Buying a home in Texas costs more than just the down payment. Before you get the keys, you also pay closing costs. These are fees charged by your lender, the title company, the county, and other parties to finalize the transaction.
For most Texas buyers, closing costs run between 2% and 5% of the purchase price. On a $350,000 home, that is $7,000 to $17,500. The exact amount depends on your loan type, lender, property taxes, and what you negotiate with the seller.
Texas has a few rules that make closing costs different from other states. There is no state transfer tax. Title insurance rates are set by the state, not by individual companies. And sellers commonly pay for the owner’s title insurance policy rather than the buyer.
This guide breaks down every buyer closing cost in Texas, explains who pays what, and shows you how to reduce what you owe at closing.
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Buyer Closing Costs
What Makes Texas Closing Costs Different?
No State Transfer Tax
Many states charge a transfer tax when a home is sold. Texas does not. This saves buyers and sellers money compared to states like New York or Maryland, where transfer taxes can add thousands of dollars to the closing bill.
Title Insurance Rates Are Set by the State
In Texas, the state sets title insurance premiums through the Texas Department of Insurance (TDI). Every title company charges the same base rate for the same coverage amount. You cannot get a lower premium by shopping around on price alone.
What you can compare between title companies: escrow fees, wire fees, communication quality, and how efficiently they close.
Sellers Commonly Pay the Owner’s Title Policy
In most Texas counties, the seller pays for the owner’s title insurance policy. This protects the buyer after closing. It is a local custom, not a law, so it can be negotiated. But in markets like Houston, Austin, and San Antonio, buyers should expect sellers to cover this cost by default.
High Property Taxes
Texas has no state income tax, but property taxes are among the highest in the country. At closing, buyers typically prepay several months of property taxes into an escrow account. This can add a significant amount to your total closing costs depending on the county and the home’s value.
The Texas Option Fee
Texas real estate contracts include an option fee that is unique to the state. This is a small, non-refundable payment, usually $100 to $500 , that buys the buyer an option period, typically 5 to 10 days. During this window, the buyer can back out of the deal for any reason and get their earnest money back.
The option fee is separate from the earnest money deposit. If the buyer proceeds with the purchase, the option fee is typically credited toward the purchase price or closing costs at closing.
Who Pays Closing Costs in Texas?
Most closing costs in Texas are negotiable. But custom and contract terms usually determine who pays for what. Here is how costs are typically split:
What Buyers Usually Pay
| Buyer Expense | Typical Cost |
|---|---|
| Loan origination fee | 0.5%-1% of loan amount |
| Appraisal fee | $400-$700 |
| Home inspection | $300-$700 |
| Credit report and underwriting fees | $100-$1,000 combined |
| Survey fee (if required) | $400-$800 |
| Escrow and settlement fee | $500-$2,000 |
| Prepaid property taxes | Varies by county and closing date |
| Homeowners insurance (first year) | $1,500-$4,000+ |
| Lender’s title insurance policy | Based on loan amount |
| Recording fees | $50-$250 |
| HOA transfer fees (if applicable) | $200-$1,000+ |
| FHA/PMI mortgage insurance (if applicable) | Varies by loan and down payment |
What Sellers Usually Pay
| Seller Expense | Typical Responsibility |
|---|---|
| Real estate agent commissions | Seller |
| Owner’s title insurance policy | Seller (commonly) |
| Existing mortgage payoff | Seller |
| HOA resale certificate | Seller |
| Property tax prorations | Shared/prorated |
| Repair credits negotiated in contract | Seller (if agreed) |
Buyer vs Seller at a Glance
| Expense | Buyer | Seller |
|---|---|---|
| Loan fees | Yes | |
| Appraisal | Yes | |
| Home inspection | Yes | |
| Lender’s title policy | Yes | |
| Owner’s title policy | Yes (commonly) | |
| Agent commissions | Yes | |
| Recording fees | Yes | |
| Property tax prorations | Shared | Shared |
All of these costs are negotiable. Sellers can offer to cover some buyer costs as a concession, especially in slower markets.
Who Pays Title Insurance in Texas?
There are two title insurance policies in most Texas home purchases. The seller typically pays for one. The buyer pays for the other.
| Policy | Who Typically Pays | Who It Protects | How Long It Lasts |
|---|---|---|---|
| Owner’s title policy | Seller (commonly) | The buyer | As long as buyer or heirs own the home |
| Lender’s title policy | Buyer | The mortgage lender | Until the loan is paid off |
The owner’s policy protects the buyer if a title problem comes up after closing, such as a lien from a previous owner, a forged deed, or a recording error. The lender’s policy only protects the mortgage company, not the buyer.
Because Texas regulates title insurance rates, premiums are the same at every title company. Here is what the owner’s policy typically costs:
| Home Purchase Price | Estimated Owner’s Policy Premium |
|---|---|
| $250,000 | $1,832 |
| $350,000 | $2,403 |
| $500,000 | $3,432 |
| $750,000 | $4,973 |
| $1,000,000 | $6,654 |
Source: Texas Department of Insurance (TDI) Basic Manual of Rules, Rates and Forms, 2026 rate schedule.
Ask the title company early whether the property qualifies for a reissue rate. This is a discount that applies when a previous title policy was issued on the same property within a recent time frame. It can reduce your total closing costs with no extra effort.
