking the total to around 6% – 8%.

Breaking Down the Typical Closing Costs for Buyers

Now that you know how much you should budget for closing costs, let’s look at each component in detail.

Legal Fees

You’ll typically need to work with a closing attorney when buying a home. It’s their job to oversee the entire process, and while they don’t represent either the buyer or the seller, their fee is generally split between the two. Depending on your location, the cost ranges from $500 to $1,500.

Appraisal Fee

Your lender will need to have the house valued before they agree to lend you the money you need to purchase it. On average, it costs $300 to have a house appraised, though it may be more for larger properties. In addition, if the seller completes repairs on the home after the appraisal, your lender may require a reinspection, which costs another $300.

Mortgage Fees

There are several fees associated with your mortgage. These include credit report fees, around $30, and application fees which generally cost between $300 and $500. But, most important is the mortgage orientation fee that all lenders charge to cover their services and admin costs. On average, this will cost around 1% of the loan value, though some lenders offer lower prices, and it’s a good idea to shop around.

Title Insurance Policy

Typically required by the lender, this insurance protects both the lender and the owner against future title claims. It can cost anywhere between $500 and $3,500 depending on the location and size of the property.

Home Inspection (optional)

While not mandatory, it’s well worth having your future home inspected by a professional before signing on the dotted line. Depending on the size of the house, it typically costs between $250 and $700. Of course, for additional inspections, such as lead paint, pest and roof, you’ll need to budget more.

Escrow Fees

An escrow account is a third-party holding account in which you’ll deposit various fees, such as the down payment. Once the sale is complete, the funds will be distributed to the appropriate individuals. Escrow fees typically cost around 1% of the sale price. This is often split between the buyer and seller, though it must be agreed upon first.

Private Mortgage Insurance (PMI)/Mortgage Default Insurance

If your down payment is less than 20%, most lenders will require you to take out mortgage insurance. PMI costs between 0.5% and 2.5% of the mortgage and is usually rolled into your mortgage payments. However, you’ll often need to pay the first month before closing.

Recording and Documentation Fees

Several companies will be involved in processing your real estate transaction, each with a fee to be paid. Courier fees are required if you’ve had to send your documents physically and typically cost around $20. Bank processing fees are also required, generally between $25 and $100, and you’ll need a notary to make the signing of all documents official, so another $100. Finally, the lender will charge a recording fee of around $50 to pay the county to make a public record of the transaction.

Prepaid Property Taxes and Utilities

Any taxes and utilities that have been paid ahead by the seller need to be reimbursed by the buyer. The attorney will calculate the cost, which generally runs between $1000 and $2000.

House Insurance

Most lenders require you to take out homeowners insurance, typically paid annually or biannually. The cost varies by house type and location, so be sure to get a few quotes.