Free Investor Guide
Investor Closing Cost Guide.
Understand where the money goes before you choose the lender or write the offer. Closing costs are not one fixed percentage, the final amount depends on the lender, loan program, loan amount, property, state, county, title or closing provider, insurance, taxes, prepaid items, reserves, and the terms negotiated in the purchase contract. Use this guide to understand the categories, compare estimates, and prepare for the complete amount of cash that may be needed at closing.
An online percentage is not an accurate closing-cost quote. Request a property-specific, state-specific, and lender-specific estimate before making a financial decision.
Section 1
Closing Costs Are Not the Same as Cash to Close
Closing costs generally include lender charges, third-party services, title or settlement costs, government charges, and certain other transaction expenses.
Cash to close may also include:
- Down payment
- Prepaid interest
- Initial insurance premium
- Property-tax and insurance escrow deposits
- Required lender reserves
- HOA dues or transfer charges
- Renovation or furnishing funds
- Entity or legal expenses
- Less earnest money already paid
- Less approved seller or lender credits
Estimated Cash Needed
Down Payment + Closing Costs + Prepaid Items + Escrow Deposits + Required Reserves + Property-Specific Funds
− Earnest Money − Approved Credits
Required lender reserves may need to remain in the borrower's account and may not always be physically collected at closing.
Section 2
Costs That May Vary by Lender
- Origination Charges
- Fees charged by the lender or broker for arranging and processing the loan.
- Underwriting, Processing, or Administrative Fees
- Names and amounts vary by lender and loan program. Avoid counting duplicate fees twice when comparing estimates.
- Discount Points
- Optional or required upfront charges connected to the interest rate. One point equals 1% of the loan amount.
- Lender Credits
- A credit may reduce upfront closing costs but can be associated with a higher interest rate or other pricing adjustment.
- Appraisal Requirements
- The cost may vary based on the property type, location, value, complexity, number of units, rental-income analysis, rush request, or additional appraisal review.
- Credit, Flood, Tax, Verification, and Document Fees
- The exact services and charges may vary by lender and transaction.
- Escrow Requirements or Waiver Charges
- Some lenders require taxes and insurance to be escrowed. Other programs may allow an escrow waiver with additional cost or pricing adjustments.
- DSCR and Business-Purpose Loan Charges
- DSCR lenders may have different origination charges, points, legal or entity review fees, appraisal requirements, reserves, and prepayment terms.
- Reserve Requirements
- Required reserves can vary by lender, credit profile, loan amount, DSCR, property type, and transaction.
Section 3
Costs That May Vary by State and Local Government
- Deed-recording fees
- Mortgage or deed-of-trust recording fees
- Transfer, deed, documentary, stamp, or conveyance taxes
- Mortgage-recording or intangible taxes where applicable
- State, county, municipal, or parish charges
- Attorney or settlement requirements
- Local tax certifications
- State-regulated title-insurance premiums
- Recording-page charges
- Local inspection, occupancy, rental-license, or permit requirements
Section 4
Title, Settlement, and Legal Costs
- Title search
- Lender's title-insurance policy
- Optional owner's title-insurance policy
- Settlement, escrow, or closing fee
- Attorney fee where used or required
- Document preparation
- Courier, wire, notary, or remote-closing charges
- Survey or location report
- Municipal lien or tax search
- HOA estoppel, resale certificate, or transfer charges
- Entity, trust, or LLC document review
Who customarily pays certain title or settlement costs may vary by state, market, provider, and purchase contract. Investors should review the proposed allocation with their real estate agent, closing agent, and lender.
Section 5
Property-Specific Investor Costs
- Short-term rental insurance
- Flood insurance
- Wind, hurricane, earthquake, wildfire, or other specialty coverage
- Well inspection
- Septic inspection
- Wood-destroying insect or pest inspection
- Structural, roof, HVAC, chimney, pool, or specialty inspections
- Survey, boundary, easement, or access review
- Condo questionnaire or project review
- HOA transfer, capital-contribution, or initiation fees
- STR permit, license, registration, or occupancy-tax setup
- Rental projection or market analysis
- Property-management onboarding
- Utility deposits
- Initial repairs
- Furniture, linens, supplies, appliances, and security systems
Inspections, furnishings, improvements, and operational setup costs may not appear as lender closing costs, but they still affect the investor's total funds needed.
Section 6
Prepaid Items and Escrow Deposits
These items affect cash to close but are not always lender revenue or traditional fees.
- Prepaid interest from closing through the applicable payment period
- Initial homeowners or STR insurance premium
- Property-tax deposits
- Insurance escrow deposits
- Initial escrow cushion where permitted
- HOA dues paid in advance
- Tax or insurance prorations
Section 7
Credits and Contract Negotiations
- Seller-paid closing costs
- Seller concessions
- Lender credits
- Real estate-agent credits where permitted
- Builder or developer incentives
- Repair credits
- Earnest-money deposit
- Tax and rent prorations
Review requested credits and contract language with Lisa and your real estate agent before the offer is submitted.
Section 8
How to Compare Two Loan Estimates or Fee Worksheets
Section 9
Questions to Ask Before Choosing the Lender
- 01Which fees are charged directly by the lender?
- 02Are discount points included in the quote?
- 03Is the rate locked?
- 04Are there lender credits?
- 05Which third-party services can I shop for?
- 06Does this estimate use accurate state and local charges?
- 07Are taxes and insurance being escrowed?
- 08How many months of reserves are required?
- 09Is there a prepayment penalty or minimum-interest requirement?
- 10Are there additional charges for an LLC, trust, condo, rural property, cabin, or complex appraisal?
- 11What could cause the costs to change?
- 12How much total cash should I have available beyond the down payment?
Section 10
Review With Your Real Estate Agent and Closing Team
Your real estate agent should help review the purchase contract, seller-paid costs, earnest money, prorations, inspections, repair negotiations, HOA obligations, deadlines, title issues, and local customs.
The closing or title professional should confirm title, settlement, recording, transfer, legal, and government charges.
Lisa should review the loan structure, lender charges, points, reserves, appraisal requirements, credits, and estimated cash needed.
Interactive Planning Worksheet
Estimate Your Total Cash Needed
Enter your own property-specific, state-specific, and lender-specific estimates. Nothing is auto-populated. All figures are your inputs.
Purchase
Lender & third-party charges
Origination, underwriting, processing, admin
% of loan amount
Prepaids, escrows & reserves
Property setup
Credits & earnest money
Next Step
Want a property-specific estimate?
Send Lisa the property, purchase price, planned down payment, and projected rental income. Lisa can help identify the lender, state, title, reserve, and property-specific costs that should be reviewed before you make the offer.
This website provides general information about consumer and business-purpose mortgage financing. Some programs may be available only for investment or non-owner-occupied properties, while others may have personal occupancy requirements. Program availability, licensing, terms, documentation, and eligibility vary by lender, borrower, property type, occupancy, and state.
All mortgage financing is subject to credit review, income or asset verification when required, appraisal, title, insurance, lender guidelines, and final approval.
Lisa Stepp-Seritt, NMLS #680403
Mpire Financial, NMLS #2108504
Equal Housing Opportunity
This guide and calculator are provided for general educational and planning purposes only. Fees, taxes, prepaid items, reserves, credits, disclosure requirements, and cash-to-close amounts vary by lender, loan program, property, borrower, title or settlement provider, state, county, municipality, closing date, and purchase contract. This is not a loan estimate, closing disclosure, commitment to lend, legal opinion, tax advice, investment recommendation, underwriting decision, or guarantee of final costs. Obtain an itemized estimate for the specific transaction.