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Most buyers and sellers see one number at closing. The buyer sees “cash to close.” The seller sees “net proceeds.” What they rarely see is the 15 or more companies, agencies, and people who get paid in between.
This guide breaks down Texas closing costs from both sides of the table. You will see who gets paid, how much, and why. We will also cover where your FHA, VA, USDA, or conventional mortgage insurance money actually goes, and what the Federal Reserve does (and does not) control.
All examples use a $350,000 home, which is a realistic price point in many Dallas-Fort Worth and Greater Houston suburbs. Your numbers will be different, so use this as a map, not a quote.
The Short Answer: Who Gets Paid at a Texas Closing?
At a typical financed Texas closing, money goes to the seller, the seller’s mortgage company, the real estate brokerages, the lender, the title company and its underwriter, the appraiser, the county clerk, the homeowners insurance company, the HOA, and your local taxing units. Depending on the loan, a federal program (HUD for FHA, the VA, or USDA) or a private mortgage insurance company also gets paid.
The Federal Reserve does not get paid at your closing. It influences the cost of money, but it never touches your transaction.
How the Money Moves Through a Texas Closing
In Texas, a title company usually acts as the escrow and closing agent. Think of it as the central bank account for your deal. Every dollar flows in, gets verified, and then flows out according to the final settlement statement.
- Earnest money and option fee. After the contract is signed, the buyer delivers earnest money to the title company. The option fee goes to the seller. Under the TREC contract, both are typically credited to the buyer at closing, depending on how the contract is filled out.
- Buyer’s funds. Before closing, the buyer wires the remaining down payment and closing costs to the title company.
- Lender’s funds. The lender wires the loan amount to the title company, often on the day of funding.
- Good funds check. Texas title rules (TDI Procedural Rule P-27) require the title company to have “good funds” in hand before it disburses money. That is why a personal check usually will not work for your cash to close.
- Disbursement. The title company pays off the seller’s mortgage, pays the brokerages, pays every third-party vendor, records the deed and deed of trust with the county, and sends the seller the remaining balance.
Wire fraud warning: Always call your title company at a phone number you already know to confirm wiring instructions. Never trust wiring instructions that arrive by email alone, even if they look legitimate.
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Buyer Side: Texas Closing Costs Ranked by Size
Here is an illustrative breakdown for a $350,000 home with a conventional loan and 5% down. The rate example uses 7.28%, which was Freddie Mac’s 30-year average as of October 1, 2026. Fees marked “est.” are typical estimates. Your Loan Estimate and Closing Disclosure are the only numbers that count. Rank Cost Example Amount Who Gets Paid 1 Down payment (5%) $17,500 The seller, through the title company 2 Prepaids and escrow deposits $6,736 est. Insurance company, lender, and your escrow account 3 Lender and loan fees $3,475 est. Lender, appraiser, credit bureau, other vendors 4 Title, escrow, recording, survey $1,525 est. Title company, title underwriter, county clerk, surveyor 5 Private mortgage insurance (monthly) Varies by credit and down payment Private mortgage insurance company Credit Seller’s property tax proration -$6,055 est. Credit to buyer from seller
In this example, cash to close before credits is about $29,236. After the seller’s tax credit, it drops to roughly $23,181, and your earnest money is credited against that too.
1. Down Payment
Your down payment is not a fee. It is your equity, and it goes to the seller as part of the purchase price. On this example, 5% equals $17,500, and the lender funds the other $332,500.
2. Prepaids and Escrow Deposits
Prepaids are not really closing costs either. They are bills you are paying in advance.
- Homeowners insurance, first 12 months: About $3,000 est. This goes to your insurance company. Texas premiums vary widely by area and roof age.
- Prepaid interest: About $1,061 for 16 days at 7.28% on $332,500. This goes to your lender and covers interest from closing to the end of the month.
- Initial escrow deposit: About $2,675 est. (3 months of insurance plus about 3 months of property taxes). This money sits in your escrow account so the servicer can pay your tax and insurance bills later.
3. Lender and Loan Fees
These go to the company making the loan and the vendors it hires.
- Origination or lender fee: About $1,500 est. This is the lender’s charge for making the loan.
- Underwriting and processing: About $1,200 est. Some lenders roll this into one fee.
- Appraisal: About $600 est. This goes to the appraiser, often through an appraisal management company.
- Credit report, flood certificate, tax service: About $175 est. These go to third-party data vendors.
- Discount points (optional): Points are prepaid interest you can buy to lower your rate. They go to the lender, which uses them to price the loan for investors.
Your loan officer is usually paid by the lender, not directly by you. Federal rules (CFPB Regulation Z) prohibit tying a loan officer’s pay to your interest rate or loan terms.
