When planning what you can afford to spend when buying a home, be sure to factor in closing costs — in addition to the down payment — to your savings plan.

If these upfront costs seem out of reach, there may be alternative ways to pay for some of them, including:

• Seller subsidies or concessions may be available to lower the costs. For new-home builds, the builder may also offer concessions.
• Grants — for both down payments and closing costs — may be available from your church, employer, municipalities, nonprofit organizations, or public agencies. If you’re a member of a Native American tribe, the tribe may contribute as well. Ask your lender for more information about your options — or check our down payment assistance tool.
• A gift from family members — anyone you’re related to by blood, marriage, adoption, or legal guardianship — may be able to cover some fees. Verify with your lender if your loan type allows this type of gift.
• If the LTV of the property you are interested in purchasing is greater than 80%, private mortgage insurance may be required.

Learn about the costs of buying a home

Different lenders can offer different types of loans and different loan terms, so it’s important to explore your options.

• Ask for lender referrals from family and friends or your local bank. Searching for lenders online and reading their reviews is another helpful way to gather information. Your real estate agent may also provide referrals, but remember you’re not obligated to use their suggestions.
• Make a list of lenders who may be a good fit, and then contact at least three of them to discuss your loan.
• When you meet with a lender’s loan officer, bring your financial documentation so they can give you a better idea of the loans you may qualify for — and be sure to ask lots of questions.
• You can ask for a pre-approval or pre-qualification letter at this stage to show sellers that you are a serious buyer. Each lender may ask for different information. The only upfront fee at this point could be for the lender to pull your credit report. While a credit inquiry typically has a small negative effect on your credit score, within a 45-day period, credit checks from multiple lenders only count as one single inquiry.

All of these discussions will help you understand your options better. But don’t choose your lender yet — not until you’ve compared specific loan offers and the overall financing package.

Ask a lender these questions

Once you’ve found a home you’d like to buy, we recommend comparing Loan Estimates from at least three different lenders. If you shop around for your mortgage loan, you could find significant cost savings — just make sure you’re requesting the same type of loan for each estimate so you can make a direct comparison.

• To get an estimate, you’ll need to provide a lender with some basics about yourself and the home you want to buy. The only upfront fee at this point could be for the lender to pull your credit report. A credit inquiry typically has a small negative effect on your credit score. However, within a 45-day period, credit checks from multiple lenders count as a single inquiry.
• When evaluating estimates, be sure to note the overall financial obligation as well as the specific terms. Different lenders may offer the same interest rate but a different annual percentage rate (APR). An interest rate is the percentage of the total amount borrowed that is paid as a fee to a lender for a loan. An APR is the effective percentage you pay for your mortgage each year, including all additional costs like broker fees, points paid, and closing costs. It’s important to compare both rates.
• Page 2, section C of the estimate includes the services you can shop for, potentially finding lower cost options. The lender is required to provide a list of companies that offer these services. You can use one of the companies on the list or choose a different company if your lender agrees.
• For more information on the specific fees listed, you can refer back to this closing costs calculator.

Remember, receiving a Loan Estimate doesn’t mean you’ve been approved for the loan, and it’s not a commitment for either you or the lender. It is, however, a useful guide for what you can expect moving forward. Loan Estimates can be complex, so be sure you understand all the details before making your selection. The Consumer Financial Protection Bureau (CFPB) provides a Loan Estimate Explainer that can help.

Explore CFPB's Loan Estimate Explainer