Many or all companies we feature compensate us. Compensation and editorial research influence how products appear on a page. Mortgages 27 Mortgage Costs and Lender Fees That Take New Homeowners By Surprise Updated Dec 04, 2025 9-min read Written by Lindsay VanSomeren Written by Lindsay VanSomeren Expertise: Mortgages, home equity, personal loans, student loans, auto loans, banking, budgeting, debt, credit, tax relief Lindsay VanSomeren is a personal finance writer living in Suquamish, Washington. She's passionate about helping people manage their money better so that they can live the life they want. In her spare time, she enjoys outdoor adventures, reading, and learning new languages and hobbies. Learn more about Lindsay VanSomeren Edited by Kristen Barrett, MAT Edited by Kristen Barrett, MAT Expertise: Student loans, mortgages, personal loans, home equity, investing Kristen Barrett is a managing editor at LendEDU. She lives in Cincinnati, Ohio, with her wife and their three senior rescue dogs. She has edited and written personal finance content since 2015. Learn more about Kristen Barrett, MAT A home is the largest purchase you’ll ever make, and that can be scary. You have good reason for it, too: 73% of first-time homebuyers had regrets about their purchase, according to a recent survey by Clever Real Estate. Mortgage fees and other costs were a top concern, so let’s break them down. Table of Contents Your loan estimate: A guide to your mortgage fees Section A: Origination charges Section B: Services you can’t shop for Section C: Services you can shop for Section E: Government fees Section F: Prepaid fees Section G: Initial escrow payments Other costs to consider Your loan estimate: A guide to your mortgage fees To make things simple, we’ll cover the mortgage fees and terms based on how they appear on a standardized loan estimate you get from a mortgage lender. A loan estimate breaks down the mortgage closing costs into discrete categories. Some you need to pay upfront before closing, some you’ll pay in cash at closing, and some can be rolled into your loan. The most important box is the “Estimated Cash to Close,” which you’ll need when you close on the loan. Section A: Origination charges You’ll see mortgage broker fees and lender charges in the first box of your loan estimate. Lenders vary, but you may see the following charges: Application fee Cost: $200 to $500 Some lenders charge a mortgage application fee to handle your initial loan request. Ask your lender what it specifically covers, because it may overlap with other fees below. Underwriting fee Cost: $300 to $900 More commonly, lenders charge an underwriting fee to handle the research and verification costs to make sure you can afford the mortgage. Processing fee Cost: $25 to $900 Some lenders prefer to list various underwriting charges as “processing fees” instead. It’s another reason you should clarify with your lender what, exactly, you’re being charged for, lest you pay for the same thing twice. Document preparation Cost: $30 to $50 Another common way some lenders divvy up the mortgage origination fees is by document prep costs, i.e., the cost to prepare and verify the actual documents you sign. Points Cost: 0% to 1% of the loan amount An optional upfront fee if you want to lower your interest rate. This can help lower your monthly payment and save you money in the long run. Section B: Services you can’t shop for Your lender works with specific companies to get information about you and the property you’re buying. You can’t shop for these services, but you will be expected to pay for their costs. Appraisal fee Cost: $300 to $1,000 You can put in whatever offer you want on a home, but mortgage lenders generally won’t lend out more than the home is actually worth. They determine this amount by ordering an independent appraisal. Credit report fee Cost: $10 to $100 Each of the three credit bureaus charges lenders a fee to view your credit report, a cost they then pass on to you. Flood certification fee Cost: $15 to $25 Lenders hire experts to check whether your home is in a high flood risk area, in which case you may be required to buy separate flood insurance. Tax monitoring fee Cost: Varies Some lenders require borrowers to pay for a third-party company that checks whether your property taxes are being paid on time, since you (and your lender) could lose the home if local authorities seize it for unpaid tax bills. VA or USDA loan funding fees Cost: 1.25% to 2.15% of the loan amount (VA loans), 1% (USDA loans) Some types of mortgages, notably VA loans and USDA loans, come with standardized upfront funding fees. Section C: Services you can shop for Your homebuying team can recommend certain companies for some of the work that needs to be done before closing. This can be a good way to shave a few dollars off your closing costs. Pest inspection fee Cost: $100 Termites and other miscellaneous pests can cause extensive damage to a home in some parts of the country, yet remain well-hidden from untrained eyes. Survey fee Cost: $400 to $1,000 Lenders sometimes require a surveyor to establish property lines and verify shared structures, such as fences, before approving a home loan. Title search fee Cost: $100 to $2,500 Most lenders will require a title search to verify that no one else has a claim to your home, such as unpaid contractors or overdue HOA fees. Title insurance Cost: 0.5% to 1% of the loan amount Lenders require that you pay for insurance to reimburse them in case you lose the title to your home. Section E: Government fees These costs can vary widely depending