Buying a home with an FHA loan? You’re probably wondering how much you'll pay in closing costs, and whether there’s a way to reduce them.
FHA loan closing costs typically range from 2% to 5% of the purchase price and include things like lender fees, title charges, and an upfront mortgage insurance premium (MIP).
Verify Your FHA Loan Eligibility
FHA loan closing costs are the fees you pay when finalizing your mortgage. They cover services like the home appraisal, credit report, lender processing, title search, and government-backed insurance.
These costs are required whether you're buying a home or refinancing with an FHA loan.
What sets FHA loan closing costs apart from conventional loans is the upfront mortgage insurance premium (UFMIP) — a one-time fee equal to 1.75% of your loan amount.
This is in addition to standard closing costs, though most borrowers roll the UFMIP into their loan to avoid paying it upfront.
Common FHA Closing Costs Include:
Appraisal fee, Credit report fee and Recording fees.
Loan origination or underwriting fee.
Title insurance and settlement services.
Upfront Mortgage Insurance Premium (UFMIP).
Prepaid taxes and homeowners insurance.
These costs typically total between 2% and 5% of your home’s purchase price.
Whether you’re a first-time homebuyer or just exploring FHA options, understanding these costs upfront can help you avoid surprises and potentially save thousands at closing.
FHA loan closing costs usually range from 2% to 5% of your total loan amount.
That means if you're buying a $300,000 home, you can expect to pay anywhere from $6,000 to $15,000 at closing.
Your exact costs will depend on the lender you choose, the state you live in, and whether you're able to roll any costs into your loan or negotiate seller credits.
FHA Closing Cost Estimate Example (on a $300,000 loan):
| Cost Item | Estimated Amount |
|---|---|
| Appraisal Fee | $500 – $700 |
| Credit Report Fee | $30 – $50 |
| Loan Origination / Underwriting | $1,200 – $2,000 |
| Title Insurance & Settlement | $1,000 – $2,500 |
| Recording Fees | $100 – $300 |
| Prepaid Taxes & Insurance | $1,000 – $3,000 |
| Upfront Mortgage Insurance (UFMIP) | $5,250 (1.75% of loan) |
| Estimated Total | $9,000 – $15,000 |
Most FHA borrowers roll the upfront mortgage insurance into the loan rather than paying it out of pocket.
In most FHA transactions, the buyer pays the closing costs — but not always.
The FHA program allows sellers to cover up to 6% of the purchase price in closing costs through what's called a seller concession.
That means you can potentially negotiate to have the seller pay some or even all of your fees.
FHA Buyer Options for Covering Closing Costs:
Pay out of pocket at closing.
Request seller concessions during the negotiation.
Use gift funds from a family member or approved source.
Apply for state or local down payment/closing cost assistance programs.
Roll certain costs (like UFMIP) into your loan.
Work with a lender who understands FHA rules, they can help structure your offer to include seller-paid costs and still stay competitive.
Worried about how much you'll need at the closing table?
The good news is, there are multiple ways to reduce your FHA loan closing costs, or even avoid paying them upfront.
Negotiate Seller Credits: Ask the seller to contribute toward your closing costs (up to 6% of the home price is allowed under FHA guidelines).
Use Down Payment Assistance Programs: Many state and local programs offer grants or forgivable loans that help cover both your down payment and closing costs.
Choose a Lender With Lower Fees: Not all lenders charge the same. Compare Loan Estimates to find the most affordable option.
Roll UFMIP Into the Loan: The upfront mortgage insurance premium (1.75%) doesn’t have to be paid out of pocket, most FHA borrowers finance it.
Ask About Lender Credits: Some lenders will cover part of your closing costs in exchange for a slightly higher interest rate. This can make sense if you plan to sell or refinance in a few years.
Reducing closing costs doesn’t mean cutting corners, it’s about using every option available to make your FHA loan more affordable.
Wondering how FHA loan closing costs compare to conventional loans? While the types of fees are similar, FHA loans have a few unique costs, and a few helpful benefits.
Here’s how they stack up - FHA vs Conventional Closing Costs Breakdown:
| Cost Category | FHA Loan | Conventional Loan |
|---|---|---|
| Down Payment | 3.5% (as low as) | 3%–20% |
| Loan Origination / Lender Fees | Similar | Similar |
| Appraisal & Title Fees | Similar | Similar |
| Upfront Mortgage Insurance | 1.75% (UFMIP) | None |
| Monthly Mortgage Insurance | Required for most loans | Required if <20% down |
| Seller Concessions Allowed | Up to 6% of home price | Up to 3% (if under 10% down) |
FHA loans often have slightly higher total closing costs, but they allow lower down payments, more flexible credit scores, and bigger seller help.
You can use the calculator above or estimate 2% to 5% of your loan amount as a general rule.
You can roll the upfront mortgage insurance premium (UFMIP) into your loan, but most other closing costs must be paid at closing or covered by the seller or assistance programs.
Some are. Lender fees may vary, and you can negotiate seller credits to cover part or all of your costs.
The seller can pay up to 6% of the purchase price toward your FHA closing costs, but it must be included in the purchase agreement.
Not always. FHA loans include UFMIP, which can make costs higher upfront, but they also allow smaller down payments and more seller help.
FHA loans make homeownership more accessible, but closing costs can vary based on your location, lender, and loan size.
The best way to get accurate numbers and find out if you qualify, is to connect with a lender who understands the FHA process.
It only takes a few minutes to check your eligibility. No commitment, no credit check required.
