Closing costs in Texas commonly equal about 2% to 5% of the home’s purchase price, excluding the down payment. For a $400,000 home, that creates an early planning range of approximately $8,000 to $20,000.
Your actual amount can vary significantly because Texas transactions may include state-regulated title insurance, a new property survey, local property-tax reserves, special district taxes, insurance premiums, property owners association charges, discount points, and costs assigned through the purchase contract. The Consumer Financial Protection Bureau notes that closing costs depend on the home price, down payment, lender, loan type, property type, and location.
The most useful question is not simply, “How much are closing costs in Texas?” It is:
Which Texas-specific costs apply to this property, who is responsible for paying them, and how will they affect the buyer’s final cash to close?
Key Takeaways Texas buyers commonly use 2% to 5% of the purchase price as an early closing-cost estimate. Closing costs are separate from the down payment. Texas title insurance premiums follow a state rate schedule, but the buyer and seller can negotiate who pays the owner’s policy. The Texas purchase contract can assign survey costs, escrow fees, title expenses, seller contributions, and other charges to either party. Texas has no state property tax; property taxes are imposed by local counties, cities, school districts, and special districts. Properties in municipal utility districts or other special districts can carry additional taxes or assessments. Seller credits, lender credits, TSAHC assistance, and TDHCA programs may reduce cash to close when eligibility and mortgage guidelines are met. Important Note: Closing costs, mortgage terms, title charges, property taxes, insurance, credits, assistance programs, and cash-to-close requirements vary by property, county, contract, lender, mortgage program, and borrower profile. This article is for educational purposes and is not a commitment to lend.
How Much Are Closing Costs in Texas? Texas homebuyers can use a broad range of approximately 2% to 5% of the purchase price for early budgeting. Freddie Mac identifies this as a typical closing-cost range, although the final amount depends on the specific property and mortgage transaction. For a broader breakdown of the expenses buyers may encounter, review closing costs when buying a house , including lender charges, third-party services, prepaid expenses, and escrow funding.
Estimated Texas Closing Costs by Home Price Texas home price
Estimate at 2%
Estimate at 5%
$250,000 $5,000 $12,500 $300,000 $6,000 $15,000 $400,000 $8,000 $20,000 $500,000 $10,000 $25,000 $650,000 $13,000 $32,500 $750,000 $15,000 $37,500 $1,000,000 $20,000 $50,000
Illustrative Estimates: These amounts are for initial planning only. The Loan Estimate and Closing Disclosure will show the costs for the actual transaction.
A Texas buyer’s final amount may be affected by:
Mortgage amount Discount points or lender credits Title insurance Survey requirements Property-tax prorations Initial escrow deposits Homeowners, flood, or wind insurance Special taxing districts POA or HOA expenses Seller credits Homebuyer assistance Closing date Do Closing Costs in Texas Include the Down Payment? No. Closing costs do not include the down payment.
The down payment is the buyer’s contribution toward the home’s purchase price. Closing costs are the fees and prepaid expenses required to obtain the mortgage, verify title, record documents, fund insurance and tax accounts, and complete the transfer.
For example:
Purchase price: $400,000 Down payment: $20,000 Estimated closing costs: $12,000 Before deposits and credits, the buyer would need to account for:
$20,000 down payment + $12,000 closing costs = $32,000
The CFPB explains that estimated cash to close includes the down payment and closing costs, minus the earnest money deposit, seller credits, and other applicable adjustments. Understanding cash to close vs. closing costs can help Texas buyers distinguish transaction expenses from the total amount they may need to bring to closing.
The 8 Texas Closing Costs Buyers Commonly Underestimate Texas closing costs are not simply a list of lender fees. Several property- and contract-specific items can materially change the amount required.
1. Texas Title Insurance Title insurance protects against certain covered ownership or lien problems that existed before the purchase.
A financed Texas transaction commonly includes:
An owner’s title policy protecting the buyer A mortgagee or loan title policy protecting the lender Title examination Title commitment Required endorsements Escrow or settlement services Recording coordination The Texas Department of Insurance explains that lenders generally require a mortgagee title policy to protect the lender’s investment. An owner’s policy separately protects the buyer against covered ownership problems such as certain fraud, deed errors, or forgery.
