Closing Costs in Texas for Buyers and Sellers
Texas closings have a few features that surprise people moving from other states: no transfer tax, title insurance premiums set by the state, and a custom in Houston that the seller buys the owner's title policy. This page lists what buyers and sellers each pay, shows the 2026 title rates, explains prorations and escrow deposits, and covers how seller credits are used in negotiation.
What buyers pay
A Texas buyer with a mortgage should plan on 2 to 5 percent of the purchase price for closing costs and prepaid items combined, with the percentage falling as the price rises because several charges are flat. The costs fall into four groups:
- Lender charges. Origination, underwriting and processing fees, any discount points (one point is 1 percent of the loan amount), the appraisal, the credit report, a flood zone determination and a tax service fee. These vary by lender and are the part worth shopping.
- Title and settlement. The lender's title policy, which costs $100 under state rules when it is issued at the same time as the owner's policy on the same property and does not exceed its amount; lender-required endorsements, such as the T-19 at 5 percent of the basic premium on residential property; the title company's escrow or settlement fee; and recording fees at the county clerk.
- Survey, if a new one is needed. When the seller's existing survey and T-47.1 declaration are not acceptable, a new survey of a typical Houston lot runs a few hundred dollars; see our survey and T-47 guide for the contract options.
- Prepaids and escrow deposits. Interest from the closing date to the end of the month, the first year's homeowners insurance premium, and the initial deposit into the escrow account for property taxes and insurance, usually two to three months of each. In Houston, where taxes and insurance are high, these prepaids are often the largest line on the buyer's side.
Two federal disclosures carry the official numbers: the Loan Estimate within three business days of your application and the Closing Disclosure at least three business days before closing. Compare them line by line; the fees that may not increase are marked.
What Houston sellers customarily pay
- The owner's title policy. Paragraph 6A of the TREC contract has a checkbox for who pays, and in the Houston market the seller customarily does. The premium is set by the state (table below).
- Half of the escrow fee charged by the title company, by custom split evenly with the buyer.
- Property tax proration. Texas taxes are paid in arrears and are due by January 31 for the year just ended. The seller credits the buyer for the days from January 1 to closing, and the buyer pays the whole bill when it arrives. On a $400,000 home at a 2.2 percent rate closing June 30, the seller's credit is about $4,360 and appears as a credit on the settlement statement, not a check.
- Homeowners association charges. The resale certificate and documents, which Property Code Section 207.003 caps at $375, plus $75 for an update, and any transfer fee the association's covenants assign to the seller. Capitalization fees are often placed on the buyer; the TREC property owners association addendum sets who pays what.
- Loan payoff and release. The remaining mortgage balance with interest through the payoff date, plus a small fee to record the release of lien.
- Document preparation. An attorney's fee for drafting the deed and related documents, and courier or wire fees.
- Negotiated items. Repairs or credits agreed during the option period, a residential service contract (home warranty) if the contract says the seller pays, and any seller credit toward the buyer's closing costs.
Everything on both lists is negotiable in the contract. The customs above describe the Houston default, which is where a negotiation starts.
No transfer tax, and title rates set by the state
Texas has no real estate transfer tax, deed stamp or mortgage recording tax. Since the 2015 constitutional amendment adding Article VIII, Section 29, the Legislature may not impose a tax on a transaction that conveys title to real property. Your recording costs are the county clerk's per-page fees and nothing more.
Title insurance premiums are promulgated by the Texas Department of Insurance and are identical at every title company in the state; what differs between companies is service, the escrow fee and the speed of the title examination. The current basic premium schedule took effect March 1, 2026 under Commissioner's Order 2025-9697, a 6.2 percent reduction from the prior schedule. A $100,000 policy is $780, and for policies from $100,001 to $1,000,000 the premium is $780 plus 0.494 percent of the amount above $100,000, rounded to the nearest dollar.
| Policy amount (sale price) | Owner's policy basic premium, effective March 1, 2026 | Loan policy issued at the same time | Survey deletion on the owner's policy (R-16, 5 percent) |
|---|---|---|---|
| $200,000 | $1,274 | $100 | $64 |
| $300,000 | $1,768 | $100 | $88 |
| $400,000 | $2,262 | $100 | $113 |
| $450,000 | $2,509 | $100 | $125 |
| $500,000 | $2,756 | $100 | $138 |
| $750,000 | $3,991 | $100 | $200 |
| $1,000,000 | $5,226 | $100 | $261 |
The loan policy's $100 simultaneous-issue price applies when both policies are issued together, cover the same land and the loan amount does not exceed the owner's policy amount; endorsements the lender requires are extra at the promulgated percentages.
