How to Get Closing Costs Waived: Top Strategies

Buying a new home comes with more than the property price tag. You’ll need to cover moving charges, seller’s expenses if you’re selling a current home at the same time, and of course, closing costs. Having a home selling checklist can help you manage these expenses effectively.

On average, closing costs run homebuyers 2–6% of the property purchase price, but there are a number of ways to reduce how much cash you need on hand.¹

Below we’ve rounded up the top strategies for how to get closing costs waived or negotiate lower mortgage fees. 

Which Closing Costs Can Be Waived or Reduced?

Depending on your state’s real estate regulations and common practices, the laundry list of closing costs varies slightly—so be sure to check with your state government for exact requirements. 

Before waiving or reducing mortgage fees not entirely under your control, you should comparison shop for the best deals on: 

• Lenders (hint: include credit unions)
• Homeowners insurance policies
• Lender and/or owner title insurance policies 
• Real estate attorney, if required by your state

Talk to lenders about available discounts, rebates, or promotions for mortgage borrowers and about their options to waive, reduce, or influence:¹

• Appraisal fee, or negotiate type and provider to lower it ($500–800 average)
• Loan application, origination, and underwriting fees (average 1% of the total loan amount)
• Title company selection, to compare prices for title search and closing fees
• Prepaid mortgage loan interest covering closing to first monthly payment due date
• Credit check fees
• Mortgage lock fees
• Courier fees
• Mortgage insurance or fees for government-backed loans, to roll them into the principal

Once you’ve chosen a new house, try negotiating with the seller to cover:¹

• Discount points to lower buyer’s mortgage interest rate
• Prorated property tax from closing day to end of year (or other payment period)
• Lender-required wood-destroying insect organism report (i.e., termites) 
• Flood zone determination and monitoring fee
• Other inspections, either state-mandated or optional, for pests, radon, etc.
• Government recording, title transfer, stamp, and tax service fees
• Tax monitoring and research fees

One common closing cost you’ll need to fund directly is an escrow account to cover two months’ insurance (and tax, if not covered by a seller concession).

Negotiations With Lender & Seller

While sellers typically cover agent commission and applicable real estate transfer tax, the majority of closing costs fall to the buyer. Sellers may agree to cover some buyers’ costs in a negotiated deal, particularly in a buyer’s market or with a troublesome property, since they’ll have access to cash on closing day. 

But the question isn’t only how you get closing costs waived through seller concessions—it’s also how much can be covered if you’re looking for sellers to contribute cash on closing day. Lenders limit the amount that sellers can cover to 3–9% of the sale price or total loan amount depending on the loan type and down payment amount.¹

Loan Programs Offering Waived Closing Costs

Closing costs are a common deterrent to home buying, and there are a number of programs and options that offer a workaround. Depending on your status and qualifications, you may be able to receive closing cost assistance (CCA) from a nonprofit organization or state, county, or local government source via²:

• Grants
• Forgivable loans
• No- or low-interest loans
• Deferred-payment loans
• Matched savings programs
• Downpayment assistance programs that incorporate CCA provision

You may also be able to receive reduced or waived closing costs with: 

• FHA loans
• USDA loans
• VA loans

No-Closing-Cost Mortgages

Some lenders offer no-closing-cost mortgage options, which should probably be renamed as “no closing cost right now but you’ll pay them and then some later” mortgages. 

The lenders may make up for the lack of your upfront cash by: 

• Increasing your interest rate and mortgage origination fees
• Rolling closing costs into the mortgage loan principal 
• Adding prepayment penalties

You’ll typically have higher monthly payments and pay more in the long run, so ask questions and be sure the short-term benefit is worth it. 

Risks and Considerations

Be bold in asking for concessions and waivers, but also read the fine print. Consider that: 

• Negotiating too hard with sellers can risk your sale agreement
• Folding closing costs into a loan means paying more interest over the life of the loan
• No-closing-cost mortgage options often have additional funding fees rolled in

Role of Real Estate Agents

An effective real estate agent for buyers is another source for closing cost help. Ask for help: 

• Identifying waiver-friendly local lenders 
• Discovering available CCA programs 
• Negotiating maximum seller concessions to cover closing costs

Consider a Sale-Leaseback to Free Up Closing Cost Cash

To cover mortgage closing costs you can’t avoid, current homeowners can use the cash profits from the sale of their current home. With Truehold's sale-leaseback, you can sell your home in just 30-days and stay as a renter while you look for your perfect new place, navigate the purchase, and pack up to move. Your unlocked equity can help ease the financial strain of the move. With a landlord handling major repairs, property tax, and homeowners insurance, you can focus your resources on your new home search. After 6-months, you’re eligible to leave the lease for your new home.

Ready to learn more about this sell-and-stay option? Call us today and connect with a Truehold Advisor.

‍

Sources: 

1. Nerdwallet. Mortgage Closing Costs: How Much You’ll Pay. https://www.nerdwallet.com/article/mortgages/closing-costs-mortgage-fees-explained‍
2. The Mortgage Reports. Closing Cost Assistance Programs & Grants 2024. https://themortgagereports.com/65878/closing-cost-assistance-where-to-get-it-and-how-it-works