Texas Title Premiums Are State-Regulated Texas title insurance basic premiums follow a rate schedule established by the Texas Department of Insurance. The current rate chart became effective March 1, 2026.
This means the basic policy premium for the same coverage amount is not negotiated like a typical lender origination charge.
However, the final title-related amount can still be affected by:
Owner’s and lender’s policy structure Applicable rate credits Endorsements Survey coverage Escrow services Tax certificates Courier or wire charges Other authorized services Who Pays the Owner’s Title Policy in Texas? The current TREC One to Four Family Residential Contract allows the parties to indicate whether the seller or buyer will pay for the owner’s title policy. The form also identifies the title company that will issue it.
In some Texas markets, sellers frequently agree to pay the owner’s policy. That practice is not a universal legal rule.
The signed contract controls the responsibility.
Before making an offer, confirm:
Who pays the owner’s title policy Who pays the lender’s policy Which title company will be used Whether endorsements will be required Whether survey coverage creates an additional charge How escrow fees will be divided 2. Property Survey Costs A survey shows the property’s boundaries, recorded easements, improvements, encroachments, and other physical matters that can affect title or the lender’s collateral.
The current Texas resale contract provides several possible survey arrangements:
The seller provides an existing survey and the required affidavit or declaration. The buyer obtains a new survey. The seller obtains a new survey. The parties select who pays when the existing survey is not accepted by the title company or lender. When Can an Existing Survey Be Used? An existing survey may be accepted when:
The seller delivers it on time The required T-47 affidavit or T-47.1 declaration is provided The title company accepts it The buyer’s lender accepts it The property has not materially changed A new survey may be required when:
A room, pool, fence, garage, shed, or other improvement was added The prior survey is incomplete The title company will not rely on it The lender requires an updated survey A boundary or encroachment issue is identified The contract requires a new survey The survey responsibility should be reviewed before the contract is signed because a new survey can create an unexpected buyer expense.
3. Local Property Taxes and Escrow Deposits Texas has no state property tax. Property taxes are imposed and collected by local taxing units, including counties, cities, school districts, and special districts.
At closing, property taxes can affect the buyer through:
Seller and buyer tax prorations Initial tax escrow deposits Tax certificates Outstanding taxes Local assessments Future monthly escrow payments Property-Tax Prorations Property taxes are commonly allocated between the buyer and seller based on the period each party owns the home.
Depending on whether the taxes have already been paid, the Closing Disclosure may show:
A seller credit to the buyer A buyer reimbursement to the seller An estimated adjustment An initial escrow deposit for future tax bills The exact treatment depends on the closing date, tax status, contract, and settlement calculation.
Initial Property-Tax Escrow When the mortgage includes an escrow account, the lender may collect several months of projected property taxes at closing.
This deposit is not a lender origination fee. The funds are held to pay future tax bills.
The CFPB recommends verifying that the property-tax estimate on the Loan Estimate is accurate because taxes are determined by government authorities rather than the lender.
4. MUD, PID, and Other Special District Costs A Texas home can be located within a municipal utility district, public improvement district, water district, or another special taxing or assessment district.
These districts can affect:
Property-tax rate Annual assessments Required buyer notices Closing adjustments Monthly housing expense Long-term affordability Texas law requires specified notices for certain properties located in special taxing or assessment districts. TREC provides a notice stating that the district may impose taxes, assessments, and bond-related obligations.
Before making an offer, ask:
Is the property in a MUD, PID, or another special district? What is the district’s current tax or assessment? Is the assessment included in the property-tax estimate? Are there outstanding bonds? Is a separate annual assessment charged? Does the listing’s tax amount include every taxing unit? A home with an attractive purchase price can still carry a higher ongoing cost when special district taxes are included.
5. Homeowners, Flood, and Wind Insurance A mortgage lender generally requires homeowners insurance on a financed property. The initial premium and escrow reserve can affect both closing costs and the monthly payment.
