Understanding who pays what in Texas closing costs can save you thousands of dollars and prevent costly mistakes during your real estate transaction. For instance, buying a home in Texas could add an extra $4,548 to $15,000 to your purchase price in closing costs alone! While buyers typically pay between 2% to 6% of the home’s purchase price, sellers face even steeper costs, ranging from 6% to 10%.
In fact, with Texas’s median home price of $354,300, buyers are looking at approximately $5,314.50 in closing costs at a rate of 1.5%. However, these costs can vary significantly depending on your location, property type, and whether you’re buying or selling.
This guide breaks down everything you need to know about Texas closing costs in 2025, from typical fees to smart strategies for reducing your expenses at the closing table.
If you want to reduce your closing costs and sell your house fast, Senna House Buyers can help you every step of the way.
The Texas Closing Cost Landscape in 2025
Texas homebuyers and sellers face some of the highest closing costs in the country, making it essential to understand what you’ll pay before signing on the dotted line. Let’s examine the closing cost landscape for 2025 and how it affects your real estate transaction.
Current average closing costs for a median-priced Texas home
The Lone Star State’s closing costs consistently rank above the national average, adding a substantial financial burden to both parties involved in property transfers. According to 2021 data, Texans paid an average of $4,548 in closing costs, compared to the national average of $3,860. Furthermore, these costs are expected to rise in 2025 as property values continue to increase across the state.
For buyers in Texas, closing costs typically range from 2% to 6% of the home’s purchase price. With a median home price of $354,300 as of 2024, buyer’s closing costs can range from approximately $7,086 to $21,258. Alternatively, calculating at the specific rate of 1.5%, you would pay around $5,314.50.
Sellers, on the other hand, face even steeper expenses, generally paying between 6% and 10% of the sales price. On that same median-priced home, seller closing costs would amount to $21,258 to $35,430. The largest portion of these expenses comes from real estate agent commissions, which average 5.76% in Texas—approximately $17,374 on the median home price.
What makes up these costs? For buyers, the total closing costs include:
- Loan origination fees (typically 1% of the loan amount)
- Appraisal fees ($300-$500)
- Home inspection fees ($300-$500)
- Credit report fees ($20-$30)
- Title insurance
- Prepaid property taxes
- Private mortgage insurance (for down payments less than 20%)
Sellers primarily pay for real estate commissions, title fees, attorney fees, and prorated property taxes up to the closing date.
Regional variations: Austin vs. Dallas vs. Houston closing costs
Across major Texas cities, closing costs vary considerably due to differences in home values, property taxes, and local regulations. Subsequently, understanding these regional variations can help you better prepare financially.
In Dallas, buyer closing costs typically range from 2% to 5% of the purchase price. For a property valued at $600,000 in Dallas, buyers should anticipate paying between $12,000 and $30,000 in closing costs.
Houston homes, with a median sale price of $360,000, generate closing costs between $7,200 and $18,000. Additionally, these costs may increase in neighborhoods with higher homeowners association fees or specialized inspection requirements.
Austin, consistently one of Texas’s most expensive real estate markets, naturally comes with higher absolute closing costs due to elevated property values. Moreover, areas served by Municipal Utility Districts (MUDs) or Public Improvement Districts (PIDs) often have property tax rates higher than the typical 2.0%.
Cash buyers experience reduced but not eliminated closing costs. Therefore, selling to cash buyers or wholesalers presents an opportunity to minimize expenses in your real estate transaction. First-time home buyers can also explore cost assistance programs specific to Texas that can help offset these expenses.
As a final consideration, remember that many closing costs are negotiable between buyers and sellers. Besides, it’s becoming increasingly common for sellers to offer concessions, such as covering certain closing costs or paying to lower the buyer’s interest rate, to make transactions more affordable in today’s market.
Preparing Your Finances: Closing Cost Planning Guide
Knowing who pays closing costs in Texas and preparing for them involves more than just knowing what you’ll pay—you need a strategic approach to budgeting and saving. With proper planning, you can avoid financial stress when finalizing your real estate transaction in the Lone Star State.