Prorations, prepaids and the escrow account
Closing costs are the fees of the transaction; prepaids are expenses you would owe anyway, collected early. Interest is prepaid from the closing date through the end of the month, which is why closing late in the month lowers cash to close and closing early raises it. The first year's homeowners premium is paid at closing. Then the lender funds the escrow account with enough to pay the next tax and insurance bills when they come due plus a cushion of up to two months, which in Houston can mean several thousand dollars of taxes collected at the table. The seller's tax proration credit offsets part of it. The lender re-analyzes the escrow account every year, and a buyer who files the homestead exemption promptly sees the payment drop at the next analysis.
Seller credits as a negotiation tool
A seller credit, called a seller concession or an interested party contribution by lenders, is an amount the seller agrees in the contract to pay toward the buyer's closing costs, prepaids or a rate buydown. In a market with mortgage rates above 7 percent it is often the most valuable term in a Houston negotiation, because it converts purchase price, which the buyer finances over 30 years, into cash the buyer keeps at closing. A $10,000 price cut on a $400,000 purchase lowers the payment by roughly $60 a month; a $10,000 credit covers most of the buyer's closing costs on day one or funds a temporary buydown that lowers the first two years of payments by far more.
Lenders cap credits by loan program, and a credit above the cap or above the buyer's actual costs is lost, so size it with the lender before you write it:
| Loan program | Maximum seller contribution | Source |
|---|---|---|
| Conventional, Fannie Mae and Freddie Mac, principal residence or second home | 3 percent with less than 10 percent down; 6 percent with 10 to 24.99 percent down; 9 percent with 25 percent or more down | Fannie Mae Selling Guide B3-4.1-02 (LTV above 90 percent, 75.01 to 90 percent, 75 percent or less) |
| Conventional, investment property | 2 percent | Fannie Mae Selling Guide B3-4.1-02 |
| FHA | 6 percent of the price | HUD Handbook 4000.1 |
| VA | Sellers may pay the buyer's ordinary closing costs; concessions beyond them, such as prepaids and debt payoffs, are limited to 4 percent of the home's reasonable value | VA, funding fee and closing costs |
Credits also show up in the appraisal. Appraisers note sales concessions on comparable sales and may adjust for them, and a contract price inflated to fund a large credit can appraise short. The cleanest structure is a credit the buyer actually needs, within the program cap, on a price the comparables support.
A worked example: $400,000 purchase, 10 percent down
Illustrative figures for a Houston closing on June 30 with a 2.2 percent tax rate, a $4,000 annual homeowners premium and a 7.25 percent 30-year loan of $360,000. Lender and title company fees vary; use your Loan Estimate.
| Buyer's side | Amount | Seller's side | Amount |
|---|---|---|---|
| Lender origination, underwriting, processing (example) | $2,500 | Owner's title policy (state rate) | $2,262 |
| Appraisal, credit report, flood certificate, tax service | $750 | Half of escrow fee | $500 |
| Loan title policy at simultaneous issue, plus endorsements | $300 | Tax proration, January 1 to June 30 | $4,360 |
| Half of escrow fee, recording | $650 | HOA resale certificate and transfer fee (example) | $600 |
| Survey (if the existing one is not accepted) | $500 | Deed preparation, release recording, courier | $400 |
| Prepaid interest, one day short of a month at the end of June (1 day) | $72 | Residential service contract (if agreed) | $600 |
| Homeowners insurance, first year | $4,000 | Repairs or credits agreed in the option period | Negotiated |
| Escrow deposit: 3 months taxes, 2 months insurance | $2,870 | Loan payoff | Balance owed |
| Total before any seller credit | About $11,640, or 2.9 percent | Total before payoff and negotiated items | About $8,100 |
Close on the 5th instead of the 30th and the buyer's prepaid interest line rises to about $1,860 while everything else stays the same. Add a $8,000 seller credit (within the 6 percent conventional cap at 10 percent down) and the buyer's cash to close falls to roughly $3,600 plus the down payment.