4. Title, Escrow, Recording, and Survey
- Lender’s title policy: When it is issued alongside the owner’s policy, the Texas simultaneous loan policy premium is $100, plus required endorsements (often a few hundred dollars).
- Escrow or closing fee: Often split between buyer and seller. About $500 per side est. This fee is not set by the state, so it can vary by title company.
- Recording fees: About $175 est. These go to the county clerk to record your deed of trust.
- Survey: About $500 est., or $0 if the seller has an acceptable existing survey and signs a T-47 affidavit.
5. Mortgage Insurance
With less than 20% down on a conventional loan, you will usually pay private mortgage insurance (PMI) monthly. That money goes to a private mortgage insurance company, not to Fannie Mae, Freddie Mac, or the government. More on that below.
The Texas Tax Credit Most Buyers Do Not Expect
Texas property taxes are paid in arrears. The seller lives in the home for most of the year but has not paid that year’s bill yet. So at closing, the seller credits the buyer for their share.
On a $7,700 annual tax bill (2.2% on $350,000, example only), a closing on October 15 creates a seller credit of about $6,055. You then pay the full bill when it comes due, usually through your escrow account. Want to lower that bill next year? Read our guide on how to file a property tax protest in Harris County.
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FHA vs. VA vs. USDA vs. Conventional: Where Your Insurance Money Goes
This is where most people get confused. Every low-down-payment loan has some form of insurance or guarantee that protects the lender if the borrower defaults. The difference is who collects it and for how long.
Here is how it looks on the same $350,000 home. Payments are principal and interest only at 7.28% for comparison. Actual FHA, VA, and USDA rates are often different from conventional rates. Loan Type Down Payment Upfront Fee Ongoing Fee Who Collects It Loan Amount P&I Payment Conventional 5% ($17,500) None typical Monthly PMI, cancelable Private mortgage insurance company $332,500 $2,275.01 FHA 3.5% ($12,250) 1.75% = $5,910.63 0.55% annual, about $157.51/mo HUD’s Mutual Mortgage Insurance Fund $343,660.62 $2,351.37 VA (first use) $0 2.15% = $7,525 None U.S. Department of Veterans Affairs $357,525 $2,446.23 USDA $0 1% = $3,500 0.35% annual, about $103.10/mo USDA Rural Development $353,500 $2,418.69
In these examples, the upfront fee is financed into the loan, which is how most buyers handle it.
Conventional Loans: Private Mortgage Insurance
With less than 20% down, the lender requires PMI. The premium goes to a private mortgage insurance company, and the price depends heavily on your credit score and down payment.
The good news is that PMI does not last forever. Under the federal Homeowners Protection Act, you can request cancellation once your balance reaches 80% of the original value, and it ends automatically at 78% if you are current on payments.
Conventional loans also carry costs you never see as a line item. Fannie Mae and Freddie Mac charge lenders a guarantee fee that is built into your rate. They may also charge loan-level price adjustments based on your credit score and down payment, which show up as a higher rate or added points. For 2026, the baseline conforming loan limit is $832,750 for a one-unit home, according to FHFA.
FHA Loans: HUD’s Mortgage Insurance Fund
FHA loans carry two premiums. The upfront premium is 1.75% of the base loan amount. The annual premium is 0.55% for most borrowers and is paid monthly.
Both premiums go into HUD’s Mutual Mortgage Insurance Fund. When an FHA borrower defaults, that fund pays the lender’s claim. With less than 10% down, the annual premium lasts for the life of the loan. With 10% or more down, it lasts 11 years. Many FHA borrowers refinance later to remove it.
VA Loans: The VA Funding Fee
VA loans have no monthly mortgage insurance. Instead, most borrowers pay a one-time funding fee to the Department of Veterans Affairs. For a first-time purchase with less than 5% down, the fee is 2.15%. It drops to 1.5% with 5% down and 1.25% with 10% down. Subsequent use with less than 5% down is 3.3%.
Veterans who receive VA disability compensation are generally exempt. That can save thousands at closing, so confirm your status early. Learn more about VA loan eligibility on the VA website.
USDA Loans: The Guarantee Fee
USDA guaranteed loans charge a 1% upfront guarantee fee and a 0.35% annual fee, paid monthly, to USDA Rural Development. These fees support the program that backs the lender’s loan. USDA loans require eligible property locations and household income limits.
Not sure which loan fits you? Our guide to types of mortgage loans walks through each one.
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Lenders, Banks, and Investors: Who Earns From Your Mortgage After Closing?
Closing day is just the start. Over the life of the loan, the biggest number by far is interest. On the conventional example above, you would pay about $24,101 in interest in the first year alone. Over 30 years, total interest would be about $486,502 if you kept the loan to term and never refinanced.