Complete Breakdown of Buyer Closing Costs in Texas
| Fee | What It Covers | Typical Cost |
|---|---|---|
| Loan origination fee | Lender’s charge for processing your mortgage | 0.5%-1% of loan amount |
| Appraisal fee | Confirms the home’s market value before the lender approves the loan | $400-$700 |
| Home inspection | Identifies structural or mechanical issues before closing | $300-$700 |
| Credit report fee | Lender’s cost to pull your credit file | $30-$75 |
| Underwriting fee | Lender’s review and approval of your loan file | $300-$900 |
| Survey fee | Confirms property boundaries and improvements | $400-$800 |
| Escrow and settlement fee | Title company’s charge for managing the closing process | $500-$2,000 |
| Prepaid property taxes | Months of property tax paid into escrow at closing | Varies by county |
| Homeowners insurance | First-year premium paid before closing | $1,500-$4,000+ |
| Lender’s title insurance | Protects the lender’s financial interest in the property | Based on loan amount |
| Recording fees | County’s charge to record the deed and mortgage documents | $50-$250 |
| HOA transfer fee | Covers HOA documentation and account transfer to the new owner | $200-$1,000+ |
| FHA/PMI mortgage insurance | Required for FHA loans and low-down-payment conventional loans | Varies |
Estimated Total Closing Costs by Home Price
| Home Price | Estimated Buyer Closing Costs | Range |
|---|---|---|
| $250,000 | $5,000-$12,500 | 2%-5% |
| $350,000 | $7,000-$17,500 | 2%-5% |
| $500,000 | $10,000-$25,000 | 2%-5% |
Cash buyers typically pay less because they skip most lender-related fees: no appraisal required by a lender, no underwriting fee, no lender’s title policy, and no mortgage insurance.
When Do Buyers Find Out Their Exact Closing Costs?
Loan Estimate
Within three business days of submitting a mortgage application, your lender must give you a Loan Estimate. This document shows your estimated closing costs, loan terms, interest rate, and monthly payment.
The Loan Estimate is not final. Fees can change before closing. But lenders are legally limited in how much certain fees can increase between the estimate and the final numbers.
Closing Disclosure
At least three business days before closing, your lender sends the Closing Disclosure. This shows the final version of every cost you will pay at closing.
Compare the Closing Disclosure to your Loan Estimate line by line. If a fee increases significantly, ask your lender to explain it before closing day. You have the right to ask questions and get answers.
How to Reduce Closing Costs in Texas
Negotiate seller concessions. In slower markets, buyers can ask sellers to cover part of the closing costs. This is written into the purchase contract as a seller credit. In competitive markets, sellers are less likely to agree, but it is always worth asking.
Compare lenders. Title insurance premiums are fixed by the state, but lender fees are not. Origination fees, underwriting fees, and discount points vary between lenders. Getting Loan Estimates from two or three lenders can save hundreds or thousands of dollars.
Close near the end of the month. Mortgage interest is paid in arrears, meaning you pay interest from your closing date through the end of that month at closing. Closing on the 28th instead of the 5th means you prepay two or three days of interest instead of 25 days. It is a small but easy savings.
Check for Texas homebuyer programs. TSAHC (Texas State Affordable Housing Corporation) and TDHCA (Texas Department of Housing and Community Affairs) offer programs that help first-time buyers with down payments and closing costs. Eligibility requirements vary by income, home price, and location.
Ask about the reissue rate. If the property had a title insurance policy issued within the past few years, you may qualify for a discounted premium. Ask the title company early in the process.
Use an existing survey. If the seller has a recent survey that meets the lender’s requirements, you may not need to pay for a new one. Ask before ordering.
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Frequently Asked Questions
Texas buyers typically pay 2% to 5% of the home’s purchase price in closing costs. On a $350,000 home, that is $7,000 to $17,500. The exact amount depends on your loan type, lender, property taxes, and what you negotiate with the seller.
Buyer closing costs include lender fees (origination, underwriting, appraisal), title-related costs (lender’s title policy, escrow fee), prepaid expenses (property taxes, homeowners insurance), and government fees (recording). Some buyers also pay survey costs, HOA transfer fees, and mortgage insurance.
In most Texas home sales, the seller pays for the owner’s title insurance policy and the buyer pays for the lender’s title insurance policy. These costs are negotiable and set by the purchase contract, not by state law.
No. Texas does not charge a state real estate transfer tax. This saves buyers and sellers money compared to many other states where transfer taxes can add thousands of dollars to closing costs.
Yes. Many closing costs are negotiable. Buyers can ask sellers to cover part of the costs through a seller concession, compare lender fees across multiple lenders, and shop title companies on service quality and ancillary fees. Title insurance premiums are fixed by the state and cannot be negotiated down.
In some cases, yes. Lenders can offer lender credits in exchange for a slightly higher interest rate, which effectively rolls some closing costs into the loan. Some loan programs also allow closing costs to be financed. Ask your lender what options are available for your specific situation.
The option fee is a small non-refundable payment, usually $100 to $500, that gives the buyer an option period to inspect the home and back out of the deal for any reason. It is unique to Texas real estate contracts. If the buyer proceeds with the purchase, the fee is typically credited at closing.
Yes, but significantly less. Cash buyers skip most lender-related fees: no appraisal required by a lender, no underwriting fee, no lender’s title policy, and no mortgage insurance. Cash buyers still pay for the title search, escrow, recording fees, and the owner’s title policy if they choose to purchase one.
Closing costs are paid on closing day, along with any remaining down payment. Your lender will tell you the exact amount needed to close, called the cash to close figure, at least three business days before closing on the Closing Disclosure.
Sellers are not required to pay any buyer closing costs. If a seller will not offer concessions, buyers can still reduce costs by comparing lenders, closing near month-end, and asking for a reissue rate on title insurance. In some cases, lender credits or down payment assistance programs can also reduce the cash needed at closing.
Reilly Dzurick is a licensed real estate agent with over six years of experience and a member of the iBuyer.com Market Insights Team, covering national trends in home selling and the evolving iBuyer landscape. Her firsthand experience working with buyers and sellers gives her a practical perspective on how these platforms impact real homeowners. She holds a degree in Public Relations, Advertising, and Applied Communication.
