Can Closing Costs Be Waived? 6 Ways Buyers Can Lower Costs at Closing

Closing costs can add thousands of dollars to the price of buying a home, often catching buyers off guard right before the finish line. Whether you’re browsing houses for sale in Los Angeles, CA or exploring homes for sale in Austin, TX, understanding these fees can help you plan for the true cost of buying.

While closing costs usually can’t be completely eliminated, there are legitimate ways to reduce them, shift who pays them, or effectively “waive” them through credits and assistance programs. In most cases, “waived” means the costs are covered or offset, not erased entirely.

This Redfin article breaks down when closing costs can be waived and the most realistic strategies to lower or avoid paying them upfront.

What are closing costs?

Closing costs are the fees and expenses required to finalize a real estate transaction. They typically range from 2% to 5% of the home’s purchase price and are paid at closing. Common closing costs include:

• Loan origination fees
• Appraisal and credit report fees
• Title insurance and escrow fees
• Attorney or settlement fees
• Prepaid taxes and homeowners insurance
• Recording and transfer fees

Some of these costs are lender-controlled, some are third-party fees, and others are government-mandated—which affects how flexible they are.

Can closing costs actually be waived?

In most cases, closing costs aren’t truly “waived” or erased—but they can be covered, reduced, or rolled into other parts of the transaction. When buyers talk about waived closing costs, they usually mean one of the following:

• The seller pays them
• The lender covers them through a credit
• They’re rolled into the loan balance
• A grant or assistance program pays them

Understanding this distinction is important, because each option changes where the cost shows up—either upfront, over time, or in the purchase price.

1. Ask the seller to pay closing costs (seller concessions)

One of the most common ways to reduce or avoid paying closing costs upfront is to negotiate seller concessions. This strategy shifts some or all of your closing costs to the seller as part of the purchase agreement, lowering the amount of cash you need at closing.

How seller concessions works

The seller agrees to cover certain closing costs on your behalf, which are paid at closing instead of coming out of your pocket. This approach is especially common in:

• Buyer’s markets
• Homes that have been on the market longer
• New construction sales

Limits to seller concessions

Most loan programs cap how much the seller can contribute:

• Conventional loans: typically up to 3%–9%, depending on down payment
• FHA loans: up to 6%
• VA loans: up to 4% (plus certain allowable fees)

Seller concessions can significantly reduce your cash-to-close, but they’re often offset by a higher purchase price or different negotiation terms.

2. Use lender credits (higher rate, lower upfront costs)

Another common way buyers “waive” closing costs is by using lender credits. Instead of paying all closing costs out of pocket, you trade a slightly higher interest rate for a credit from the lender that covers some or all of your upfront fees.

How lender credits work

You agree to a higher mortgage rate, and in return, the lender applies a credit toward your closing costs at closing. This reduces the amount of cash you need to bring to the table. This can make sense if:

• You’re short on cash upfront
• You plan to refinance or sell within a few years
• You value lower cash-to-close over the lowest possible rate

The trade-off is higher interest costs over time. Because of that, lender credits tend to work best for short-to-medium holding periods rather than long-term homeownership.

3. Roll closing costs into the loan (when allowed)

Some loan programs allow certain closing costs to be financed into the loan balance rather than paid out of pocket at closing. This approach can lower your upfront cash requirement, but it increases the amount you borrow, and typically your monthly payment. This is more common with:

• VA loans (especially for refinances)
• FHA streamline refinances
• Certain renovation loans

For standard purchase loans, rolling closing costs into the loan is relatively uncommon and usually requires:

• The home appraising above the purchase price
• Staying within loan-to-value limits

While financing closing costs can make buying or refinancing more accessible, it’s important to weigh the higher loan balance and long-term interest costs against the short-term savings at closing.

4. Use down payment and closing cost assistance programs

Many state, local, and nonprofit programs offer grants or forgivable loans that can help cover closing costs, down payments, or both. These programs are designed to make homeownership more accessible and can significantly reduce the amount of cash you need at closing.

These programs are often available to:

• First-time homebuyers
• Moderate-income buyers
• Buyers purchasing in specific areas

Assistance may cover:

• Closing costs
• Down payment
• Both

Some programs require:

• Income limits
• Homebuyer education courses
• Living in the home for a set number of years

Availability and requirements vary widely by location, so it’s best to ask your lender or real estate agent about assistance programs early in the process, as they can affect timelines and loan eligibility.

5. Compare lenders and negotiate fees

Not all closing costs are fixed, and many buyers don’t realize they have more room to negotiate than they think. Lenders can charge different rates for the same services, and some fees—especially lender-controlled ones—vary widely from one loan estimate to another. 

Taking the time to compare offers and ask questions can significantly reduce your out-of-pocket costs at closing. You may be able to reduce costs by:

• Comparing loan estimates from multiple lenders
• Asking lenders to match or beat fees
• Questioning origination or processing fees
• Shopping for title and escrow services (where allowed)

Even small reductions can add up to meaningful savings.

6. Close at the right time

The timing of your closing can influence how much cash you need upfront. While it won’t eliminate closing costs entirely, choosing the right closing date can help reduce prepaid expenses—costs that cover interest, taxes, and insurance before your first mortgage payment is due. You may lower prepaid costs by:

• Closing later in the month (less prepaid interest)
• Choosing a time when property taxes or insurance payments are lower

These timing adjustments won’t remove closing costs, but they can reduce the total amount due at closing and make your cash-to-close more manageable.

What closing costs usually can’t be waived

While many closing costs can be reduced or shifted to another party, some fees are difficult, or impossible to avoid. These costs are typically set by government agencies or required by lenders and third parties, leaving little room for negotiation. Fees that usually can’t be waived include:

• Government recording fees
• Transfer taxes (where applicable)
• Required insurance premiums
• Certain third-party charges

Because these costs are mandatory, most “waived” closing cost strategies focus on who pays the fees rather than eliminating them altogether.

Is waiving closing costs worth it?

Whether waiving closing costs makes sense depends on your financial priorities and how long you plan to own the home. While reducing upfront costs can make buying more accessible, it often comes with trade-offs that affect your long-term expenses. 

Waiving or reducing upfront closing costs can help if:

• You’re cash-constrained
• You want to preserve savings for repairs or emergencies
• You plan to move or refinance within a few years

Paying closing costs upfront may be better if:

• You want the lowest long-term interest cost
• You’re buying a long-term home
• You can comfortably afford the upfront expense

Weighing both the short-term cash savings and the long-term cost impact can help you choose the option that best fits your homeownership goals.

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