Texas Home Buyer Closing Costs: What You’ll Really Pay (and Why It Matters)

Buying a home in Texas is often a financial upgrade compared to states like California, Washington, or New York. Lower home prices, no state income tax, and generally lower insurance costs all work in your favor.

But there’s one area that still catches buyers off guard: closing costs.

My goal with this post is simple—to give you a clear, plain-English, Texas-specific breakdown of what home buyers actually pay at closing, why those costs exist, and which ones you can influence. No sales pitch. No vague percentages. Just the facts, with context.

The Big Picture: What Are “Closing Costs” in Texas?

Closing costs are the one-time expenses required to finalize a real estate purchase. In Texas, they typically fall into five buckets:

1. Lender fees

2. Title company & escrow costs

3. County recording fees

4. Prepaid items (insurance & interest)

5. Initial escrow funding (mainly property taxes)

For most financed purchases in Texas, buyers should plan on 2.5%–3.5% of the purchase price, excluding the down payment. Rate buydowns or jumbo loans can push that higher.

1. Lender Fees (What the Bank Charges)

These are fees tied directly to originating and underwriting your mortgage.

Fee	Typical Texas Range
Loan origination fee	$0 – 1.0% of loan amount
Discount points (optional)	0 – 3% of loan amount
Processing / administration	$400 – $900
Some lenders bundle these fees into a single line item, others itemize aggressively. Multiple “admin” fees should always prompt questions. 2. Lender-Required Third-Party Fees These aren’t paid to the lender, but they’re required by the lender. Item Typical Cost Appraisal $500 – $800 (can exceed $1,000 for rural/jumbo) Credit report $30 – $75 Flood certification $10 – $25 Tax service / monitoring $75 – $150 3. Title Insurance & Title Company Fees (Texas-Specific) Texas is a title-company state, and title costs are more prominent here than in many other states. Title Insurance (Rates Are State-Regulated) Purchase Price Lender’s Policy Owner’s Policy $500,000 $1,200 – $1,400 $1,200 – $1,400 $750,000 $1,700 – $2,000 $1,700 – $2,000 $1,000,000 $2,300 – $2,700 $2,300 – $2,700 Important: The lender’s policy is mandatory when financing. The owner’s policy is optional, but strongly recommended. Who pays for the owner’s policy is negotiated in the contract. Title Company / Escrow Fees Item Typical Cost Settlement / escrow fee $600 – $1,200 Title search & exam $150 – $300 Title endorsements $25 – $100 each Wire & notary fees $75 – $200 4. County & Government Fees (A Texas Advantage) Texas does not charge a state real estate transfer tax. Item Typical Cost Deed recording $25 – $50 Deed of Trust recording $25 – $75 Texas transfer tax $0 5. Surveys, Inspections & Due Diligence Surveys are more common in Texas than many buyers expect. Item Typical Cost Residential survey $450 – $900 General home inspection $450 – $700 Termite / WDI inspection $75 – $150 Foundation engineer $350 – $600 6. Prepaids & Escrow Funding (Biggest Cash-to-Close Variable) These aren’t fees—but they require cash at closing. Item Typical Amount Prepaid interest $50 – $150 per day Homeowners insurance (1 year) $1,800 – $4,500+ Initial property tax escrow $2,000 – $8,000+ This is where most surprises happen, particularly for out-of-state buyers unfamiliar with Texas property taxes. Final Perspective: What This Looks Like on a $500,000 Texas Home Abstract percentages don’t help most buyers. Real numbers do. So here’s what a typical, financed $500,000 home purchase in Texas often looks like at the closing table. This assumes a conventional loan, no aggressive rate buydown, and a standard owner-occupied transaction. A realistic closing cost snapshot Lender fees: ~$3,500 – $6,000 (origination, underwriting, processing; varies widely by lender) Appraisal & lender-required third parties: ~$700 – $1,100 Title insurance (lender + owner’s policies): ~$2,400 – $2,800 (Texas-regulated pricing; who pays owner’s policy is negotiable) Title company / escrow / recording fees: ~$1,000 – $1,500 Survey & inspections: ~$1,000 – $1,600 (survey, general inspection, termite; more if specialty inspections are needed) Prepaid interest: ~$300 – $900 (depends entirely on your closing date) Homeowners insurance (1 year upfront): ~$2,000 – $3,500 Initial property tax escrow funding: ~$3,000 – $6,000+ (this is where many out-of-state buyers get surprised) Total typical buyer closing costs: ~$14,000 – $23,000 (roughly 2.8%–4.6% of the purchase price, excluding down payment) Why the range is wide — and why that’s normal Two buyers can purchase identical $500,000 homes and still have materially different cash-to-close numbers. The biggest swing factors are: Which lender you choose (fee structure matters more than rate headlines) Whether you buy down the rate Closing date timing (prepaid interest) Insurance costs (carrier, coverage, wind/hail exposure) How much the lender collects upfront for tax escrow Who pays the owner’s title policy (negotiated in the contract) None of these are red flags. They’re simply mechanics. The takeaway most buyers miss The mistake isn’t the amount of closing costs. The mistake is not understanding them early. Well-prepared buyers don’t panic at closing. They: Focus on cash-to-close, not just fees Ask which costs are fixed vs. timing-driven Identify which items are negotiable Plan for Texas property taxes before the Loan Estimate arrives That’s how closings stay boring — which is exactly how they should be. Texas real estateTexas home buyersClosing costsBuying a home in TexasTitle insurance TexasEscrow TexasRelocation buyers Bill Ross https://BillRossRealtor.com Next Next Texas Home Sellers: Why “After Closing” Is When Lawsuits Actually Begin Blog Painting contractors Title Companies Selling Landscape Contractors Cleaning companies Lenders Buying Inspectors Surveyors Insurance companies Warranty Companies How to Get a Texas Driver License Register Your Car in Texas Settling in Schools, Colleges and Universities Claiming Your Texas Homestead 408-827-8484 Bill@HillCountryHomesteads Bill Ross Bill Ross 607 E Blanco Road, Ste. 2507 Boerne, TX 78006 Texas Real Estate Commission Consumer Protection Notice Texas Real Estate Commission Information About Brokerage Services © 2024 Texas Providence All rights reserved.