Closing Costs in Texas: What Buyers Actually Pay
Closing costs are the fees and prepaid expenses required to finalize your home purchase. In Texas, buyers typically pay 2-3% of the loan amount in closing costs. On a $380,000 loan, that is $7,600-$11,400 — not a trivial amount.
But Texas has a buyer-friendly feature: many closing costs are negotiable and sellers can contribute significantly.
Full Closing Cost Breakdown for Texas Buyers
Lender Fees
| Fee | Typical Amount | Notes |
|---|---|---|
| Origination fee | $0-$3,800 | Up to 1% of loan; negotiable |
| Discount points | Varies | Optional; buys down interest rate |
| Underwriting fee | $400-$900 | Lender's processing charge |
| Credit report | $25-$75 | One-time charge |
Third-Party Fees
| Fee | Typical Amount | Notes |
|---|---|---|
| Appraisal | $500-$700 | Required by lender |
| Title search | $200-$400 | Confirms clean ownership |
| Owner's title insurance | $1,500-$2,200 | Customarily paid by seller in TX |
| Lender's title insurance | $400-$700 | Buyer pays; required by lender |
| Survey | $400-$600 | Confirms property boundaries |
| Recording fees | $100-$200 | County recorder fee |
| Attorney / settlement fee | $300-$600 | If applicable |
Prepaid Expenses (Not Technically Closing Costs, But Paid at Closing)
| Item | Typical Amount | Notes |
|---|---|---|
| Homeowner's insurance (1 year) | $1,800-$3,600 | Austin area averages high due to hail |
| Property tax escrow | $2,000-$6,000 | 2-6 months of taxes prepaid |
| Prepaid mortgage interest | $600-$1,400 | Interest from closing to month end |
| HOA setup / transfer fee | $200-$500 | If applicable |
Texas-Specific Closing Cost Notes
Title Insurance
In most Texas transactions, the seller pays for the owner's title insurance policy — a custom unique to Texas that saves buyers $1,500-$2,200. The buyer pays only for the smaller lender's title policy.
Survey
Texas custom is for the seller to provide a recent survey or for the buyer to pay for a new one. This is negotiable — in slow markets, sellers often cover the survey.
Property Tax Escrow
Texas property taxes are paid in arrears and can be substantial (1.8-2.5% of assessed value annually). At closing, 2-6 months of estimated taxes are collected into escrow. This can add $2,000-$6,000 to your closing costs depending on the time of year.
How to Reduce Closing Costs in Texas
1. Seller Concessions
Sellers can pay toward your closing costs:
- FHA: up to 6% of purchase price
- VA: up to 4% of purchase price
- Conventional: 3-6% depending on down payment
2. Lender Credits
Accept a slightly higher interest rate in exchange for the lender paying some or all closing costs. This trades a higher rate for less cash upfront — good strategy if you plan to refinance within 5 years.
3. DPA Programs
Some Texas down payment assistance programs also cover closing costs, not just the down payment.
4. Compare Lenders
Lender fees vary widely. Get Loan Estimates from at least 3 lenders and compare the fees on page 2 of each — these are the negotiable costs that vary most between lenders.
Frequently Asked Questions
Austin buyers typically pay 2-3% of the loan amount in closing costs. On a $380,000 home, that is $7,600-$11,400 total — including lender fees, third-party fees, and prepaid expenses like insurance and property tax escrow. Veterans using VA loans pay a funding fee instead of PMI but have certain fees capped.
The survey cost is negotiable in Texas. The contract specifies who pays — either buyer or seller. In competitive markets, buyers often pay $400-$600 for a new survey. In slower markets, negotiating seller-paid surveys is common. If the seller has a recent survey (within 5 years), lenders may accept it to save cost.
Not directly into the loan in most cases. However, seller concessions (seller paying your costs), lender credits (higher rate = lender covers costs), and DPA programs achieve the same effect. VA loans allow the funding fee to be financed. FHA UFMIP is always financed.
