What Are Closing Costs? A Complete Breakdown for Texas Homebuyers

When you’re getting ready to buy a home in Texas, most people focus on the down payment. But there’s another crucial expense you must budget for — closing costs.

Closing costs are the fees and expenses required to finalize your mortgage and officially transfer ownership of the home to you. For many buyers, they’re an unexpected hurdle. But with a little preparation and the right guidance, they don’t have to be a dealbreaker.

This guide will help you understand exactly what closing costs are, what they include, how much you should expect in Texas, and what strategies can help you lower or manage them effectively.

🔍 What Are Closing Costs?

Closing costs are the collection of fees you pay at the end of a real estate transaction—in addition to your down payment.

These fees are paid to multiple parties involved in the sale including lenders, title companies, appraisers, and the government.

Generally, closing costs run about 2% to 5% or more of the home’s purchase price. So for a $350,000 home in Texas, you could expect to pay anywhere from $7,000 to $17,500+ in closing costs, depending on your loan program and structure.

🧾 What Do Closing Costs Include?

Let’s break down the typical categories you’ll find on your closing disclosure in Texas:

1. Loan Origination Fees

These are the fees charged by your lender to process and underwrite your loan.

It often includes document preparation, application review, and other administrative costs.

Typical range: 0.5% to 1% of the loan amount.

2. Appraisal Fee

Your lender will require a licensed appraiser to verify the home’s market value.

This protects both you and the lender from overpaying.
💰 Typical cost in Texas: $500–$800

3. Credit Report Fee

Your lender charges this to pull your credit history and score from the three major bureaus.
💰 Usually under $100

4. Title Insurance & Title Search

This protects both you and the lender against future claims against the home’s ownership.

A title company will also perform a search to ensure there are no liens or disputes.
💰 Texas average: $1,000–$2,000+ depending on property price

5. Escrow Fees (Closing Fees)

The title company or escrow officer facilitates the transaction, handles the funds, and ensures all documents are properly signed.
💰 Usually split 50/50 between buyer and seller unless negotiated otherwise

6. Recording Fees

These are paid to the local county to officially record your deed and make it public record.
💰 Typically $100–$250 in most Texas counties

7. Survey Fee

In Texas, lenders and title companies often require a new survey of the property if an existing one isn’t available or sufficient.
💰 Ranges from $400–$700

8. Prepaid Costs

These are not fees, but upfront payments for items like:

• Homeowners insurance (several months prepaid)

• Property taxes (several months prepaid)

• Mortgage interest (prorated to your closing date)

They’re required at closing to establish your escrow account, which your lender will use to pay future taxes and insurance.

9. HOA Transfer Fees / Dues

If the home is in an HOA, there may be upfront transfer fees or monthly dues collected in advance.
💰 These vary widely from $200–$1,000+

10. Attorney or Notary Fees

While attorneys are not required in Texas closings, some buyers still use one for peace of mind.

Notary or mobile notary fees may apply.
💰 Notary: $100–$200

💡 Can I Lower My Closing Costs?

Yes—and many Texas buyers don’t realize they have options.

Here are a few smart ways to reduce them:

✅ Negotiate Seller Concessions

Especially in a buyer’s market, you can request that the seller cover part or all of your closing costs.

This is written into your contract and must be agreed to upfront.

✅ Compare Lender Fees

Not all lenders charge the same for origination or underwriting.

When shopping mortgage rates, also compare closing cost estimates (Loan Estimates) side by side.

✅ Ask About Lender Credits

Some lenders will offer to reduce your closing costs in exchange for a slightly higher interest rate.

This trade-off may be worthwhile if you need more cash at closing.

✅ Use Down Payment Assistance Programs

Programs like TDHCA (Texas Department of Housing and Community Affairs) offer grants and second-lien assistance that can cover both down payment and closing costs.

🧠 Pro Tip: Review Your Loan Estimate Early

You’ll receive a Loan Estimate (LE) within 3 business days of applying for a mortgage.

Page 2 of the LE clearly outlines your estimated closing costs.

Review it carefully, and don’t hesitate to ask your lender to walk you through every line item.

Before closing, you’ll receive the Closing Disclosure (CD) —a final, itemized version that must match your Loan Estimate within regulatory limits.

🔚 Final Word: Plan Ahead, Don’t Be Surprised

Your dream home in Texas shouldn’t be derailed by unexpected closing costs.

Knowing what to expect, reviewing your estimates carefully, and working with a trusted mortgage expert can make the difference between a smooth closing and a stressful one.

If you’re looking for transparent, honest mortgage guidance, I’m here to help every step of the way—from application to closing.

📲 Brandon Burgess | Mortgage Broker
NMLS #371950 | Serving all of Texas
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