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Hole 16 · Back Nine — Execute

Closing Costs

Closing costs typically run 2-5% of the purchase price and catch first-time buyers off guard if they are not budgeted for early. This hole breaks down what you are actually paying for at closing and how seller credits can offset part of the bill.

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Written by 18 Holes to Home Team · Education Team · 18 Holes to Home | Educational content

Primary sources reviewed July 15, 2026

Homebuying fundamentals are taught for learners nationwide. Sections labeled Washington detail use Washington law, programs, practices, or Pacific Northwest examples—check the official resources for your state before acting.

What buyer closing costs actually pay for

Closing costs typically run 2-5% of the purchase price, on top of your down payment. The bulk covers loan origination, title insurance, escrow and settlement fees, recording fees, and prepaid property taxes and insurance. Some costs — like your appraisal and inspection fees — you may have paid earlier in the process, so they're not money due at the table.

  • Origination charges and lender credits appear on the Loan Estimate and Closing Disclosure.
  • Title, escrow, settlement, and recording charges vary by transaction and provider.
  • Prepaid taxes and insurance amounts vary by county and your closing date.
Washington detail

Washington keeps one big cost off the buyer's plate

Washington's Real Estate Excise Tax (REET) is a tax on the sale of real property. The seller usually pays it, but the Department of Revenue says the buyer can become responsible if it is not paid, and unpaid REET can create a lien. Treat it as a title-and-escrow item to verify rather than an expense that can never affect the buyer.

  • State REET is graduated by sale-price tier, with local REET added where applicable.
  • The seller usually pays REET, but escrow and title should confirm payment because buyer liability can arise if it remains unpaid.
  • Knowing what REET costs a seller can inform how much room there is to negotiate.

Seller credits and lender credits can offset your costs

A seller concession is an agreed credit toward eligible costs; a lender credit usually trades a higher interest rate for lower upfront charges. Loan programs calculate and limit interested-party contributions differently, and VA distinguishes ordinary buyer closing costs from seller concessions. Ask the lender to test the exact credit against your loan, price, occupancy, and required cash before relying on it.

  • Seller concessions are typically negotiated in the initial offer or as part of an inspection response.
  • Lender credits trade a higher rate for lower fees — model both before deciding.
  • FHA and VA loans permit some of the highest seller-contribution limits among common loan types.

Budget cash-to-close, not just the down payment

Cash-to-close is your down payment plus closing costs, minus any earnest money already on deposit and any seller credits. Earnest money is applied toward this total at closing — it's not an extra cost stacked on top. Ask for a written closing-cost estimate early, and confirm the final number against your Closing Disclosure before you show up to sign.

  • Cash-to-close = down payment + closing costs − earnest money already deposited − seller credits.
  • Your lender must deliver a Closing Disclosure at least three business days before closing.
  • Confirm your final wire amount against the Closing Disclosure, not an earlier estimate.

Mastery check

Prove it out before you move on.

Caddie

Before you play through — quick read of the green:

4 quick questions. Get all but one right and this hole is marked played. Unlimited retries — there's no penalty for missing one.

Question 1 of 4

Roughly what percentage of the purchase price should buyers budget for closing costs?

Question 2 of 4

In Washington, who pays the Real Estate Excise Tax (REET) on a home sale?

Question 3 of 4

What's the difference between a seller concession and a lender credit?

Question 4 of 4

How is your cash-to-close calculated?

Still stuck? Ask the Caddie.

Hole 15: Appraisal & Financing ContingenciesHole 17: Closing Week