Here is who shares in that money. Player What They Do How They Get Paid Loan officer Takes your application and guides the loan Commission paid by the lender, regulated by federal rules Lender (bank, credit union, or mortgage company) Funds the loan at closing Origination fees, points, and profit when it sells the loan Fannie Mae or Freddie Mac Buy conventional loans and package them into securities Guarantee fees built into your rate, plus loan-level price adjustments Ginnie Mae Guarantees securities backed by FHA, VA, and USDA loans A small guaranty fee from the issuer Investors Buy mortgage-backed securities (pension funds, banks, insurers, and others) Most of your monthly interest Servicer Collects your payment and manages your escrow A slice of the interest each month HUD, VA, or USDA Insure or guarantee government loans MIP, funding fee, or guarantee fee Private mortgage insurance company Insures conventional loans with less than 20% down Monthly PMI premiums
This is why your loan may be “sold” after closing. The lender often sells it to Fannie Mae, Freddie Mac, or into a Ginnie Mae security, then uses that cash to make the next loan. Your rate and terms do not change when the loan or its servicing is transferred.
What Does the Federal Reserve Actually Control?
The Fed does not set mortgage rates, and it does not get paid at your closing. It sets a target range for the federal funds rate, which is what banks charge each other for overnight loans.
On September 17, 2026, the Fed raised that target by 0.25% to a range of 3.75% to 4.00%. That was its first change of 2026.
Here is how that ripples into real estate:
- Short-term borrowing moves fast. The prime rate, home equity lines, credit cards, and many construction loans tend to follow the Fed quickly.
- 30-year mortgage rates follow the bond market. They track investor demand for mortgage-backed securities and longer-term Treasury yields, which react to inflation, the economy, and what the Fed signals next.
- Rates still moved. Freddie Mac’s 30-year average was 6.71% on September 3, 2026, and climbed to 7.28% by October 1, 2026.
The Fed also holds a large portfolio of mortgage-backed securities from past stimulus programs. As those holdings pay down without being replaced by new mortgage bonds, private investors have to absorb more of the market.
For more on this, read our breakdown of Texas mortgage rates after the Fed rate hike.
Seller Side: Texas Closing Costs Ranked by Size
Sellers usually do not bring money to closing. Instead, costs come out of the sale price before the seller receives net proceeds. Here is an illustrative net sheet on the same $350,000 sale, assuming a $210,000 mortgage payoff. Rank Cost Example Amount Who Gets Paid 1 Mortgage payoff $210,000 example Your current lender or servicer 2 Real estate commissions (5.5% example only) $19,250 Listing brokerage and, if agreed, the buyer’s brokerage 3 Property tax proration $6,055 est. Credit to the buyer 4 Buyer concessions or repair credits $5,000 example Credit to the buyer 5 Owner’s title policy About $2,016 Title company and its underwriter 6 HOA resale certificate and transfer fees $575 est. HOA or management company 7 Escrow or closing fee (seller half) $500 est. Title company 8 Deed preparation and lien release $250 est. Attorney and county clerk 9 Tax certificates and courier fees $100 est. Title company and vendors Estimated net proceeds$106,254Seller
1. Mortgage Payoff
This is almost always the largest number on the seller side. Your payoff is more than the balance on your statement. It includes interest through the payoff date, since mortgage interest is paid in arrears, and any fees your servicer adds. The title company requests an official payoff statement before closing.
2. Real Estate Commissions
Commissions are fully negotiable. No law sets them, and the 5.5% above is only an example. Since August 2024, buyers sign a written agreement with their agent that spells out that agent’s compensation. A seller may agree to pay some or all of it, or the buyer may pay it. Learn more in our guide on who pays the buyer’s agent in Texas.
Once paid, commissions are split between the brokerage and the agent. Agents then pay their own business costs, like MLS dues, marketing, licensing, and insurance.
3. Property Tax Proration
Because Texas property taxes are paid in arrears, the seller credits the buyer for the portion of the year the seller owned the home. On an October closing, that can mean several thousand dollars. Sellers who have not budgeted for it are often surprised.
4. Concessions and Repair Credits
After the buyer’s inspection, many deals include a repair credit or help with the buyer’s closing costs. Those amounts come straight out of your proceeds. Read how much sellers should negotiate repairs before you respond to an amendment.
5. Owner’s Title Policy
In most Texas transactions, the seller pays for the buyer’s owner’s title policy, although the TREC contract lets the parties negotiate it. Texas sets title insurance premiums by state order. After a 6.2% reduction that took effect March 1, 2026, the basic owner’s premium on a $350,000 policy is about $2,016. The title agent keeps a portion for searching, examining, and closing, and sends the rest to the title insurance underwriter.
