In the state of Texas, a typical home costs $266,667, with buyers paying an average of 1.41% in closing costs. This puts the average closing cost in Texas in 2020 at $3,754 — below the national average.
How much you actually pay will depend on the price of the home and whether the seller agrees to help cover the costs. Let’s take a closer look at how closing costs in Texas work and where you can potentially save some cash.
Closing costs stats in Texas
| Data | Value |
|---|---|
| Average home sale price | $200,000 to $300,000 |
| Average total closing cost | $3,753.65 |
| Expected closing cost range | $2,502.43 to $5,630.48 |
| Percentage of closing cost to home sale price | 1.25% to 1.88% |
Average closing costs in Texas
According to research from ClosingCorp, the average closing cost in Texas is 1.41% of the purchase price. It may seem like a small number, but this percentage can quickly escalate into the tens of thousands if you’re buying an expensive home.
What fees make up the closing cost?
Standard closing costs
Some closing costs are fixed, like the appraisal and recording fees. Other fees you can shop around for, including the title insurance and home inspection. Closing costs are typically made up of the following fees.
- Appraisal
- Recording fees
- Transfer tax
- Lender’s title policy
- Owner’s title policy
- Home inspection
- Settlement fees
Other closing costs in Texas
In Texas, buyers may also have to pay a land survey fee as part of their closing costs. While land survey fees are generally not part of closing costs, they are required in two states — Texas and Florida. In Texas, buyers can expect to pay $250 and up for a land survey, depending on the size of the land.
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Texans pay an average of $3,754 in closing costs.
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Who pays closing costs in Texas?
In most states, including Texas, closing costs are divided between the buyer and seller, but the buyer pays the bulk of the fees and taxes. Your closing costs will vary depending on the selling price, down payment amount and credit score.
For the buyer
| Name | Cost |
|---|---|
| Land survey fee | $250 to $500 and up, based on land size |
| Attorney and settlement fees | $450 and up |
| Recording fees | $200 or less |
| Transfer taxes | $0 |
| Postage and courier fees | $35 |
| Homeowner’s insurance (12 months prepaid at closing) | $1,000 to $1,500 |
| Upfront mortgage insurance premium (MIP) for FHA loans | MIP = 1.75% of the FHA base loan amount For example:
|
| Prepaid daily interest charge (15 days) | $170 and up |
| Settlement and closing fees | $500 to $700 |
| Escrow deposit for property taxes & homeowner’s insurance | $1,000 to $1,500 |
| Environmental certification report | Varies |
For the seller
| Name | Cost |
|---|---|
| Broker fees | Around 6% of sales price |
| Postage and courier fees | $35 |
| Mobile notary, if needed | $25 to $100 |
| Own attorney fees | Varies |
| Tax certificate | $40 to $70 |
| Title insurance | $238 to $875 for policies from $10K to $100K; varies for policies above $100K |
| Recording fees | $200 or less |
| Document preparation fee | $100 to $150 |
| Mortgage payoff | Subject to loan balance |
| Real estate tax | Prorated at closing |
| Escrow fee | $350 to $700 |
Remember, the averages shown are based on sample data. Your closing costs may vary based on your lender, the size of your loan and whether or not you’re paying in cash.
How much does transfer tax affect the closing cost in Texas?
In Texas, buyers and sellers aren’t required to pay any taxes on the transfer of real estate. Many states charge around $1 per $500 of the value of the property transferred, but Texans get to save on taxes here.
How do closing costs in Texas compare nationally?
In 2020, the average closing cost for a single-family home in the US was $6,087 with taxes, putting Texas’ average closing cost at $3,754 below the national average. Compared to other states, it currently ranks 27th out of 50 states for closing costs.
By comparison, buyers in Delaware, District of Columbia and New York pay the highest closing costs in the nation, while buyers in Indiana, Kentucky and Missouri pay the lowest closing costs of all homebuyers.
How are closing costs paid?
If you’re buying a home, closing costs must be paid in cash and can’t be rolled into your mortgage payment, as they can with a mortgage refinance. Budget these costs into your home purchase and plan on how you will cover these costs at closing time.
That said, you can always try negotiating on your closing costs to help reduce your out-of-pocket expenses.
Can I negotiate on my closing costs?
Yes, it’s possible. Most buyers will need to set aside cash to pay for their closing costs, however you do have some negotiating tools in your arsenal, such as:
- Asking the seller if they’re willing to cover a part of these fees.
- Asking the lender if you can “buy up” your interest rate in exchange for paying all or part of your closing costs.
Is it possible to avoid paying closing costs?
Yes. There is such a thing as a no-closing-cost loan. But not all lenders offer them and you’ll likely end up paying a higher interest rate for this type of loan.
How can I ensure I’m paying the lowest closing costs possible?
The best way to find the lowest closing costs is to shop around. Whenever you apply for a loan, you’ll get a loan estimate that breaks down the different fees. Use this fee disclosure as a negotiating tool when comparing lenders to ask if another lender can cut you a better deal. Doing so could save you thousands in fees and interest on your Texas mortgage.
Bottom line
Closing costs in Texas will vary depending on the county, the type of property you’re buying and the total sale amount. While both the buyer and seller pay closing costs, the buyer pays the bulk of the fees and taxes, which on average, currently run about 1.41% of the home’s purchase price.
The good news is, it’s possible to minimize your closing costs by comparing brokers, title companies, attorneys and our researched list of the best mortgage lenders in Texas.
Frequently asked questions
Do I need to hire an attorney for closing?
No. In the state of Texas, you’re not legally required to hire an attorney to close on a home.
I’m paying in cash. Do I need to pay closing costs?
If you’re buying in cash, you might not need to cover these mortgage-related closing costs:
- Appraisal fee
- Inspection fee
- Title insurance
- Mortgage insurance
- Intangible tax on mortgage
While you can avoid these charges, it’s always a good idea to get the home appraised and inspected and purchase a homeowner’s title insurance policy to avoid any expensive legal problems down the road.
