Buying a home is one of the most exciting and important purchases you'll make—but it comes with more than just the down payment. Buyers should be prepared for several additional costs, often called "closing costs," that are due at or before the time of closing.
Here’s a detailed breakdown of the typical fees you may encounter as a homebuyer:
The down payment is the portion of the purchase price you pay upfront. The required amount depends on your loan type and lender requirements.
Common amounts:
Conventional loan: 3% to 20%
FHA loan: As low as 3.5%
VA/USDA loans: 0% down (for qualified buyers)
This is a fee charged by your lender to process your loan. It helps cover administrative costs such as underwriting, verifying income, and preparing documents.
Estimated Cost: 0.5% to 1% of the loan amount
Your lender will require an appraisal to ensure the home's value supports the loan amount. A licensed appraiser evaluates the property to determine its fair market value.
Estimated Cost: $400–$700
Most buyers hire a licensed home inspector to evaluate the condition of the property before closing. This can help identify issues with the roof, plumbing, electrical, HVAC systems, and more.
Estimated Cost: $300–$600
While the seller typically pays for the owner's title policy, the buyer is often responsible for the lender's policy. This protects the lender if any title issues arise after closing.
Estimated Cost: $300–$600 (varies by sale price)
Lenders pull your credit report during the pre-approval process. This small fee is passed along to you at closing.
Estimated Cost: $30–$50
At closing, you'll likely prepay certain expenses, such as:
Property taxes (typically 6–12 months)
Homeowners insurance (1 year premium)
Mortgage insurance (if applicable)
These are deposited into your escrow account to ensure there’s money available when the bills come due.
Estimated Cost: Varies by loan, location, and timing of closing
Local governments charge fees to record the new deed and mortgage. Depending on the agreement, you may also pay part of the transfer tax.
Estimated Cost: $100–$300 (recording only) – Transfer tax amount varies by location
Some lenders require a property survey to confirm boundary lines and structures. This is more common with rural or large properties.
Estimated Cost: $300–$800
In most transactions, the buyer's agent is compensated through the seller's proceeds at closing. However, the amount and structure of the buyer's agent commission is negotiated as part of the purchase agreement when the buyer submits an offer.
This means that the buyer's agent will propose their commission terms in the offer, and the seller must agree to them as part of accepting the contract. The commission amount is not fixed and can vary from one deal to the next.
It's important for buyers to understand how their agent is being compensated and to review this section of the purchase agreement carefully.
Many real estate brokerages charge a separate brokerage transaction fee, sometimes referred to as an admin or compliance fee. This is a flat fee charged in addition to the agent's commission and is meant to cover internal office processing and file handling.
Typical Fee Range: $200–$600
At Bay Realty Michigan, we never charge a broker transaction fee to our buyers. This is part of our commitment to transparent and client-friendly service.
Be sure to check with the brokerage you are using to confirm whether a transaction fee will be applied.
| Fee | Estimated Cost |
|---|---|
| Down Payment | 3%–20% of purchase price |
| Loan Origination | 0.5%–1% of loan amount |
| Appraisal | $400–$700 |
| Home Inspection | $300–$600 |
| Title Insurance (Lender's) | $300–$600 |
| Credit Report | $30–$50 |
| Escrow / Prepaids | Varies |
| Recording Fees | $100–$300 |
| Survey (if required) | $300–$800 |
| Buyer's Agent Commission | Usually paid by seller (negotiated in purchase agreement) |
| Brokerage Transaction Fee | $0 with us (check with your brokerage) |
Final Thought
While the down payment gets most of the attention, closing costs can add thousands to your total out-of-pocket expenses. Make sure to review your Loan Estimate and Closing Disclosure carefully so there are no surprises. And remember—your agent and lender are there to help you understand each line item.
Have questions about what you might pay as a buyer? Contact us anytime. We’re here to walk you through it!