Calculating your expected closing costs with online tools
Estimating your potential closing costs early helps prevent unwelcome surprises at the closing table. Fortunately, several reputable online calculators can provide personalized estimates:
- Fannie Mae’s closing costs calculator uses local data to show price ranges for common fees, helping you budget effectively
- Freddie Mac offers tools that determine how much you should expect to pay based on your specific situation
- Mortgage lender websites typically provide calculators that estimate loan origination fees, appraisal fees, and other expenses
These tools typically ask for your home’s purchase price, loan type, and location to generate estimates. Considering that closing costs in Texas typically range from 2% to 5% of your total loan amount, for a $350,000 home, you might need between $7,000 and $17,500 in closing costs.
When to start saving and how much to set aside
Ideally, begin saving for closing costs as soon as you decide to purchase property. First, determine your target home price range, then calculate approximately 3-6% of that amount for closing costs. Next, establish a monthly savings goal by dividing your target amount by the number of months until your planned purchase.
For instance, if you aim to save $10,000 for closing costs over 10 months, you’ll need to set aside about $1,000 monthly. If that’s not feasible, you might need to adjust your timeline or explore alternatives such as seller concessions or cost assistance programs.
Beyond your down payment and closing costs, experts recommend saving an additional 2% for unexpected expenses. In other words, for a $350,000 home with a 20% down payment ($70,000) and 5% in closing costs ($17,500), consider having around $94,500 total—approximately 27% of the home’s value.
Down payment vs. closing costs: Balancing your priorities
Despite seeming similar, down payments and closing costs serve completely different purposes in your home purchase. Essentially, your down payment reduces your loan amount and becomes part of your equity, whereas closing costs cover the administrative expenses of processing your real estate transaction.
The down payment typically ranges from 3.5% to 20% of the home’s sale price and goes directly toward purchasing the property. Meanwhile, closing costs include fees for services like appraisals, title searches, and loan origination.
For many first-time home buyers, balancing these two financial obligations presents challenges. Consider these approaches:
- Prioritize a 20% down payment to avoid private mortgage insurance, potentially saving thousands over the life of your loan
- Explore FHA loans with down payments as low as 3.5% if cash reserves are limited
- Investigate down payment assistance programs specifically designed for Texas residents
- Consider selling to cash buyers or wholesalers to minimize closing expenses, as this approach often reduces both buyer and seller costs
- Negotiate with sellers to cover some closing costs through seller concessions, particularly in a buyer’s market
Remember that your lender will provide a loan estimate after your mortgage application, detailing expected closing costs at least three days before closing.
Who Pays Closing Costs in Texas by Situation: What to Expect
Who pays closing costs in Texas can vary significantly based on your specific situation in Texas’s real estate market. Understanding these differences helps you plan effectively and potentially save thousands of dollars at the closing table.
First-time home buyer scenarios and special programs
First-time home buyers in Texas face substantial closing costs, yet numerous programs exist to lighten this financial burden. The Texas State Affordable Housing Corporation (TSAHC) offers the Home Sweet Texas Home Loan Program, providing 30-year fixed-rate mortgages with up to 5% in down payment assistance. Similarly, the Texas Department of Housing and Community Affairs (TDHCA) manages the My First Texas Home program, offering low interest rates and up to 5% in interest-free down payment assistance.
Public service professionals including teachers, firefighters, and police officers qualify for the Homes for Texas Heroes Program, which offers comparable benefits. Additionally, mortgage credit certificates (MCCs) provide tax credits equal to 20% of your mortgage interest, effectively reducing your federal income tax liability annually.
Who pays closing costs in Texas on investment property purchases
Investment property purchases typically involve higher closing costs than primary residences. Investors should expect to pay between 2% and 5% of the loan amount in total closing costs. For a $300,000 investment property, buyer-side closing costs could range from $6,000 to $15,000.