on your local customs and regulations. Recording fees Cost: $20 to $250 Some local governments charge a fee to update property records after you take the title to your new home. Real estate transfer taxes Cost: 0.01% to 1.5% State and local governments often charge a tax every time a piece of real estate changes hands. Section F: Prepaid fees Lenders require you to stay up-to-date on things like property taxes and insurance, and so they’ll typically require you to pay for these things upfront. Homeowners insurance Cost: $3,303 (U.S. average) You’ll get to choose your home insurance company, so you have some control over these costs. But to make sure you’re covered, lenders often require you to pay a full year’s premium in advance. Mortgage insurance Cost: 1.75% upfront fee (FHA loans) or a few months upfront (USDA and conventional loans) If your loan type requires you to pay for mortgage insurance, you’ll typically pay either an upfront funding fee or a few months’ worth of charges in advance. Mortgage interest Cost: Varies You’ll start owing interest on your home from day one, even though your first payment isn’t due for a month after you close. To bridge the gap, you’ll prepay that interest during closing. Property taxes Cost: Varies Property taxes can vary tremendously based on where you live and how expensive your home is. Lenders typically require you to pay up to a year’s worth of taxes in advance to ensure that your mortgage works smoothly from the start. Section G: Initial escrow payments Insurance and taxes can rise over time, and to make sure you have a buffer when the payments come due, lenders typically require you to pre-fund your escrow account with two to three months of payments. Homeowners insurance Cost: Varies Extra buffer for your homeowners insurance payment. Mortgage insurance Cost: Varies Extra buffer for your mortgage insurance, if your lender requires it. Property taxes Cost: Varies Extra buffer for your property taxes, in case they’re higher than anticipated by the next due date. Other mortgage lender costs to consider Some costs don’t fit neatly into the lender estimate you’ll receive, but it’s still important to know about them. Earnest money Cost: 1% to 10% of the purchase price Earnest money is a cash payment you make to the sellers as a sign of good faith. If they accept your offer, it will be applied to your closing costs. But if you don’t uphold your contract terms, the sellers get to keep your money. Some of the best mortgage lenders, such as SoFi, offer a cashback closing guarantee that can help protect you in situations like this. Mortgage rate lock fee Cost: 0% to 0.50% of the loan amount Mortgage rates are constantly changing, even while you shop for a home. Thus, some lenders charge an extra fee to temporarily lock your mortgage rate against future changes. Mortgage insurance Cost: 0.2% to 2% of the original loan amount per year, split up into monthly payments If you paid mortgage insurance costs during closing, you’ll likely have a separate charge every month on your loan statement, too. Depending on your loan type, you can have this removed once you’ve gained enough equity, or you can refinance into a new loan. Home inspection fee Cost: $300 to $1,000 Some lenders and loan types come with extra inspection or appraisal requirements. If you apply for a VA loan, for example, you’ll need a special VA home appraisal. Don’t forget about other homebuying costs Once you’ve closed on your house, you’ll want to make sure you can use it, too. I recommend including these important expenses when you’re planning your budget: Moving expenses Lease-breaking fees (if applicable) New furnishings and renovations Unfinished repair items (plus savings for future maintenance) Article sources At LendEDU, our writers and editors rely on primary sources, such as government data and websites, industry reports and whitepapers, and interviews with experts and company representatives. We also reference reputable company websites and research from established publishers. This approach allows us to produce content that is accurate, unbiased, and supported by reliable evidence. Read more about our editorial standards. Clever Real Estate, American Home Buyer Report: 2025 Edition Consumer Financial Protection Bureau, Loan Estimate and Closing Disclosure: Your guides in choosing the right home loan Consumer Financial Protection Bureau, Loan Estimate Explainer The Mortgage Reports, Average Closing Costs 2026 | List of Closing Costs Zillow, Closing Costs Explained: What Are Closing Costs and How Much Are They? Redfin, What Are Closing Costs and How Much Will You Pay? Consumer Financial Protection Bureau, How Should I Use Lender Credits and Points (Also Called Discount Points)? U.S. Department of Veterans Affairs, VA Funding Fee and Loan Closing Costs U.S. Department of Agriculture, Single Family Housing Guaranteed Loan Program Consumer Federation of America, New Report Finds American Homeowners Faced 24% Increase in Homeowners Insurance Premiums Over the Past Three Years About our contributors Written by Lindsay VanSomeren Lindsay VanSomeren is a personal finance writer living in Suquamish, Washington. She's passionate about helping people manage their money better so that they can live the life they want. In her spare time, she enjoys outdoor adventures, reading, and learning new languages and hobbies. Edited by Kristen Barrett, MAT Kristen Barrett is a managing editor at LendEDU. She lives in Cincinnati, Ohio, with her wife and their three senior rescue dogs. She has edited and written personal finance content since 2015.