Closing Costs in Texas: What’s Standard and What’s Negotiable

I am Anthony Ferrando, a mortgage loan originator licensed across Texas (NMLS# 1919613), and one of the most common questions I get from first-time buyers is also one of the most important: how much do I actually need to bring to the closing table? The purchase price is one number. The closing costs are another, and they catch a lot of buyers off guard.

Closing costs in Texas typically run between 2% and 5% of the purchase price. On a $400,000 home, that means you could be looking at anywhere from $8,000 to $20,000 in additional costs beyond your down payment. Some of those costs are fixed. Others are negotiable. And a few, including prepaid items, are often overlooked entirely until buyers see the final Closing Disclosure.

This guide walks through every major category so you know what to expect before you make an offer.

What Counts as a Closing Cost in Texas?

Closing costs cover all the fees and expenses required to complete a real estate transaction. They are separate from your down payment, though both come due at the same time. Here is the full list of what you may see:

Lender fees: Origination fee, underwriting fee, discount points (if you buy down the rate), application fee, rate lock fee.

Third-party fees: Title insurance (owner’s and lender’s policies), title search fee, escrow/settlement fee, appraisal fee, survey fee, attorney fees (if applicable).

Government fees: Recording fees paid to the county, transfer taxes (note: Texas has no statewide real estate transfer tax, which is an advantage compared to many other states).

Prepaid items: First year of homeowners insurance paid upfront, prepaid mortgage interest (the interest from your closing date through the end of the month), and initial escrow reserves for property taxes and insurance.

Understanding the Texas option period is also relevant here. The option fee you pay during the option period is separate from closing costs, but it is part of your total out-of-pocket picture going into a purchase.

Who Pays What: Texas Customs vs. What Is Actually Negotiable

Texas has specific customs around who typically pays which closing costs, but custom is not the same as law. Almost everything is negotiable.

Owner’s title insurance. In most Texas counties, the seller customarily pays for the owner’s title insurance policy. This is one of the clearest ways Texas differs from many other states, where the buyer typically foots this bill. The lender’s title insurance policy (required by your lender if you are financing) is always paid by the buyer.

Survey. The survey is typically buyer-paid in Texas, running $400 to $600 in most markets. However, if the seller has a recent survey and the title company accepts it, you may be able to use it and avoid the cost entirely.

Appraisal. The appraisal fee, typically $400 to $700 in Texas markets, is buyer-paid and usually collected at the time of service rather than at closing.

Recording fees. Paid by the buyer in most Texas transactions.

Lender fees. Always buyer-paid, though the amount and structure vary by lender.

The most significant negotiating opportunity is seller concessions, where the seller agrees to credit the buyer a set amount toward closing costs. This is covered in more detail in the strategies section below.

Lender Fees: Which Ones Are Fixed and Which Can Be Shopped

Not all lender fees are created equal. Some are set by your lender and cannot be changed; others reflect services you have the right to shop for independently.

Origination fee. This is the fee your lender charges for processing your loan. It typically runs 0% to 1% of the loan amount. On a $380,000 loan (after 5% down on a $400,000 home), 1% origination comes to $3,800. Some lenders charge no origination fee but offset it through a slightly higher rate.

Underwriting fee. Charged by the lender to review and approve your file. Usually $400 to $900. This is a lender-specific fee.

Discount points. Optional. Paying points upfront buys you a lower interest rate. Whether this makes sense depends on how long you plan to keep the loan. I walk buyers through this calculation whenever they ask.

Rate lock fee. Most lenders include standard 30 to 45-day rate locks at no cost. Longer locks sometimes carry a fee.

Fees labeled “services you can shop for” on your Loan Estimate are the ones where you can compare providers and potentially save money.

Third-Party Fees: Appraisal, Title, Survey, and Escrow

Appraisal ($400 to $700). Ordered by your lender from an independent appraiser to confirm the property’s value supports the loan amount. You pay this directly to the appraisal management company, typically before closing.