Notably, investment properties often carry higher interest rates and stricter down payment requirements. Consequently, you’ll need to factor these additional expenses into your return on investment calculations. Although many costs remain negotiable, unique expenses for investment properties include higher loan fees, more extensive inspections, and potentially higher title insurance premiums.
Refinancing closing costs: What’s different
Refinancing in Texas comes with distinctive rules, particularly for cash-out refinances. Remarkably, closing costs for refinances cannot exceed 2% of your loan amount, excluding third-party fees like appraisals, title insurance, and attorney fees. With these external costs included, total fees might reach 5% of the loan amount.
Furthermore, Texas imposes a six-month waiting period after initially buying your home before you can refinance. For cash-out refinances, only one is permitted every 12 months, and borrowers cannot refinance more than 80% of their home’s appraised value.
Cash buyers: Reduced but not eliminated closing costs
Cash buyers avoid numerous mortgage-related expenses yet still face several unavoidable closing costs. Without a mortgage, you’ll skip loan origination fees, credit checks, and mortgage insurance premiums. Nevertheless, expenses for title searches, title insurance, recording fees, and transfer taxes remain.
On average, cash buyers pay approximately 1% of the purchase price in closing costs, compared to 2-6% for financed purchases. Additionally, cash transactions often involve simpler, faster closings with fewer administrative costs. Thus, selling to cash buyers or wholesalers can significantly minimize your overall closing expenses while streamlining the entire real estate transaction.
While each situation presents unique challenges, understanding the specific closing costs applicable to your circumstances allows you to navigate Texas’s real estate landscape more confidently and cost-effectively in 2025.
Alternative Approaches to Reduce Your Closing Costs
Looking to slash your closing costs in the Lone Star State? Several alternative strategies can lighten your financial burden at the closing table without derailing your home purchase plans.
Selling to cash buyers and wholesalers to minimize expenses
Working with cash buyers markedly reduces your closing expenses. Unlike traditional sales, cash transactions typically eliminate mortgage-related fees, cutting your total closing costs by 5-8% of the sale price. Furthermore, cash buyers usually handle all closing costs themselves, which means you won’t pay traditional expenses like real estate agent commissions or bank fees.
Cash sales also wrap up in just 5-14 days, compared to traditional transactions that can take months. Given these points, sellers facing foreclosure or those with distressed properties often find this approach particularly beneficial.
No-closing-cost mortgages: The pros and cons
No-closing-cost mortgages offer an alternative way to manage upfront expenses. Albeit appealing, these loans function in one of two ways: either by rolling closing costs into your total loan amount or by accepting a higher interest rate to cover these expenses.
The advantages include:
- Minimized upfront costs, making homeownership more accessible
- Freed up cash for other needs like home improvements
- Potential benefits for short-term buyers who plan to sell within five years
The drawbacks, henceforth, cannot be ignored:
- Substantially higher long-term costs (potentially $56,000+ over 30 years to save $5,000 upfront)
- Higher monthly mortgage payments and slower equity building
Closing cost assistance programs in Texas for 2025
Fortunately, various assistance programs help first-time home buyers in Texas offset closing costs. The City of Fort Worth’s Homebuyer Assistance Program offers up to $25,000 for down payment and closing costs to qualified applicants. Likewise, the Texas State Affordable Housing Corporation provides 30-year fixed-rate mortgage loans with down payment assistance.
Other noteworthy programs include:
- My First Texas Home program with up to 5% in closing cost assistance
- Mortgage Credit Certificates offering 20% tax credits on mortgage interest
- City-specific programs in Houston (up to $50,000), Dallas, and San Antonio
To qualify for most programs, you’ll need to meet income limits and occasionally complete homebuyer education courses.
The Closing Process Timeline: From Offer to Closing Table
Understanding the closing timeline and who pays closing costs in Texas helps you navigate the final stages of your real estate transaction with confidence. From receiving initial paperwork to sitting at the closing table, each step follows a specific schedule mandated by federal regulations.
