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The down payment is usually the most talked-about up-front cost of buying a home, and while it’s usually significant, it’s not the only cost you’ll need to prep for as a home buyer.

If you’re taking out a mortgage loan, you’ll also need to pay closing costs — a long list of fees and charges that compensate your lender, appraiser, title company, attorney, and other professionals involved in the process.

The exact fees you’ll pay will depend on many factors, including what type of mortgage loan you choose. Here’s what to expect for FHA loans.

In this article:

What are FHA loan closing costs?

FHA closing costs encompass a wide range of fees and expenses. First, there’s a mortgage insurance premium (MIP), which is paid by all FHA borrowers no matter what. This costs 1.75% up-front at closing, and you’ll pay an ongoing annual MIP as part of your monthly mortgage payments. The annual MIP amount depends on your loan amount, term length, and loan-to-value ratio (LTV).

In addition to MIP, you will also pay for:

• Lender fees: These may include application, origination, processing, and underwriting fees that compensate your lender for their services. They vary based on your FHA mortgage lender.

• Credit report fee: Most lenders charge this for pulling your credit report as part of the application process.

• Appraisal: Your lender will order an appraisal to confirm your home’s value. According to the home services platform Angi, this averages about $356 nationwide.

• Prepaids: These are items you must pay for ahead of time — like homeowners insurance and property taxes for the remainder of the year. Your lender will also collect prepaid interest, which covers the interest charges from closing day until your first monthly payment is due.

• Survey fees: Surveys help determine the legal boundaries of your property.

• Recording fees: These are the costs of recording your transaction with your county.

• Attorney’s fees: If an attorney reviews the contract or participates in the process, you may owe these fees.

• Agent commissions: Depending on how you’ve negotiated with your agent, you may pay their commissions as part of your closing costs.

• Title search, insurance, and other services: These are used to investigate your home’s title and ensure it’s clear of liens and other issues before closing.

• Discount points: Lenders often let you buy mortgage discount points to lower your interest rate. These typically cost 1% of the loan amount and decrease your rate by 0.25%.

• Wire, notary, and courier fees: If you use wire, notary, or courier services in your transaction, you’ll pay fees for these at closing.

There may be others, too, though it depends on your lender and location. Once you apply for your loan, your mortgage lender will give you a full breakdown of your expected closing costs.

Read more: How does title insurance work?

How much are FHA loan closing costs?

The Department of Housing and Urban Development (HUD), which oversees the Federal Housing Administration and its loan program, estimates that FHA closing costs average around 3% to 4% of a home’s price tag. On a median-priced home (roughly $400,000), that comes to $12,000 to $16,000.

Those are just estimates, though. The actual amount you’ll pay will depend on many factors, including:

• Your home’s price

• The costs of services in your area (appraisals, surveys, inspections, etc.)

• The lender you choose

• Where you’re buying

• Your down payment

• The cost of prepaid items, like property taxes or insurance, on your home

When you apply for your FHA loan, the lender will give you a Loan Estimate detailing these costs and how much you will be expected to bring to closing. These are just estimates, though. As you get closer to the closing date, they will give you an official Closing Disclosure, which will provide you with the final costs for each line item.

Dig deeper: Closing on a house — What to expect and how to prepare

How to reduce your FHA closing costs

Closing costs aren’t set in stone, so there are many ways to reduce yours or make them more manageable. Here are a few strategies:

Roll your MIP into your loan amount

The up-front mortgage insurance premium on FHA loans is 1.75%, which can get expensive, depending on your loan amount. For instance, if your mortgage loan is $400,000, you’ll owe $7,000 in initial MIP — which you’ll pay at closing.

Fortunately, the FHA allows you to finance that cost if you can’t pay it out of pocket. This rolls it into your loan balance (essentially adding that $7,000 to your loan amount), so you can pay it off over time. Just keep in mind that this will mean a higher monthly payment and more long-term interest costs.

Learn more: How to remove FHA mortgage insurance

Shop around

Every mortgage lender has a different approach to rates and fees. To make sure you’re minimizing your closing costs, get Loan Estimates from a handful of lenders, and then compare each one line by line.

You can also shop around for any third-party service providers needed. On each Loan Estimate, there should be a “Services You Can Shop For” section on page 2, which lists the items you can find on your own — usually inspections, surveys, and title services.

Read more: The best FHA mortgage lenders

Use closing cost assistance

Many state and local housing agencies offer down payment and closing assistance programs you can apply for. This may help cover some or all of your costs and, in some cases, may not need to be repaid.

Some lenders also offer proprietary closing cost assistance programs, which is yet another reason to shop around for your mortgage company.

Get help from family

You can use gift funds with an FHA loan, so consider asking family members if they can donate to the cause. Just make sure you can document the transfer of the funds and get a gift letter from the donor. This should state that the money is, in fact, a gift and does not need to be repaid.

Get the seller to chip in

Sellers are allowed to pay part of your closing costs, and they might be willing to if they’re in a buyer’s market or have had a hard time selling their home. Talk to your agent if you’re considering this, as they can help negotiate on your behalf.

Dig deeper: What are the pros and cons of FHA loans?

FHA loan closing costs: FAQs

Are closing costs higher with FHA loans?

FHA loan closing costs tend to be on par with other loan programs, though they do come with one extra cost: the up-front mortgage insurance premium (MIP). This is 1.75% of the loan amount and is not charged on other loan programs.

Can closing costs be included in FHA loans?

You can often roll some of your FHA closing costs into your loan amount, though it depends on your lender. Keep in mind that doing this will increase your monthly payment and interest costs. This is sometimes called a “no-closing-cost” FHA loan.

What is the downside of an FHA loan?

MIP is the big downside of FHA loans, as it means you’ll have an extra monthly cost for your entire loan term, in most cases.

This article was edited by Laura Grace Tarpley.