The cost and availability of coverage can depend on:
Property location Replacement value Roof age and condition Construction type Prior claims Coverage limits Deductibles Flood exposure Wind and hail exposure Coastal Wind and Hail Coverage Some homeowners policies along the Texas coast and portions of Harris County near Galveston Bay may exclude wind and hail coverage. Buyers in affected areas may need separate coverage through the Texas Windstorm Insurance Association or another available insurer.
Coastal properties can also require documentation showing that the structure meets applicable windstorm standards before qualifying for certain coverage.
Flood Insurance Standard homeowners insurance does not generally cover rising floodwater. Flood insurance is a separate policy.
Before submitting an offer, review:
Flood zone Lender’s insurance requirement Estimated flood premium Deductible Waiting periods Prior flood history when available Whether the premium will be escrowed Insurance should be quoted before finalizing affordability—not only a few days before closing.
6. Property Owners Association Charges A home subject to mandatory membership in a property owners association can create additional buyer and seller expenses.
Possible POA charges include:
Resale certificate Transfer fee Prorated dues Capital contribution Document charges Special assessments Other charges permitted by the governing documents The current TREC resale contract warns buyers that association assessments can change and that nonpayment can result in enforcement of an association lien.
The contract and applicable POA addendum determine responsibility for transfer fees, resale certificates, assessments, and other charges.
Review:
Current dues Pending dues increases Special assessments Transfer fees Resale certificate Association financial condition Restrictions that may affect the intended use 7. Earnest Money and the Texas Option Fee Earnest money and the option fee are not the same as mortgage closing costs, but they affect how much cash a buyer must have available during the transaction.
Earnest Money Earnest money is deposited with the escrow agent after the contract becomes effective.
At closing, the current TREC contract applies earnest money first toward the buyer’s cash down payment and then toward buyer expenses. Any applicable excess is refunded.
This means earnest money usually reduces the amount the buyer still needs to provide at closing, but it does not reduce the actual fees charged.
Option Fee The option fee provides the buyer with a negotiated termination right during the option period when the contract requirements are satisfied.
The current TREC resale form treats the option fee separately from earnest money and credits it toward the sales price at closing.
Buyers should budget for both amounts early because they are generally due shortly after the contract becomes effective.
8. Buyer Brokerage and Other Contract Expenses Texas purchase costs can also be affected by separate buyer representation or brokerage agreements.
The current TREC resale contract states that brokerage compensation is not set by law and is negotiable. The form also separates brokerage compensation from other buyer expenses and seller contributions.
Before signing a purchase contract, confirm:
Whether you have agreed to pay buyer brokerage compensation Whether the seller or listing broker is contributing Whether the obligation will be paid at closing Whether the amount appears in the correct agreement How it affects estimated cash to close A buyer should not assume that every brokerage obligation is included in the lender’s initial closing-cost estimate.
Who Pays Closing Costs in Texas? Both the buyer and seller can pay closing expenses in Texas. For a broader explanation of who pays closing costs , the actual allocation depends on the purchase contract, mortgage requirements, negotiated contributions, and transaction-specific expenses.
The current TREC resale contract identifies common seller expenses, buyer expenses, escrow allocation, and a negotiated amount the seller may contribute toward eligible buyer expenses.
Costs Commonly Assigned to the Buyer Depending on the contract and mortgage, the buyer may pay:
Appraisal fee Loan application fee Origination charges Credit report Loan-document preparation Prepaid mortgage interest Recording of mortgage documents Lender’s title policy and endorsements Loan-related inspections One-half of the escrow fee Homeowners and flood insurance Initial insurance and tax reserves PMI, FHA MIP, or VA funding fee when applicable Survey if assigned to the buyer POA expenses assigned by contract Buyer brokerage obligations The TREC contract lists many of these expenses as buyer expenses unless the contract or another permitted contribution provides otherwise.
Costs Commonly Assigned to the Seller Depending on the contract, the seller may pay:
Existing lien releases Seller loan payoff costs Preparation of the deed Tax statements or certificates One-half of the escrow fee Seller brokerage obligations Owner’s title policy when selected Seller’s share of property taxes Seller-paid repairs Negotiated contribution toward buyer expenses Other expenses assigned to the seller These are common contract allocations, not mandatory rules for every Texas transaction.
Can a Texas Seller Pay Buyer Closing Costs? Yes. A Texas seller can agree to contribute toward eligible buyer closing costs when the mortgage program and purchase contract permit it.
