Who Pays Closing Costs in Texas? A Buyer and Seller Breakdown
The median Texas home sold for $335,000 as of the Texas Real Estate Research Center’s April 2026 data. Close on that home with a mortgage and somewhere between $8,000 and $16,000 in closing costs and prepaids changes hands, and who covers each piece is set by the contract, by tradition, and by loan-program rules that most buyers never see written down. I walk clients through this split every week, and the same surprise comes up in Houston, San Antonio, and Fort Worth alike: far more of it is negotiable than people expect. Here is the breakdown, with the numbers that matter in 2026.
Key points:
- Texas tradition has the seller paying the owner’s title policy, one of the largest single line items, though the contract can assign it either way.
- Buyers typically pay 2% to 5% of the purchase price in closing costs and prepaids, roughly $8,000 to $16,000 on a $335,000 home.
- Seller concession caps depend on the loan: conventional allows 3% to 9% based on down payment, FHA allows 6%, and VA allows 4% plus customary closing costs.
- Concessions can pay closing costs, prepaids, and discount points. They can never fund your down payment.
- A $10,000 seller concession usually helps a cash-tight buyer more than a $10,000 price cut, which only trims the payment by about $63 a month at current average rates.
- With statewide supply at 5.2 months (TRERC, April 2026 data), sellers in most Texas metros are saying yes to concession requests more often than they did two years ago.
Who pays which closing costs in Texas?
In a typical Texas purchase, the seller pays the owner’s title policy, their own agent’s compensation as negotiated, and half of the escrow fee. The buyer pays lender fees, the appraisal, the lender’s title policy, the other half of the escrow fee, and all prepaid items such as the first year of homeowners insurance and the initial escrow deposit. Every one of those defaults can be moved by the contract.
Here is the customary split I see on Texas files:
| Line item | Who usually pays in Texas | Notes |
|---|---|---|
| Owner’s title policy | Seller | State-set premium; negotiable by contract |
| Lender’s title policy | Buyer | Required when there is a mortgage |
| Escrow (settlement) fee | Split | Often 50/50 between the parties |
| Lender origination and underwriting | Buyer | Varies by lender; compare estimates |
| Appraisal | Buyer | Commonly $550 to $700 in Texas metros |
| Survey | Negotiable | Sellers often provide an existing survey with an affidavit |
| Prepaids (insurance, taxes, interest) | Buyer | Largest variable; Texas taxes and insurance run high |
| Agent compensation | Negotiated per agreement | Set in writing under the rules that took effect after the 2024 industry settlement |
How much can a seller contribute by loan type?
Loan programs cap what a seller can pay on the buyer’s behalf. Conventional loans allow 3% of the price when the buyer puts down less than 10%, 6% with 10% to 25% down, and 9% with 25% or more down. FHA allows 6% regardless of down payment. VA allows the seller to pay all customary closing costs plus concessions up to 4% of the value. Investment property purchases with conventional financing are capped at 2%.
On that $335,000 median-priced home, the caps translate to real money: $10,050 under the common conventional 3% tier, $20,100 under FHA’s 6%, and $13,400 of pure concessions under VA’s 4% before customary costs are even counted. Anything a seller agrees to above the applicable cap gets treated as a price adjustment by the lender, so it pays to size the request correctly the first time. I covered why sellers have grown more willing to sign these requests in my earlier piece on rising seller concessions in Texas.
How much should a buyer budget for closing costs in Texas?
Budget 2% to 5% of the purchase price, with prepaids included. On a $335,000 purchase, a realistic middle-of-the-road file looks like this: about $1,500 to $2,500 in lender origination and underwriting fees, $550 to $700 for the appraisal, roughly $1,500 to $2,500 in lender’s title and closing fees, $350 to $700 for the buyer’s share of escrow, and a few hundred dollars in recording and miscellaneous charges.
Then come the prepaids, and in Texas they are the heavyweight. The first year of homeowners insurance often runs $2,500 to $3,500 on a median-priced home, and the initial escrow deposit for property taxes can add $1,700 to $3,300 depending on the county and the closing month. Prepaid interest covers the days between funding and your first full month. None of the prepaids are fees in the true sense; they are your own future bills, collected early. Remember that closing costs sit on top of your down payment, which I broke down separately in how much down payment you really need in Texas.
Price cut or seller concession: which saves you more?
For a buyer short on cash, the concession usually wins. Take $10,000 on the table in a negotiation. As a price reduction, it lowers the loan balance by $10,000, which trims the monthly principal and interest by about $63 at the 6.49% average 30-year rate reported by Freddie Mac’s Primary Mortgage Market Survey for the week ending July 9, 2026. Useful, but slow: it takes over 13 years of those savings to equal $10,000.
The same $10,000 as a seller concession is cash working for you on day one. It can wipe out most of your closing costs, keeping your savings intact for reserves or moving expenses, or it can buy discount points that lower your rate for the life of the loan. Which use wins depends on your cash position and how long you plan to keep the home, and the appraisal still has to support the contract price either way. A recent client of mine in Houston used a $12,000 concession to cover closing costs and a point; the alternative price cut would have changed his payment by less than $80 a month.
What does the 2026 market mean for negotiating?
Buyers hold more negotiating power than they have in years. Statewide inventory stood at 5.2 months of supply with 70 days on market in the Texas Real Estate Research Center’s April 2026 data, and several metros are softer than that average. In the files I work on at Mortgage Austin, concession requests are now a routine part of offers rather than a long shot. The current numbers by metro are on my Texas housing market page, which I update as new data comes out.
Two practical tips. First, decide what the concession is for before you ask: covering costs, buying points, or funding the escrow deposit. A concession larger than your actual costs and allowable prepaids is wasted, because the excess cannot come back to you as cash. Second, on new construction, compare the builder’s incentive tied to their preferred lender against an outside offer with a concession; the headline incentive is not always the better deal once the rate and fees are side by side.
Frequently Asked Questions
Can seller concessions cover my down payment?
No. Every major loan program limits concessions to closing costs, prepaid items, and discount points. Your down payment must come from your own funds, eligible gift funds, or an approved assistance source, never from the seller.
Who pays for the owner’s title policy in Texas?
By tradition the seller pays it in most Texas markets, and the premium is set by the state based on the sale price. The contract controls, though, so the parties can assign it to either side during negotiation.
What happens if the concession is bigger than my actual closing costs?
You lose the difference. Concessions can only be applied to closing costs, prepaids, and points, and any excess cannot be refunded to you as cash at closing. Have your loan officer estimate your total costs before you settle on the concession amount.
Do seller concessions raise the price of the home?
Sometimes the parties agree to a higher price to offset the concession, and that only works if the appraisal supports the higher value. If the appraisal comes in short, the deal has to be renegotiated. A concession at the original price is the cleaner structure when the seller will accept it.
Can I get concessions on a new-construction home in Texas?
Yes, builders offer incentives constantly, but they are usually tied to using the builder’s preferred lender. Compare the full package (rate, fees, and incentive) against an outside lender’s offer before committing. The same loan-program concession caps apply to builder incentives.
If you are writing an offer and want to know how big a concession to ask for, or you are weighing a price cut against credits, let’s talk through your options. I’ll run both versions of the math on your actual numbers so you can negotiate with confidence.
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. Rates cited are averages from the Freddie Mac Primary Mortgage Market Survey for the week ending July 9, 2026, are illustrative only, and are not a quote or an offer of specific terms. Rates may change at any time. Closing cost figures are estimates and vary by transaction, county, and lender. Sources: Freddie Mac PMMS (July 2026), Texas Real Estate Research Center (April 2026 data). Equal Housing Lender.
