Home Buying
Total closing costs
Two charges are percentages of different bases, and the other two are fixed amounts. Adding all four gives the total cash cost of closing, on top of the down payment.
The Formula
C = (origination% x loan) + (title% x price) + third-party fees + prepaid escrow
Two charges are percentages of different bases, and the other two are fixed amounts. Adding all four gives the total cash cost of closing, on top of the down payment.
| Symbol | Meaning | Unit | Notes |
|---|---|---|---|
| o | Origination rate | percent | Lender charge as a share of the loan. |
| t | Title rate | percent | Title insurance as a share of the price. |
| F | Third-party fees | currency | Appraisal, search and recording charges. |
| E | Prepaid escrow | currency | Tax and insurance collected in advance. |
| C | Closing costs | currency | The total charged at closing. |
What Each Symbol Means
opercent
Origination rate
Lender charge as a share of the loan.
tpercent
Title rate
Title insurance as a share of the price.
Fcurrency
Third-party fees
Appraisal, search and recording charges.
Ecurrency
Prepaid escrow
Tax and insurance collected in advance.
Ccurrency
Closing costs
The total charged at closing.
See It Worked With Real Numbers
A formula on its own does not tell you which number goes where. The how to calculate closing costs page applies this equation to a concrete case, shows every intermediate step, and names the mistakes that produce a wrong answer even when the algebra is right.
Where This Formula Appears
This equation is the working core of How To Calculate Closing Costs, filed under Finance. Every number the guide produces comes from substituting into this one line.