Mortgage closing costs have increased sharply over the past four years, with credit-pull fees alone jumping more than tenfold since 2022. Homebuyers today should expect to pay between 2% and 5% of their loan amount in closing costs, and understanding where that money goes is the first step toward managing it wisely.
If you have been pre-approved or are planning to apply for a mortgage this spring, you may be surprised by the line items on your Loan Estimate. Fees that once seemed minor have grown into meaningful budget items, and buyers who do not account for them risk scrambling at the closing table.
This post explains why mortgage closing costs are rising, which fees are driving the increase, and what you can do to keep your out-of-pocket expenses under control.
What Are Mortgage Closing Costs?
Closing costs are the fees and charges you pay when your mortgage loan is finalized. They cover everything from the lender’s underwriting work to third-party services like appraisals, title searches, and credit reports. According to the Consumer Financial Protection Bureau, closing costs on a typical home purchase range from 2% to 5% of the loan amount. On a $350,000 mortgage, that translates to $7,000 to $17,500 in upfront fees.
Common Closing Cost Line Items
- Loan origination fee (typically 0.5% to 1% of the loan amount)
- Appraisal fee ($400 to $700 for a standard single-family home)
- Title insurance and title search ($1,000 to $2,500 depending on the state)
- Credit report fee (now averaging $540, up from $50 to $100 in 2022)
- Prepaid property taxes and homeowners insurance escrow
- Recording fees charged by the county
Each of these line items serves a specific purpose in the lending process, but several of them have increased faster than inflation over the past few years. Understanding which costs are negotiable and which are fixed helps you budget more accurately before you apply.
Why Have Credit Report Fees Increased So Much?
The single largest percentage increase in mortgage-related fees has been the cost of pulling your credit report. A 2026 survey by the Community Home Lenders of America found that the average tri-merge credit report fee has risen to $540, more than ten times what it cost in April 2022. FICO score licensing is the primary driver of this increase, with the three major credit bureaus and resellers also raising their prices.
How FICO Pricing Affects Your Costs
FICO has positioned mortgage credit scoring as its highest-growth revenue segment. The company raised its per-score licensing fees significantly between 2022 and 2026, and those costs are passed directly to borrowers. While FICO recently introduced a direct licensing option at $4.95 per score – roughly a 50% reduction compared to tri-merge reseller fees – most lenders still use the traditional credit bureau pipeline, which means borrowers continue to absorb the higher costs.
- April 2022: Typical credit report fee of $50 to $100
- April 2024: Fees climbed to the $150 to $250 range
- 2026: Average fee now $540 per the CHLA survey
- CHLA forecasts additional increases later this year
For borrowers, this means the credit report fee is no longer an afterthought. It is now a meaningful closing cost that should be factored into your upfront budget from the very beginning of your home search.
What Other Costs Are Climbing for Homebuyers?
Credit report fees are not the only closing cost that has risen. Several other line items have increased due to labor shortages, regulatory changes, and higher property values that push up percentage-based fees.
The National Association of Realtors reported that the median existing-home sale price reached $398,400 in February 2026, up 3.8% year over year. Because many closing costs are calculated as a percentage of the purchase price or loan amount, higher home values automatically push these fees upward even when the percentage rate stays the same.
How Fellowship Home Loans Helps You Manage Costs
At Fellowship Home Loans, we believe that wise stewardship of your finances starts with full transparency about what your mortgage will actually cost. We walk every borrower through their Loan Estimate line by line, explaining which fees are fixed, which are negotiable, and where you may be able to save. Our loan officers take time to compare closing cost scenarios so you can make decisions with confidence rather than confusion.
- We provide a detailed Loan Estimate within three business days of your application
- We explain every fee and flag any that seem higher than market norms
- We help you negotiate seller concessions when the market allows it
- For pastors and clergy, we understand how housing allowance income is documented and can structure your loan to minimize unnecessary costs
Proverbs 27:23 says, “Be sure you know the condition of your flocks, give careful attention to your herds.” The same principle applies to your mortgage: know your numbers, understand what you are paying for, and make decisions from a position of knowledge rather than uncertainty.
How Can You Reduce Your Closing Costs?
While you cannot eliminate closing costs entirely, there are several strategies that can reduce what you pay out of pocket. The key is to start planning early and to compare offers from multiple lenders before committing.
Practical Steps to Lower Your Expenses
- Compare Loan Estimates from at least three lenders. The CFPB encourages borrowers to shop around because closing costs can vary by thousands of dollars between lenders for the same loan amount.
- Ask about lender credits. Some lenders offer to cover a portion of your closing costs in exchange for a slightly higher interest rate. This can make sense if you plan to refinance within a few years.
- Negotiate seller concessions. In a balanced or buyer-friendly market, sellers may agree to pay part of your closing costs as part of the purchase agreement. Your loan officer can advise you on how much to request.
- Look into down payment and closing cost assistance programs. The Mortgage Bankers Association reports that more than 2,000 down payment assistance programs exist nationwide. Many cover closing costs as well.
- Time your closing strategically. Closing at the end of the month reduces the amount of prepaid daily interest charges, which can save you several hundred dollars.
If you are a first-time homebuyer, our mortgage calculator can help you estimate your monthly payment, and our loan officers can walk you through the full picture of what you will need at closing. You can also explore your options by visiting our Find a Loan page to see which programs fit your situation.
For pastors and church staff with non-traditional income structures, closing costs can feel especially daunting on top of the complexity of documenting housing allowance and love offerings. Fellowship Home Loans has deep experience working with clergy borrowers, and we can help ensure your application reflects your full qualifying income so you are not paying more than necessary. Start your application today or contact our team to discuss your options.
Frequently Asked Questions
How much are average mortgage closing costs in 2026?
Closing costs typically range from 2% to 5% of the loan amount. On a $350,000 mortgage, that means $7,000 to $17,500. The exact amount depends on your lender, your state, and the specific services required for your transaction.
Why did mortgage credit report fees increase so much?
FICO raised its score licensing fees significantly between 2022 and 2026. The Community Home Lenders of America found that the average tri-merge credit report fee rose from $50-$100 in 2022 to $540 in 2026, driven primarily by FICO pricing increases passed through credit bureaus and resellers.
Can I negotiate my closing costs?
Yes, some closing costs are negotiable. Lender fees such as origination charges can sometimes be reduced or offset with lender credits. Third-party fees like title insurance may also vary between providers. Comparing Loan Estimates from multiple lenders is the most effective way to find savings.
Are closing costs higher for first-time homebuyers?
Closing costs are generally the same regardless of whether you are a first-time or repeat buyer. However, first-time buyers may qualify for assistance programs that help cover closing costs. The MBA reports that over 2,000 such programs exist across the country.
Do pastors pay different closing costs?
Pastors pay the same closing costs as other borrowers. However, the complexity of documenting housing allowance income can sometimes lead to additional processing time or documentation requirements. Working with a lender experienced in clergy mortgage qualification can help streamline the process and avoid unnecessary delays or costs.
Can the seller pay my closing costs?
Yes, sellers can agree to pay part or all of a buyer’s closing costs through seller concessions. The amount allowed depends on your loan type and down payment. Conventional loans typically allow seller concessions of 3% to 9% of the purchase price, while FHA loans allow up to 6%.
Should I roll closing costs into my loan?
Rolling closing costs into your loan (sometimes called a no-closing-cost mortgage) increases your loan amount and your monthly payment, but it reduces what you need to bring to closing. This can be a good strategy if you need to preserve cash for moving expenses or home repairs, but it does mean you pay interest on those costs over the life of the loan.