Owner’s title insurance. In Texas, this is typically seller-paid and protects the buyer’s ownership rights in perpetuity. The cost varies by purchase price but is set by the Texas Department of Insurance, so the rate is the same regardless of which title company you use.

Lender’s title insurance. Required by your lender. Protects the lender’s interest in the property. Buyer-paid, typically a smaller premium than the owner’s policy.

Title search and settlement fee. The title company charges for conducting the title search and managing the closing. Combined, these usually run $500 to $1,200 depending on the market.

Survey ($400 to $600). A licensed surveyor locates the property boundaries and identifies any encroachments or easements. Buyer-paid in most Texas transactions.

Escrow/settlement fees. Charged by the title company or attorney managing the closing process.

Prepaid Items and Escrow Reserves: The Costs Buyers Often Overlook

Prepaid items are not fees in the traditional sense. They are costs you would pay anyway as a homeowner. You are simply paying them upfront at closing to fund your escrow account and cover the gap between your closing date and your first payment.

Prepaid homeowners insurance. Your lender requires proof of insurance before closing, and the first year’s premium is typically paid at or before closing. Depending on your coverage level and location, this could range from $1,500 to $3,000 or more annually in Texas.

Prepaid mortgage interest. You pay interest from your closing date through the end of that month. If you close on May 16, you pay 15 days of prepaid interest. On a $380,000 loan at 7%, that is roughly $1,100.

Escrow reserves for property taxes. Your lender collects a cushion of property tax funds upfront to ensure the escrow account has enough to cover your first tax payment. Texas property taxes are paid in arrears, and how much you owe upfront depends on the time of year you close.

Understanding the Texas homestead exemption is worth doing before closing. Filing promptly after purchase reduces your taxable value and, over time, lowers your monthly escrow payment.

For context on how loan amounts affect these numbers, see the 2026 FHA loan limits in Texas, which determine the maximum loan amount available under FHA guidelines in each county.

Four Strategies to Reduce What You Pay at the Table

1. Seller concessions. Ask the seller to contribute a dollar amount toward your closing costs. In 2026, with Texas inventory elevated and most homes selling below list price, sellers in many markets are open to this. Lender caps apply: up to 3% on a conventional loan with less than 10% down, up to 6% on FHA. On a $400,000 purchase with a conventional loan and 5% down, that is up to $12,000 the seller can contribute, subject to credit, income, and property qualifications.

2. Lender credits. A lender credit works in reverse from paying discount points. You accept a slightly higher interest rate in exchange for a credit toward your closing costs. This can reduce or eliminate out-of-pocket fees at closing, though it increases your monthly payment slightly over the life of the loan. This strategy works well for buyers who are cash-constrained at closing but plan to refinance if rates drop.

3. Shop the title company. In Texas, you have the right to choose your own title company for the lender’s title policy and the settlement services. The owner’s title insurance rate is state-regulated and consistent across providers, but settlement fees and title search fees do vary. Getting a quote from more than one title company is worth the time on higher-priced purchases.

4. Negotiate lender fees. Origination fees, underwriting fees, and other lender charges are not always fixed. If you are a strong borrower with good credit and a solid income history, there may be room to negotiate. Comparing Loan Estimates from at least two lenders is the most reliable way to see the full fee picture side by side.

What to Watch on Your Loan Estimate

Your lender is required to issue a Loan Estimate within three business days of receiving your complete application. This document is a standardized three-page summary of your loan terms, projected monthly payments, and estimated closing costs.

Here is what to focus on:

Page 1: Loan terms, rate (and whether it can rise), monthly payment, and whether you have a prepayment penalty. Verify the rate is what you were quoted.

Page 2, Section A: Origination charges. These are fees from your lender that cannot increase between the Loan Estimate and the final Closing Disclosure.

Page 2, Section B: Services you cannot shop for (appraisal, credit report). These can increase by up to 10% from estimate to closing.

