Published , 3 minute read
Texas closing costs explained — lender fees, title insurance, escrow fees, prepaid taxes and insurance — and what's unique about closing in Texas.
Quick answer: Closing costs in Texas typically run about 2%–5% of the purchase price for buyers, including lender fees, appraisal, title insurance, title company fees, and prepaid items like homeowners insurance and an escrow deposit for property taxes. Texas has no state transfer tax, and title insurance premiums are set by the state, so every title company charges the same base premium. Many closing costs are negotiable, and sellers can contribute toward them within loan program limits.
Typical buyer closing costs in Texas
Category | What it covers | Notes |
|---|---|---|
Lender fees | Origination, underwriting, processing; any discount points you choose | Compare these using each lender's Loan Estimate |
Third-party loan costs | Appraisal, credit report, flood certification | Appraisal is often paid up front |
Attorney document preparation | Preparing the loan documents | Common in Texas transactions |
Lender's title policy | Protects the lender's interest | Premium set by the Texas Department of Insurance |
Owner's title policy | Protects you as the owner | Who pays is negotiated in the contract |
Title company escrow/settlement fee | Handling the closing and funds | Often split between buyer and seller |
Survey | Confirms property boundaries | May be avoided if the seller has an acceptable existing survey |
Recording fees | Recording your deed and mortgage with the county | Set by the county |
Prepaid items | First-year homeowners insurance, interim interest, escrow deposit for taxes and insurance | Varies by closing date and tax rate |
What's different about closing costs in Texas
Title insurance rates are set by the state. Texas is one of the few states where the Texas Department of Insurance sets title insurance premium rates that every title company must charge. In December 2025, the commissioner ordered a 6.2% reduction to basic title premium rates, effective March 1, 2026. Because the premium is fixed, you won't save on the base premium by switching title companies — though other fees and endorsements can vary.
No state transfer tax. Unlike many states, Texas doesn't charge a tax to transfer a home from seller to buyer.
Property tax prepaids can be significant. Texas property taxes are billed once a year and generally due by January 31 of the following year. Your lender will collect enough at closing to start your escrow account so the bill can be paid on time. Depending on your closing month, this deposit can be a meaningful part of your cash to close.
Tax prorations. At closing, the seller typically credits you for their share of the current year's property taxes, since you'll pay the full bill later. This credit often reduces your cash to close.
How to lower your closing costs
- Negotiate seller concessions in your offer. Each loan program limits how much a seller can contribute.
- Ask about lender credits. A slightly higher rate can come with a credit toward closing costs.
- Look into down payment and closing cost assistance through Texas state, county, and city programs.
- Compare Loan Estimates from lenders on the same day, looking at fees as well as the rate.
- Close near the end of the month to reduce prepaid interest — but don't let this drive your schedule if timing is tight.
Your Loan Estimate and Closing Disclosure
Within three business days of applying, your lender must give you a Loan Estimate listing your expected costs. At least three business days before closing, you'll receive a Closing Disclosure with final numbers. Compare the two, and ask your loan officer to explain any changes.
FAQ
How much are closing costs on a $400,000 house in Texas? Often roughly $8,000–$20,000 including prepaids, depending on your loan, the tax rate, insurance premium, and what the seller agrees to pay. Your Loan Estimate gives your specific number.
Who pays the owner's title policy in Texas? It's negotiated in the purchase contract. Ask your real estate agent what's customary in your area and what to request.
Can closing costs be rolled into the loan? On a purchase, closing costs generally can't be added to the loan amount, though FHA's upfront mortgage insurance and the VA funding fee can be financed. Seller concessions and lender credits are the usual ways to reduce cash at closing.
Are closing costs tax deductible? Some items, like property taxes and certain points, may be. Ask your CPA about your situation.
Want a clear estimate of your Texas closing costs? Call or text Mike Tanas at 214-604-5245
This article is general education, not financial, tax or legal advice. Guidelines change and vary by lender. Talk with Mike about your own situation.