Can You Roll Closing Costs Into Your Mortgage?

If you're preparing to buy or refinance a home, you’ve probably heard about closing costs—and you might be wondering if there's a way to avoid that hefty out-of-pocket expense. The good news? In some cases, you can roll those costs into your mortgage, giving you more flexibility with your cash flow and helping you get into a home sooner. Let’s break down when and how that works—and whether it’s the right move for you.

What Are Closing Costs, and How Much Should You Expect to Pay?

Closing costs are the fees and expenses required to finalize your home purchase or refinance. These are separate from your down payment and usually range from 2% to 5% of the loan amount. For example, on a $400,000 home, you could expect to pay $8,000–$20,000 in closing costs.

Typical closing costs include:

Loan origination fees (charged by the lender to process your loan)
Appraisal fee (required to confirm the home’s value)
Credit report fee
Title insurance and escrow fees
Prepaid property taxes and homeowner’s insurance
Recording fees (charged by the county)

These costs can add up quickly—especially if you’re buying in a high-cost area or choosing a conventional loan without special programs.Property taxes are assessed annually based on your home’s assessed value, and the rate is set by your local government. When property values go up — or if the tax rate increases — you’ll end up paying more, even if your mortgage payment stays the same. For buyers, this means your lender will factor in these rising taxes when calculating your debt-to-income ratio, which can limit your purchasing power.

Here’s An Example & How Some Closing Costs Can Be Rolled In

Let’s say:

The home price is $400,000
You’re putting 5% down = $20,000
Closing costs are $10,000

If your loan program allows it, you may be able to add that $10,000 to your loan, bringing the total loan amount to $390,000 instead of $380,000. You'll finance those costs instead of paying them in cash.

**OK… So When Can You Roll Closing Costs In?**

You can typically roll closing costs in the mortgage:

When You Refinance: Skipping out on paying closing costs upfront is much more common when you are refinancing because costs can often be rolled into the new loan balance.
When You’re Making a New Purchase: Rolling closing costs into the mortgage on a home purchase is sometimes possible—but it depends on a few key factors. Most importantly, the home must appraise high enough to support the increased loan amount. That means if you're buying a home for $400,000 and want to roll in $10,000 in closing costs, the appraised value typically needs to support a $410,000 loan.
Not all loan programs allow this, and not all properties will qualify—but the good news is, there are options. Some lenders may offer lender credits, while others may allow the seller to cover some of your closing costs (called seller concessions). This is where working with the right mortgage professional makes all the difference. At Brizzi Financial, we help our clients explore every possible option to reduce upfront costs and find a loan structure that fits their financial goals—including programs that may allow for rolled-in closing costs. Whether you're a first-time buyer or looking to move up, we're here to guide you through the process with clarity and strategy.
If You Have a VA or USDA Loan: These types of loans allow some or all closing costs to be included, providing additional benefits to borrowers who are veterans or who are purchasing a home in a rural or some suburban areas.
When Your Lender Offers Credits: A lender can cover part or all of the closing costs in exchange for a slightly higher interest rate. In the example above, instead of paying $10,000 in closing costs out-of-pocket and up front, the lender may be able to build those costs into the loan by offering you a higher rate that compensates them over time.

When Can’t You Roll In Closing Costs Into The Mortgage?

While rolling in closing costs can be a great option, it’s not always allowed—and there are a few key reasons why your lender might say no:

The Loan-to-Value (LTV) Ratio Is Too High: The LTV ratio compares the amount of your loan to the appraised value of the home. Most loan programs have strict limits—usually 80% to 97%, depending on the loan type. If rolling in closing costs pushes your loan amount above those limits, the lender may deny the request to protect both you and the loan itself from being over-leveraged.

The Home Doesn’t Appraise High Enough: In order to increase your loan to include closing costs, the home must appraise for enough to support the higher loan amount. For example, if the purchase price is $400,000 and you want to roll in $10,000 in closing costs, the appraisal may need to come in at $410,000 or higher. If it appraises low, you're limited to financing the amount the home is worth—and will need to cover closing costs out of pocket.

Loan Program or Lender Guidelines Don’t Allow It: Not all mortgage types permit rolling in closing costs—especially on conventional loans with strict underwriting rules. Some lenders may also have internal policies that prohibit it, even if technically allowed by the loan program. In these cases, you'll need to explore alternatives like lender credits, seller concessions, or adjusting your loan structure.

Should You Roll Closing Costs Into Your Mortgage?

It depends on your goals. If you’re short on cash and want to get into a home, rolling in closing costs could be a smart move. But if you have the funds to pay upfront, you’ll save money in the long run by avoiding interest on those costs.

Let’s Talk About It!

Rolling closing costs into your mortgage can be a smart way to ease the financial pressure of buying or refinancing a home—but it’s not always the right move for everyone. The key is understanding your options and working with a mortgage expert who can guide you through the details of your loan program, appraisal, and financial goals. Brizzi Financial is here to help you explore every option, ask the right questions, and find a solution that works for you. If you’re wondering whether this strategy fits your situation, let’s talk. Connect with us to schedule a consultation call.