Page 2, Section C: Services you can shop for (title company, settlement agent). Compare these to your own quotes.

Page 2, Section F and G: Prepaids and escrow reserves. These fluctuate based on your closing date and local tax rates.

At least three business days before closing, you will receive a Closing Disclosure. Compare it line by line to the Loan Estimate. Costs in Section A cannot increase at all. Costs in Sections B and C cannot increase by more than 10% in total. If you see a discrepancy that exceeds these tolerances, ask your lender immediately.

Frequently Asked Questions

How much should I budget for closing costs on a $400,000 Texas home?

Budget between $8,000 and $20,000 depending on your loan type, down payment, and how your deal is structured. That range (2% to 5%) covers lender fees, title fees, prepaid insurance, and escrow reserves. The actual number varies based on your specific lender, the title company, and your closing date within the month. Your Loan Estimate will give you a precise figure within three days of submitting a full application.

Can I roll closing costs into my mortgage in Texas?

In most cases, no. Conventional and FHA purchase loans do not allow you to directly roll closing costs into the loan balance. However, there is a workaround: if the seller agrees to pay a credit at closing, you can effectively recoup those costs by offering a slightly higher purchase price and asking for the equivalent seller concession. The result is similar: your out-of-pocket cash decreases, and your loan balance is higher. Subject to lender limits on seller contributions and appraisal value supporting the higher purchase price.

Do sellers pay closing costs in Texas?

Sellers in Texas customarily pay the owner’s title insurance policy and their own real estate agent’s commission. Everything else is negotiable. In markets where inventory is elevated and homes are sitting longer, buyers are successfully requesting seller concessions of $5,000 to $10,000 or more toward closing costs. Whether a seller will agree depends on the local market, how long the home has been listed, and how the offer is structured.

What are prepaid items and why are they part of closing costs?

Prepaid items are costs you would pay as a homeowner regardless, just collected at closing to fund your escrow account. They include your first year of homeowners insurance, prepaid mortgage interest from your closing date through the end of that month, and an initial reserve of property tax funds. They typically add $3,000 to $6,000 to your total closing cost figure, depending on your insurance premium, loan size, and closing date.

Can I shop for my own title company in Texas?

Yes. In Texas, you have the right to choose your own title company for the services listed under Section C of your Loan Estimate. While the owner’s title insurance rate is state-regulated and the same at every title company, the settlement fee and title search fee can vary. On a high-priced purchase, getting a competing quote is worth a few phone calls. Your real estate agent often has a preferred title company, but that recommendation is not a requirement.

How do lender credits work and when does it make sense to use them?

A lender credit reduces your out-of-pocket closing costs in exchange for a slightly higher interest rate. For example, a 0.25% rate increase might generate a credit worth 1% of the loan amount. This makes sense if you are short on cash at closing, plan to sell or refinance within a few years, or simply want to preserve reserves after closing. The tradeoff is a higher monthly payment for as long as you keep the loan, so running the break-even math matters before deciding.

Does my closing cost estimate change between the Loan Estimate and the Closing Disclosure?

Some costs are locked: lender origination fees (Section A) cannot increase at all. Services you did not shop for (Section B) and services you chose from the lender’s list (Section C) can increase by no more than 10% in total. Prepaid items (Section F and G) can vary based on your actual closing date. If your Closing Disclosure shows numbers significantly higher than your Loan Estimate, ask your lender for an explanation and compare them section by section.

If you are preparing to buy in Fort Worth, Houston, Austin, or anywhere across Texas and want a clear picture of your total costs before you make an offer, reach out directly and let’s talk through your options.

Anthony Ferrando | Mortgage Loan Originator | NMLS# 1919613 | Ferrando Financial LLC NMLS# 2403080 | Licensed in Texas. This is not a commitment to lend. Loan approval is subject to credit, income, and property qualifications. Equal Housing Lender.