Mortgage Planning
Closing Costs Explained for Affordability
Closing costs explained for affordability, in plain English. See what they cover, how to model a percent, quick 2% vs 4% examples, and how to test them in the stress tester without overthinking it.
Published: January 1, 2026 · Updated: January 1, 2026 · By FinToolSuite Editorial
Open the stress tester
Model closing cost percents, see cash to close, and compare two scenarios.
Disclaimer
- Educational only. Costs vary. Examples are illustrative. No guarantees.
Closing costs explained for affordability: basics
Closing costs are the upfront expenses you pay to finish the purchase. Think lender fees, title work, and prepaids. Modeling them as a percent keeps the math simple and helps you see cash to close next to your down payment.
Two examples
2% on $400,000 is $8,000. 4% on $400,000 is $16,000. That $8,000 gap can shift how much you put down, what buffer you keep, or whether you need to pause and save a bit more.
How to test
Save a scenario at 2%. Duplicate it, set 4%, and rerun. Note the new cash to close and whether the “safe loan” shifts if your down payment changes. Label both runs so you remember which is which.
FAQs
Are these costs monthly?
No. They are upfront. Model them as a percent for cash planning.
Should I add a buffer?
Consider testing a higher percent if uncertain. This is not advice.
Where do buffers fit?
See the cash buffer page for ideas.
Where is privacy info?
See Privacy Policy.
Plan cash to close
Open the mortgage affordability stress tester, test 2% and 4% closing costs, and see how your cash buffer changes.