5 Closing Cost Concessions First-Time Homebuyers Often Forget To Negotiate
According to recent research from Realtor.com, down payments hit a four-year low in the first quarter of 2026, dropping 19% year over year to $23,400.
With higher interest rates and housing costs, homebuyers should look for ways to find savings on this expensive purchase. However, new homebuyers could get so preoccupied with negotiating the best possible purchase price that they may leave thousands of dollars on the table in closing costs.
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These are closing costs that first-time homebuyers often forget to negotiate and how much they can cost.
1. Seller Paid Closing Costs
Thomas O'Shaughnessy, a real estate expert and vice president of Clever Real Estate, believes that the largest amount of money left behind by first-time homebuyers is the seller-paid closing costs.
“Buyers can negotiate for sellers to pay for closing costs at 2% to 3% of the purchase price. That means you can receive up to $10,500 in cash if you buy a $350,000 house," he said.
He stressed that in today's market, this has become an acceptable concession for more motivated sellers, but it will never be offered without asking.
2. Origination Fee
“Lenders usually have room to negotiate down on this fee, especially if the buyer has good credit standing,” said Sain Rhodes, a real estate professional at Clever Offers. “A person with a credit score of 740+ and purchasing a home valued at $400,000 should never accept a 1% lender origination fee without negotiating.”
The experts agreed that lender origination fees present another great opportunity for saving. The origination fee, which may be labeled as "loan origination," "underwriting" or "processing" in your estimate, can range between 0.5% and 1% of the mortgage amount. You could save anywhere from $1,500 to $3,500 by negotiating this, which can help you afford other home-related expenses.
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3. Title Insurance
O'Shaughnessy emphasized that there’s no rule requiring buyers to use the title company the bank suggests and noted that you could save anywhere from $500 to $1,000 in closing costs by negotiating.
You can spend less than an hour calling around to find a better price here, and the savings will add up.
4. Settlement Fees
Rhodes noted that settlement and escrow fees payable to the closing title company can be reduced by just asking. In most cases, the fee will depend on the title company and whether it has processed many purchases lately.
5. Rate Buydown
The majority of first-time buyers are unaware that a rate buydown is a highly valuable concession in the current interest rate environment. It could lower monthly mortgage payments by $200 to $400, saving tens of thousands of dollars in total during the course of the loan, per O'Shaughnessy.
O'Shaughnessy believes that the sum of all possible savings is sufficient for a year's mortgage payments, which usually range from $12,000 to $20,000 for a median-priced home. Rhodes believes that first-time buyers miss the opportunity to save at least $5,000 because they don’t realize how much leverage they have.
“First-time buyers typically take the closing cost estimate as an invoice and accept its terms without considering the possibilities of negotiation,” Rhodes said.
The good news is that you can save thousands of dollars by simply requesting a better rate because you never know what options exist until you ask.
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This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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