Last reviewed: 30 September 2026
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What mortgage closing costs include
The short answer: closing costs are the upfront costs of getting your loan and transferring ownership of the home. On the Loan Estimate and Closing Disclosure they fall into two groups, “Loan Costs” and “Other Costs,” each split into labelled subheadings.[1, 2] What this term means: the Consumer Financial Protection Bureau (CFPB) also calls them “settlement costs.” They are separate from your down payment and from your monthly payments.[1, 3]
Knowing the labels lets you read the form line by line and ask a specific question instead of a general one.
The two groups, line by line
| Group and subheading | What goes in it | Notes |
|---|---|---|
| Loan Costs — Origination Charges | What you pay each lender and loan originator for originating and extending the credit. Points paid to lower the interest rate are listed first, as a percentage of the loan and in dollars.[2] | The CFPB gives application, origination, underwriting, processing, verification and rate-lock fees as common examples, and says lenders itemize them more or less finely.[1] |
| Loan Costs — Services You Cannot Shop For | Settlement services from someone other than the lender or broker that you were not permitted to shop for.[2] | The CFPB describes them as required and chosen by the lender, for example some government-program fees or upfront mortgage insurance.[1] |
| Loan Costs — Services You Can Shop For | Settlement services, again from others, that you were permitted to shop for.[2] | See services you can shop for. |
| Loan Costs — Total Loan Costs | The sum of the three subtotals above.[2] | Added to Total Other Costs to give Total Closing Costs.[2] |
| Other Costs — Taxes and Other Government Fees | Recording fees and other government fees and taxes, and transfer taxes you pay, on separate lines.[2] | The CFPB describes these as the costs of transferring the property to you and registering your mortgage with the county records office.[3] |
| Other Costs — Prepaids | Amounts paid in advance of your first scheduled payment: homeowner’s insurance premium, mortgage insurance premium, prepaid interest, and property taxes, each with its period.[2] | The CFPB says you usually pay the first 6 to 12 months of homeowner’s insurance at or before closing, and that you choose the insurer.[1] |
| Other Costs — Initial Escrow Payment at Closing | What you put into an escrow or reserve account at closing, for homeowner’s insurance, mortgage insurance and property taxes, with a per-month amount and number of months.[2] | The CFPB describes it as establishing an initial balance in your escrow account.[3] |
| Other Costs — Other | Other amounts you are likely to pay, or have contracted to pay, to someone other than the lender or loan originator. Premiums for separate insurance, warranty, guarantee or event-coverage products are labelled “(optional).”[2] | Title-insurance items are labelled “Title —.”[2] |
| Other Costs — Total Other Costs | The sum of the subtotals above.[2] | Feeds the “D + I” closing costs total.[2] |
| Total Closing Costs | Total Loan Costs plus Total Other Costs (“D + I”), with any lender credits shown as a negative number.[2] | Labelled “D + I” (the form’s lettered sections for total loan costs and total other costs).[2] The CFPB notes this excludes your down payment and is different from “Cash to Close.”[3] |
Points, lender credits and “no closing cost” loans
The CFPB explains that points are an upfront fee you pay your lender in exchange for a lower interest rate, and that a lender credit is a rebate that offsets some closing costs, typically in exchange for a higher interest rate than you would otherwise pay.[1, 3] The CFPB also warns that an advertised “no closing cost” loan does not make the costs free: in most cases they are covered by a lender credit paid for through a higher interest rate, or rolled into a larger loan balance.[4] Seller credits work similarly: the CFPB notes that a seller who pays some of your closing costs will usually require a higher purchase price, so you are still paying the cost.[4, 5]
Title insurance, in two policies
The CFPB distinguishes two policies. Lender’s title insurance protects the lender against title problems and is usually required to get a mortgage loan; it does not protect your equity in the home.[6] Owner’s title insurance is optional and protects you if someone later sues claiming an interest in the home from before you bought it.[7] The CFPB adds that you can usually shop for title insurance separately from your mortgage.[7]
Who pays, and what can change
The CFPB says that when you buy a home you generally pay all of the costs of the transaction, although depending on the contract or state law the seller may end up paying some.[5] On the Closing Disclosure each cost is shown in columns for borrower-paid, seller-paid, and paid by others.[8] Between the Loan Estimate and closing, some of these costs can change and some cannot; see tolerance categories and cure requirement under the TILA-RESPA Integrated Disclosure (TRID) rule.
Steps to take
- On your Loan Estimate, find “Total Closing Costs” on page 1 and the itemized detail on page 2; our guide to reading the Loan Estimate shows where each part sits.
- Compare the Origination Charges and “Services You Cannot Shop For” totals across lenders; you cannot shop those services separately, and the CFPB suggests comparing the totals.[1]
- Shop for the services in the “Services You Can Shop For” box, title insurance among them.[1, 7]
- Check the homeowner’s insurance and property tax estimates against your own quotes and your local tax authority; the CFPB notes property taxes are set by government, not the lender.[1]
- At closing, compare the Closing Disclosure against this estimate; see how to check your Closing Disclosure against your Loan Estimate.
This page covers the United States federal rule for most closed-end mortgages. Canada uses different disclosure rules; for the Canadian framework start with Canada’s Cost of Borrowing (Banks) Regulations, explained.
When we update this page
We revise this page, and log the change, when any of the following happens:
- 12 CFR § 1026.37 or § 1026.38 changes how closing costs are grouped or labelled.
- The CFPB revises the consumer pages cited here.
- A reader reports an error we confirm.
If something here looks wrong, report an error; we review reports within 5 business days.