The current TREC resale contract includes a space for an amount to be applied toward buyer expenses other than brokerage compensation.
Seller contributions may potentially cover eligible expenses such as:
Loan origination charges Discount points Title and settlement expenses Prepaid interest Homeowners insurance Initial escrow deposits Mortgage insurance or guarantee fees Other approved costs The usable amount depends on:
Mortgage program Down payment Occupancy Loan-to-value ratio Actual eligible expenses Purchase price Appraisal Underwriting requirements Estimate the Seller Credit Before Making an Offer A seller credit should be based on an estimate of the buyer’s actual eligible costs.
For example:
Estimated eligible costs: $10,000 Requested seller contribution: $8,000 The credit could substantially reduce cash to close if the contract and loan program allow it.
A $15,000 seller contribution would not automatically provide the buyer with $5,000 in unrestricted cash if only $10,000 of eligible expenses exist.
What Is a Lender Credit? A lender credit offsets eligible closing costs through the mortgage’s pricing structure.
The CFPB explains that lender credits reduce upfront costs but may be associated with a higher interest rate.
Compare options based on:
Interest rate APR Estimated payment Lender-credit amount Discount points Origination charges Cash to close Expected time in the mortgage A lender credit can be useful when preserving funds for moving, repairs, reserves, or other ownership expenses is a priority.
It should not be evaluated as a benefit with no tradeoff.
Texas Closing Cost Example Assume:
Purchase price: $400,000 Down payment: $20,000 Closing costs and prepaid expenses: $13,000 Earnest money already paid: $5,000 Seller credit: $6,000 Lender credit: $1,000 Estimated cash remaining at closing:
$20,000 + $13,000 − $5,000 − $6,000 − $1,000 = $21,000
In this example:
Closing costs remain $13,000. The down payment remains $20,000. The buyer has already paid $5,000 in earnest money. The seller and lender are covering $7,000 of eligible expenses. The buyer’s estimated remaining cash to close is $21,000. Illustrative Example: Actual mortgage terms, payments, deposits, costs, credits, taxes, insurance, and cash to close depend on the borrower, property, purchase contract, underwriting, and final disclosures.
Can Texas Buyers Get Help With Closing Costs? Eligible Texas buyers may be able to combine a qualifying first mortgage with state or local down payment and closing-cost assistance. Buyers comparing Texas options can also review how closing cost assistance programs may use grants, forgivable loans, deferred-payment loans, or other approved assistance structures.
TSAHC Assistance The Texas State Affordable Housing Corporation offers mortgage and down payment assistance programs for eligible first-time and repeat buyers. TSAHC’s programs include options for qualifying low- and moderate-income households, Veterans, teachers, police officers, firefighters, EMS personnel, and other eligible buyers.
Eligibility can depend on:
Income Credit Property location Occupancy Mortgage program Approved lender Program funding Homebuyer education Program terms can change, so buyers should review the current structure rather than relying on an older assistance amount.
TDHCA Homebuyer Programs The Texas Department of Housing and Community Affairs offers first-mortgage and assistance options that may help eligible buyers with down payment and closing costs. TDHCA connects applicants with approved Loan Officers and requires homebuyer education for specified program assistance. TSAHC and TDHCA are examples of the broader range of down payment assistance programs that may help eligible buyers address upfront home-purchase costs.
TDHCA assistance can have:
Income limits Purchase-price limits Approved first-mortgage requirements Credit standards Education requirements Second-lien terms Forgiveness or repayment conditions Available funding limits Assistance should be evaluated based on both the funds received at closing and the obligations that remain afterward.
Local Texas Assistance Cities, counties, housing authorities, nonprofits, employers, and community organizations can also offer:
Grants Forgivable loans Deferred-payment second mortgages Repayable assistance Employer housing benefits Availability depends on location and current funding.
Texas Homestead Exemption After Closing The homestead exemption does not reduce closing costs immediately, but eligible homeowners should review it after purchasing a primary residence.
Texas law currently requires school districts to provide a $140,000 residence homestead exemption, and some local taxing units may offer additional exemptions.
