Hidden costs like taxes, inspections and lender fees can impact your home buying budget more than you expect.
17 Hidden Expenses You Can Expect to Pay for Before Buying a House
Updated on Jul. 16, 2025
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Application Fee
Lenders collect a mortgage application up front to pay for the cost of initiating your loan, with typical costs running between $400 and $500. However, this is not a required part of the application process, and many lenders advertise ‘no application fees’ in their marketing to attract customers. Investopedia calls application fees an excessive fee that should be avoided.
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Credit Report Fee
Mortgage lenders are required to run a credit report if you’re borrowing to buy a home, typically charging between $30 and $50 per report. If you pay an application fee, it often includes the cost of the credit check. Some lenders itemize the credit report fee separately, while others bundle it with processing or administrative costs. It’s a good idea to request a detailed breakdown, so you clearly understand what you’re being charged for.
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Origination Fee
An origination fee is usually collected after a loan is approved as part of the closing costs. “Charged by the lender for processing the loan, [it’s] usually either a flat fee or a percentage of the loan amount, and disclosed upfront in the Loan Estimate,” LaBonte says. Origination fees are between .5 and 1 percent of the sale price and typically cover the cost of paperwork, verifications and calculations to figure out the mortgage.
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Earnest Money
A homebuyer pays earnest money after their offer is accepted to show the seller that they are serious about purchasing the property. The funds are held in an escrow account until closing, then applied toward the purchase price. If the sale falls through due to agreed-upon contingencies, like a failed inspection or inability to secure financing, the earnest money is refunded. Earnest money deposits range from one to three percent of the sale price, or approximately $3,000 to $9,000 for a $300,000 home.
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Inspection
While not required, home inspections are a highly recommended step in the home buying process. This involves hiring a licensed home inspector to perform a visual examination of the home’s structure, systems, and components to identify any existing issues or potential problems. “Home inspections cost $600 to $650,” Tourville says, “but with the market the way it is, many buyers are waiving the inspection to put forth a more competitive offer.” Specialized inspections for termites, radon or sewer lines are not included in a standard home inspection and come with additional costs.
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Appraisal Fee
One of the hidden costs of buying a home is an appraisal fee, which is used to determine the fair market value of a home. This is required if you’re using a mortgage to purchase the property, and the fee typically ranges from $300 to $600, depending on the property’s type and location. The buyer usually pays this out-of-pocket, but it can sometimes be rolled into the closing costs.
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Flood Determination Assessment
A flood determination assessment costs home buyers around $15 to $30 and is used by lenders to determine if a property is in a flood zone. Lenders also need a flood determination assessment to determine if the home has the proper amount of insurance. This fee is low-cost because the assessment only involves verifying the property’s location on FEMA flood maps.
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Survey Fee
The survey fee pays for a surveyor to assess and verify property boundaries as well as any easements or encroachments like shared driveways or fences. While not required in all states, surveys provide valuable information for homebuyers about the exact location of the house, driveway and any other structures on the property in relation to the property lines. Plan to pay $300 to $700 in survey fees.
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Prepaid Interest
Prepaid interest “covers interest accrued from the closing date to the first mortgage payment,” LaBonte says, and the amount you are expected to pay will be “based on your rate, loan amount and closing date.” This is typically paid up front at closing to ensure the lender receives their interest due for the gap in time between closing and your first full monthly payment. The later in the month you close, the less prepaid interest you’ll owe.
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Escrow Fee
This closing fee is paid to the title company, escrow company or attorney for holding earnest money and distributing insurance premiums, property taxes and mortgage funds. It is separate from the escrow deposit, which covers up to two months of property taxes and mortgage insurance. The fee typically ranges from $500 to $2,000, depending on the property’s value and location, and is often split equally between buyer and seller.
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Attorney Fee
Attorney fees will vary depending on the area of the country in which you live, and are often influenced by state real estate laws. For example, in Massachusetts, where state law requires an attorney to be present at real estate closings, Tourville says costs will range from $1,000 to $1,200, influenced by demand. However, in states where attorney involvement is optional, like in many parts of the South, buyers may find lower attorney fees or rely on title companies instead.
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Mortgage Broker Fee
While not mandatory, mortgage brokers shop around for the best loan products and rates, saving you time and energy contacting different lenders. A broker could potentially find a more favorable loan, but their services come at a cost. They’ll typically charge you 1 to 2 percent of the loan amount, or between $3,500 to $7,000 on a $350,000 mortgage loan. This fee can be paid out of pocket at closing or can be incorporated into the loan, usually through a higher interest rate.
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State Recording Fee
The property transaction from seller to buyer must be publicly recorded by the local government to be legally recognized. This service fee includes the cost to record the deed and mortgage in local land records, with costs ranging from $50 to $250. The cost you can expect to pay should be itemized on the lender’s closing disclosure and will be required at closing.
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Lender’s Title Insurance
Title insurance protects lenders in the event that there is an error in the title search or if there’s a claim of ownership on the property after it’s sold. Also known as a loan policy, lenders will require the buyer to pay their title insurance at closing. This cost is “typically based on the percentage of the loan amount and regulated by the state,” LaBonte says.
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Owner’s Title Insurance
Owner’s title insurance is an optional but highly recommended policy that protects the homebuyer in case of title issues that could come up after purchase. This insurance provides protection if someone later claims a right to the property, like a missing heir, an undiscovered lien or a clerical error in public records, that wasn’t found during the initial title search. This is a hidden cost of buying a home that is well worth it.
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Buyer’s Agent Fee
Buyer’s agents are paid for their services at closing, typically receiving a fee of 2.5 to 3 percent of the home’s purchase price. While this fee was traditionally paid by the seller, a rule change in 2024 has shifted the responsibility to buyers. However, it remains common practice for sellers to cover both the buyer’s and seller’s agent commissions as a way to attract offers, especially in competitive markets. That said, this norm is evolving, and in the coming years, it’s possible that the burden of this cost may fall entirely on buyers.
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Escrow Deposit
While not all mortgage lenders require escrow accounts, many do to ensure that you pay insurance and taxes on time. The cost is calculated and added to your mortgage payment, then set aside in escrow until due. Expect to pay two to three months’ worth of taxes and insurance at closing for upcoming bills. If your property taxes are $7,000 and home insurance premium is $2,000, plan to pay $1,500 to $2,250 as an escrow deposit at closing.
FAQ
Can some closing costs be waived?
It is possible to have some closing costs waived, but not all. Look for lender promotions that waive certain mortgage fees, or try actively negotiating fees with lenders if you have a high credit score. Paying with cash also circumvents any lender fees.
What closing costs will the seller pay for?
In a strong enough buyer’s market, a seller could potentially pay most or all of your closing costs, and it can be used as a point of negotiation to secure the deal. In a seller’s market, it is unlikely that a buyer’s closing costs will be covered, however, they may pay your buyer’s agent fees, as this is still a customary practice.
About the Experts
- Paul Tourville is a licensed broker with Canon Real Estate in Massachusetts. He has been in the real estate industry since 1977.
- Lindsay LaBonte is a loan originator with Applied Mortgage in Northampton, Massachusetts. She has over 18 years of industry experience.
