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What Are FHA Closing Costs and How Much Are They?

If you want to buy a home but your finances are creating a roadblock, an FHA loan might be a great fit due to its affordability and flexibility.

Author
By Alene Laney

Written by

Alene Laney

Freelance writer

Alene Laney is a personal finance expert with over 10 years of experience. Her work has been featured by Newsweek and Bankrate.

Written by

Alene Laney

Freelance writer

Alene Laney is a personal finance expert with over 10 years of experience. Her work has been featured by Newsweek and Bankrate.

Edited by Reina Marszalek

Written by

Reina Marszalek

Former senior editor

Reina Marszalek has more than 10 years of experience in personal finance and is a former senior mortgage editor at Credible.

Written by

Reina Marszalek

Former senior editor

Reina Marszalek has more than 10 years of experience in personal finance and is a former senior mortgage editor at Credible.

Updated July 28, 2025

Editorial disclosure: Our goal is to give you the tools and confidence you need to improve your finances. Although we receive compensation from our partner lenders, whom we will always identify, all opinions are our own. Credible Operations, Inc. NMLS # 1681276, is referred to here as “Credible.”

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You don’t have to give up your dream of owning a home when finances are tough. If you’re a first-time homebuyer with limited down payment resources, have a lower credit score, or have experienced foreclosure or bankruptcy, there are some situations where Federal Housing Administration (FHA) loans can be incredibly flexible. The best FHA lenders may have the tools to work with you so homeownership is achievable, whatever your unique financial situation.

Financing with an FHA loan can get you into a home at a reasonable cost. Here is what you need to know about FHA closing costs and other important loan information.

How much are FHA closing costs?

Closing costs on an FHA mortgage loan are typically around 3% to 4% of the loan amount. For a $400,000 mortgage, you would likely spend $12,000 to $16,000 in closing costs.

FHA closing costs vs. conventional closing costs

An FHA loan does have an added expense that could be avoided with a conventional loan (depending on the down payment amount): the upfront mortgage insurance premium (MIP).

The MIP fee is 1.75% of the loan amount, and it’s required on all FHA loans. For a $400,000 home, that’s $7,000.

What are FHA closing costs made up of?

Costs vary widely around the country according to state law and local customs as to what is required and who is required to pay the various closing costs. Some closing costs are paid as a percentage of the loan, while others are fixed amounts. Here’s a hypothetical breakdown of what you can expect to pay in FHA closing costs for a $400,000 home.

  • Origination charges: $2,000 to $4,000 (0.5% to 1%)
  • Upfront mortgage insurance premium: $7,000 (1.75%)
  • Appraisal: $500
  • Title closing fee: $450
  • Attorney: $500 to $1,000 
  • Survey: $527
  • Pest inspection fee: $100
  • Flood certification: $600
  • Transfer taxes: $0 to $8,000 (0% to 2%), depending on local law
  • Title insurance and fees: $1,800
  • Credit report fee: $20
  • Recording fee: $30

Your real estate transaction may not include every one of these costs, and there may be other costs you’ll need to pay that are not on this list. But this gives you a general idea of what closing costs you’ll be paying and how much, on average, they will cost.

Keep in mind you’ll also need to pay prepaid expenses. Prepaid expenses aren’t considered closing costs, but you will pay them at closing. These include expenses like taxes, homeowners insurance premiums, and partial-month interest payments.

How to lower FHA closing costs

Paying closing costs isn’t fun, quite frankly. Closing costs don’t lower your loan amount or provide you with ongoing services — they’re administrative costs to obtain a mortgage and transfer the title to your name in a real estate transaction. You pay them one time.

And while some closing costs aren’t negotiable, there are some key things you can do that can make a big difference in your bottom line. To lower your FHA closing costs, try these ideas:

Compare lenders

Finding the best mortgage lender requires a little research on your part. You may see different lenders quote a range of fees and annual percentage rates (APRs) that affect both the cost of your loan over time as well as how much you’ll pay at closing; it’s important to compare your options to find the best rates and offerings.

When you’re comparison shopping for a mortgage, you may want to try negotiating with these FHA lenders. Lenders can pay for some closing costs or offer you a higher rate in exchange for a no-closing-cost loan.

Shop around for negotiable costs

Closing costs you can shop around for are noted on your loan estimate document. They include things like title insurance, attorneys fees, the cost of a home inspection, settlement fees, and other costs from third parties that are variable and can be selected by the borrower.

Put down a larger down payment

A larger down payment will decrease the amount of upfront mortgage insurance premium you pay. It will also reduce the amount of your mortgage's monthly premium.

Get a shorter term

The annual MIP premium goes down substantially with a loan term of 15 years or less. This won’t change the 1.75% upfront MIP due at closing, but if you get an FHA loan pre-approval, you may be able to see if you qualify for a shorter term and save on annual MIP costs. 

Ask for seller concessions

You can negotiate with the seller to help cover your closing costs. It may be possible to offer more than the list price for the property and then ask for a percentage or dollar amount back to apply toward the closing costs.

Disclosure: Depending on loan type, different lenders in the United States offer loans to consumers with credit scores as low as 620, 580, or even 500. Lenders listed in the Advertisements that appear in this article are unlikely to offer loans for consumers with credit scores below 620.

FAQ

What is an FHA loan and how does it work?

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Meet the expert:
Alene Laney

Alene Laney is a personal finance expert with over 10 years of experience. Her work has been featured by Newsweek and Bankrate.