When you’ll receive your loan estimate
After submitting your loan application, your mortgage lender must provide a Loan Estimate within three business days. This critical document outlines the key details of your potential loan, including the interest rate, monthly mortgage payments, and estimated closing costs. Most importantly, it allows you to compare offers from different lenders to find the best deal for your situation. Keep in mind that a Loan Estimate typically expires after 10 business days, so you’ll need to make decisions promptly.
Three days before closing: Understanding your final closing disclosure
Regardless of your loan type—whether conventional loans, FHA loans, or VA loans—you must receive the Closing Disclosure at least three business days before your closing date. This mandatory waiting period gives you time to review the final terms and address any discrepancies before the closing process begins. The Closing Disclosure contains your finalized loan details, including the exact amount needed for closing and a breakdown of all fees. Afterward, carefully compare it to your initial Loan Estimate. This ensures there are no unexpected changes in interest rates or total closing costs.
Closing day: What to bring and what to expect
Once the closing date arrives, you’ll need several essential items:
- Government-issued photo ID
- Cashier’s check or wire transfer receipt for your cash to close
- Proof of homeowners insurance
- Copy of your Closing Disclosure
At the closing table, you’ll meet representatives from the title company, possibly your real estate agents, attorneys, and the closing agent. Subsequently, you’ll sign numerous documents transferring property ownership and finalizing your mortgage loan. Given that Texas has some of the highest closing costs in the Lone Star State, selling to cash buyers or wholesalers remains a good idea to minimize these expenses. Following the signing process, you’ll receive the keys to your new home, officially completing your real estate transaction.
Who Pays Closing Costs in Texas Conclusion
Understanding who pays closing costs in Texas helps you make smart decisions during your real estate transaction. Buyer closing costs typically range between 2-6% of the home’s purchase price, while seller closing costs can reach up to 10% when including real estate agent commissions and other fees.
Cash buyers certainly enjoy significant advantages, paying approximately 1% in total closing costs compared to traditional buyers. Additionally, selling to cash buyers eliminates many standard closing expenses like loan origination fees and mortgage-related costs, making it an effective strategy to reduce your financial burden at the closing table.
Your closing costs ultimately depend on factors like property location, loan type, and whether you qualify for assistance programs. First-time home buyers can take advantage of various cost assistance programs through the Texas Department of Housing and Community Affairs. This can potentially save thousands on closing expenses.
Remember to start preparing early, compare loan estimates from multiple mortgage lenders, and consider alternative approaches like seller concessions or cash buyers to minimize your closing costs. With proper planning and the right strategy, you can navigate Texas closing costs successfully while keeping more money in your pocket.
Ready to sell your home fast while lowering your closing costs? Contact Senna House Buyers for an offer today.
Who Pays Closing Costs in Texas FAQs
What is the average range of closing costs for buyers in Texas?
Buyers in Texas typically pay between 2% to 6% of the home’s purchase price in closing costs. For a median-priced home of $354,300, this could range from approximately $7,086 to $21,258.
Are there any programs to help first-time homebuyers with closing costs in Texas?
Yes, there are several programs available. The Texas State Affordable Housing Corporation offers the Home Sweet Texas Home Loan Program, which provides down payment assistance. Additionally, the Texas Department of Housing and Community Affairs manages the My First Texas Home program, offering low interest rates and down payment assistance.
How do closing costs differ for cash buyers in Texas?
Cash buyers generally pay significantly less in closing costs, averaging about 1% of the purchase price compared to 2-6% for financed purchases. They avoid many mortgage-related expenses, though some costs like title searches and transfer taxes still apply.
Can sellers negotiate who pays closing costs in Texas?
Yes, it’s becoming increasingly common for sellers to offer concessions. These can include covering certain closing costs or paying to lower the buyer’s interest rate, especially in a buyer’s market. This can make transactions more affordable for buyers.
How soon before closing will I receive my final closing disclosure?
You will receive your Closing Disclosure at least three business days before your closing date. This mandatory waiting period allows you to review the final terms and address any discrepancies before the closing process begins.