The homeowner files the application with the county appraisal district—not with the lender or the Texas Comptroller.
An eligible homeowner may qualify for the exemption during the year of purchase when the applicable statutory requirements are met and the previous owner did not receive the same exemption for that year.
Because exemption rules can change, verify current eligibility directly with the local appraisal district.
How to Reduce Closing Costs in Texas The strongest opportunities are usually identified before the buyer submits an offer.
Review the Owner’s Title Policy Selection The Texas contract allows the parties to select whether the buyer or seller pays the owner’s title policy.
A buyer can evaluate:
Seller-paid owner’s policy Buyer-paid owner’s policy with another negotiated benefit Seller contribution toward other eligible costs Purchase-price or repair negotiations The complete offer matters more than one isolated fee.
Check Whether an Existing Survey Can Be Used Ask early whether:
The seller has a survey The property has changed The required affidavit or declaration is available The title company will accept it The lender will accept it An acceptable survey can avoid the expense and delay of ordering a new one.
Verify Every Property-Taxing Unit Do not rely only on one county tax rate.
Review:
County City School district MUD PID Emergency service district Hospital district Other special district taxes or assessments The Texas Comptroller provides county directories and tax-rate resources, while appraisal districts and local tax offices provide property-specific information.
Obtain Insurance Quotes Early Before making a final affordability decision, confirm:
Homeowners insurance premium Wind and hail coverage Flood insurance requirements Deductibles Roof eligibility Coastal inspection or certification requirements Initial premium and escrow deposit This is especially important for Gulf Coast and flood-prone properties.
Negotiate a Useful Seller Credit Ask your Loan Officer to estimate:
Expected closing costs Prepaid expenses Initial escrow deposits Maximum useful seller contribution Program contribution limit Discount-point options Lender-credit alternatives This helps the real estate professional structure a credit that is more likely to be fully usable.
Compare Lender-Credit Options Request side-by-side structures showing:
No lender credit A moderate lender credit A larger lender credit Discount points when relevant Compare the payment, APR, costs, and cash to close together.
Review Texas Assistance Before Making an Offer TSAHC, TDHCA, and local assistance can affect:
Approved lender Mortgage program Purchase-price range Closing timeline Required education Income qualification Repayment terms Confirm eligibility and funding before treating assistance as available cash.
How Loan Factory Helps Texas Homebuyers Texas buyers need a mortgage review that accounts for the contract, property location, title, survey, taxes, insurance, and available credits.
At Loan Factory, our Texas-licensed Loan Officers can help you:
Estimate closing costs before making an offer Separate the down payment from cash to close Review who pays the owner’s title policy Identify whether a new survey may be required Account for local and special district taxes Compare seller-credit and lender-credit options Review homeowners, flood, and wind insurance estimates Explore compatible TSAHC, TDHCA, and lender-backed assistance Compare Conventional, FHA, VA, USDA, Jumbo, and other available programs Review multiple Loan Estimates side by side Loan Factory connects borrowers with 240+ wholesale lenders. TERA supports transparent pricing comparisons, document review, communication, and loan tracking.
This comparison can be especially useful when one mortgage structure offers a meaningful lender credit, another works with homebuyer assistance, and another produces a different combination of insurance, mortgage insurance, and cash to close.
Compare Texas mortgage options before deciding how much of your savings to use for the down payment and closing expenses.
For faster support, call or text (660) 333-3333.
Texas Buyer Checklist Before Making an Offer Before submitting an offer, confirm:
Estimated down payment Estimated closing costs Estimated cash to close Who pays the owner’s title policy Which title company will be used Whether an existing survey is available Who pays if a new survey is needed Local property-tax estimate MUD, PID, and other special district taxes Homeowners insurance premium Flood and wind coverage requirements POA transfer fees and assessments Seller-credit amount Lender-credit options TSAHC or TDHCA eligibility Earnest money and option fee Buyer brokerage obligations Savings remaining after closing This review can identify costs that may not be obvious from the listing price or estimated mortgage payment.
When Will You Know the Final Amount? After receiving a mortgage application, the lender generally provides a Loan Estimate showing the estimated loan terms, closing costs, taxes, insurance, lender credits, and cash to close.
