Understanding FHA Loan Closing Costs

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All mortgage loans have loan closing costs – it’s a part of doing business. FHA loans typically have closing costs between 2 and 5 percent of the loan amount. On a $200,000 loan, closing costs may be $4,000 to $10,000.

FHA Closing Costs Vary by Lender

Each lender sets its own closing costs. In general, borrowers pay:

• Underwriting fee
• Credit report fee
• Appraisal fee
• Origination fee
• Processing fee
• Document Preparation fee
• Closing fees
• Title fees

Paying the FHA Closing Costs

Closing costs are the borrower’s responsibility, but there are ways to get help.

• Ask the seller for closing costs assistance – When you negotiate your sales contract, talk to your seller about helping with the closing fees. If the seller agrees, you’ll increase the sales price of the home to make room for the closing costs. Before you do this, make sure the home is worth at least as much as you bid.
• Ask the lender for closing costs assistance – Some lenders offer no-closing costs loans in exchange for a higher interest rate. This increases your monthly payment but decreases the money you need to close on the loan.

I have many years of experience working with FHA borrowers. I’d be happy to walk you through the FHA loan closing costs so you understand the costs and your options to pay them.

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