Questions Texas buyers and sellers ask about closing costs
How much are closing costs for a buyer in Texas?
Plan on 2 to 5 percent of the purchase price for closing costs and prepaid items together, with the percentage lower on higher prices. That covers lender fees and any points, the appraisal and credit report, the lender's title policy, which costs $100 when issued with the owner's policy, endorsements, the escrow fee, recording fees, a survey if the existing one is not accepted, prepaid interest, the first year of homeowners insurance and the initial escrow deposit for taxes and insurance. Texas has no transfer tax. Your Loan Estimate and Closing Disclosure carry the exact figures.
What does the seller pay at closing in Houston?
By Houston custom the seller pays for the owner's title policy at the state-set premium, half of the title company's escrow fee, a property tax proration from January 1 to the closing date, the homeowners association resale certificate and any transfer fee the covenants assign to the seller, the payoff of the existing mortgage, deed preparation and release recording fees, and any repairs, home warranty or seller credit agreed in the contract. Every item is negotiable in the TREC contract; the custom is only the starting point.
Does Texas have a real estate transfer tax?
No. Texas has no transfer tax, deed stamp or mortgage recording tax, and Article VIII, Section 29 of the Texas Constitution, added by voters in 2015, bars the Legislature from imposing a tax on a transaction that conveys title to real property. The only government charges at closing are the county clerk's recording fees, which are a per-page amount, and the prorated property taxes between seller and buyer.
Who pays for title insurance in Texas?
Paragraph 6A of the TREC contract has a checkbox, and in Houston the seller customarily pays for the owner's title policy while the buyer pays for the lender's policy, which costs $100 when issued at the same time. The premium is the same at every title company because the Texas Department of Insurance sets it; what the seller does choose, subject to the buyer's lender, is the title company. In some other Texas markets the custom differs, and in any market it can be negotiated.
How much is title insurance in Texas in 2026?
The Texas Department of Insurance schedule effective March 1, 2026 sets the owner's policy basic premium at $780 for a $100,000 policy; for policies between $100,001 and $1,000,000 the premium is $780 plus 0.494 percent of the amount above $100,000. That works out to $1,274 at $200,000, $2,262 at $400,000, $2,756 at $500,000 and $5,226 at $1,000,000. A loan policy issued at the same time costs $100, survey deletion coverage on a residential owner's policy adds 5 percent of the basic premium, and lender endorsements are extra at promulgated percentages.
How much can a seller pay toward a buyer's closing costs in Texas?
Lenders set the caps. On conventional Fannie Mae and Freddie Mac loans for a principal residence the limit is 3 percent of the price with less than 10 percent down, 6 percent with 10 to 24.99 percent down and 9 percent with 25 percent or more down, and 2 percent on investment property. FHA allows up to 6 percent. VA lets sellers pay the buyer's ordinary closing costs and limits other concessions to 4 percent of the home's reasonable value. A credit above the cap or above the buyer's actual costs is lost, so size it with the lender before writing the contract.
When do I see my final closing costs?
Your lender must give you a Loan Estimate within three business days of your application and a Closing Disclosure at least three business days before closing, and the title company prepares the settlement statement that matches it. Compare the two disclosures line by line; lender fees and transfer taxes generally may not increase, while prepaid interest, escrow deposits and the tax proration move with the closing date. In Houston the seller's tax proration credit and the first-year insurance premium are usually the two largest moving parts.
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Related guides
Sources
- Texas Department of Insurance, Title insurance basic premium rates effective March 1, 2026, the title insurance index (Commissioner's Order 2025-9697), Rate Rules R-5 and R-16 and Rate Rule R-29.
- Texas Constitution, Article VIII, Section 29, prohibition of a real property transfer tax (approved November 2015).
- Texas Real Estate Commission, One to Four Family Residential Contract (Resale), form 20-19, paragraphs 6 (title policy and survey), 12 (settlement expenses) and 13 (prorations).
- Texas Property Code Section 207.003, resale certificate fee caps.
- Fannie Mae Selling Guide, B3-4.1-02, Interested Party Contributions; U.S. Department of Veterans Affairs, VA funding fee and loan closing costs (4 percent concession limit); HUD, Single Family Housing Policy Handbook 4000.1.
Updated October 29, 2026.