The CFPB defines closing costs as the upfront costs charged to obtain the mortgage and transfer ownership. It also explains how the Loan Estimate calculates the amount the buyer needs at closing.
For most covered mortgages, the Closing Disclosure provides the final transaction figures.
Compare:
Loan amount Interest rate Points Lender credits Title charges Survey Property taxes Escrow deposits Insurance Seller credits Earnest money Assistance funds Final cash to close The CFPB recommends asking the lender to explain significant differences between the Loan Estimate and Closing Disclosure.
Common Texas Closing-Cost Mistakes Assuming the Seller Always Pays Title Insurance The contract lets the parties choose who pays the owner’s title policy.
Assuming Every Title Company Can Set a Different Base Premium Texas establishes the basic title insurance premium schedule. Other services and applicable charges can still affect the final amount.
Ignoring the Survey Section of the Contract The survey provision determines who provides it and who pays when an existing survey is rejected.
Using an Incomplete Property-Tax Estimate The home may be taxed by several local entities and special districts.
Forgetting MUD or PID Charges Special district taxes or assessments can materially affect the monthly housing expense.
Waiting Too Long to Obtain Insurance Flood, wind, roof, or coastal eligibility issues can affect the premium and closing timeline.
Treating Earnest Money as an Additional Closing Fee Earnest money is generally applied toward the buyer’s down payment and expenses at closing.
Comparing Only the Interest Rate Review the rate, APR, points, lender credits, payment, costs, and cash to close together.
Assuming Assistance Is Always a Grant Some Texas assistance programs use forgivable, deferred, or repayable second liens.
Spending Every Available Dollar at Closing Preserve funds for:
Moving Repairs Insurance deductibles Appliances POA assessments Property-tax changes Emergency expenses Conclusion Closing costs in Texas commonly range from approximately 2% to 5% of the home’s purchase price, but the final amount depends on much more than the mortgage fee schedule.
Texas buyers should specifically review:
Title insurance Survey requirements Local property-tax prorations MUD and PID taxes Homeowners, flood, and wind insurance POA expenses Earnest money and option fee Buyer and seller contract obligations Seller and lender credits TSAHC and TDHCA assistance At Loan Factory, we help buyers compare the mortgage amount, payment, APR, fees, credits, insurance, property costs, and cash to close before choosing a financing structure.
Apply online or call or text (660) 333-3333 to begin your Texas home loan review.
Experience Note When our Loan Officers estimate Texas closing costs, we do not rely only on a percentage of the purchase price.
We review the proposed mortgage, owner’s title policy allocation, survey, property-tax districts, insurance, POA charges, seller credits, lender credits, assistance funds, earnest money, option fee, and closing date.
This detailed review helps buyers understand the amount required to close and the ongoing ownership expenses that can follow the purchase.
Sources Consumer Financial Protection Bureau guidance on Loan Estimates, Closing Disclosures, lender credits, closing costs, and cash to close. Freddie Mac guidance on typical homebuyer closing-cost ranges. Texas Department of Insurance guidance on title policies and the Texas title insurance rate schedule. Texas Real Estate Commission resale contract and buyer–seller expense provisions. Texas Comptroller guidance on property taxes and homestead exemptions. Texas Department of Insurance guidance on homeowners, flood, and wind insurance. TSAHC and TDHCA homebuyer assistance resources. Loan Factory information on its wholesale lender network and TERA platform. Disclaimer: This content is for educational and informational purposes only and is not financial, tax, legal, insurance, credit, or housing counseling advice, a commitment to lend, or a guarantee of approval or assistance. Mortgage programs, rates, APRs, payments, fees, credits, title charges, surveys, property taxes, insurance, assistance, and eligibility are subject to change and vary by borrower, property, county, purchase contract, underwriting, lender overlays, and investor guidelines.
About the Author Loan Factory Mortgage Education Team
Loan Factory is a technology-powered mortgage platform helping borrowers compare mortgage options through a broad wholesale lender network.
The Loan Factory Mortgage Education Team helps Texas homebuyers understand title insurance, surveys, local property taxes, special districts, insurance, seller credits, homebuyer assistance, and the complete amount required to purchase a Texas home.
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