6. HOA Fees
If the home is in an HOA, the association charges for a resale certificate. Texas Property Code Section 207.003 caps that preparation fee at $375. Transfer fees and any prorated dues are separate.
What Sellers Do Not Pay in Texas
Texas has no state real estate transfer tax and no state income tax. Many homeowners also qualify for the federal capital gains exclusion of up to $250,000 ($500,000 if married filing jointly) on a primary residence. Talk to a tax professional about your situation.
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Texas-Specific Costs That Catch People Off Guard
A few items work differently in Texas than in many other states.
- Title premiums are set by the state. The Texas Department of Insurance promulgates the basic premium, so every title company must charge the same base rate for the same policy. Escrow fees and some other title company charges are not set by the state and can differ.
- Property taxes are paid in arrears. That creates the large proration credit from seller to buyer covered above.
- MUD and PID assessments. Many suburban and new construction communities in DFW and Houston sit inside a Municipal Utility District or Public Improvement District. MUD taxes show up in your tax rate. PID assessments may be billed separately and can sometimes be paid off early. Always ask for the exact numbers before you write an offer.
- Homeowners insurance runs high. Premiums vary sharply by location, roof age, and wind or hail exposure. Get quotes during your option period, not the week of closing.
- Existing surveys can save money. If the seller has a usable survey and signs a T-47 affidavit, the buyer may avoid paying for a new one, depending on what the title company and lender accept.
You can review official property tax information through the Texas Comptroller and title rates through the Texas Department of Insurance.
What Is Negotiable and What Is Fixed?
Cost Negotiable? Notes Purchase price Yes Market conditions drive leverage Real estate commissions Yes Set by agreement, not by law Who pays the owner’s title policy Yes Seller customarily pays, but the contract can change it Seller concessions and repairs Yes Negotiated after inspections Lender fees and points Yes, by shopping Compare Loan Estimates from more than one lender Escrow fee Somewhat Varies by title company Texas title insurance basic premium No Set by TDI FHA MIP, VA funding fee, USDA guarantee fee No Set by the federal agency Property tax rate No Set by local taxing units, but you can protest your appraised value HOA resale certificate fee Capped $375 maximum under Texas Property Code 207.003
The CFPB’s Loan Estimate guide shows how to compare lender offers line by line.
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Frequently Asked Questions About Texas Closing Costs
How much are closing costs for a buyer in Texas?
Buyer closing costs often run a few percent of the price before prepaids and escrow, but it depends on the loan, lender, insurance, and taxes. On our $350,000 conventional example, lender, title, and recording costs were about $5,000, and prepaids and escrow added about $6,736. Your Loan Estimate gives your real numbers.
What closing costs does the seller pay in Texas?
Sellers usually pay their mortgage payoff, any agreed commissions, the owner’s title policy, half the escrow fee, deed preparation, HOA resale and transfer fees, and the property tax proration credit. Any agreed concessions or repair credits also come out of the seller’s proceeds.
Who pays for title insurance in Texas?
In most Texas transactions, the seller pays for the owner’s policy and the buyer pays for the lender’s policy. The TREC contract allows the parties to negotiate this.
Does the Federal Reserve set mortgage rates?
No. The Fed sets a target for the federal funds rate, an overnight bank lending rate. Thirty-year mortgage rates follow the bond market, though Fed decisions and signals influence that market.
Where does FHA mortgage insurance money go?
FHA’s upfront and annual mortgage insurance premiums go into HUD’s Mutual Mortgage Insurance Fund. That fund pays lenders when FHA-insured loans default.
Does the VA funding fee go to the lender?
No. The VA funding fee goes to the U.S. Department of Veterans Affairs to support the home loan program. Veterans receiving VA disability compensation are generally exempt.
Why does the seller give the buyer a property tax credit in Texas?
Texas property taxes are billed at the end of the year and paid in arrears. The seller credits the buyer for the days the seller owned the home, and the buyer pays the full bill when it comes due.
Can a seller pay the buyer’s closing costs in Texas?
Yes, if both parties agree in the contract. Each loan program limits how much the seller can contribute, so check with your lender before you negotiate.
Is there a transfer tax when selling a home in Texas?
No. Texas does not have a state real estate transfer tax. Sellers still pay normal closing costs like title, escrow, and recording fees.
Know the Numbers Before You Sign
Every closing has the same basic flow, but the numbers change with your price, loan, taxes, insurance, and negotiation. The buyers and sellers who feel best at the closing table are the ones who saw these numbers weeks earlier.
If you are buying, we can walk through a realistic cash-to-close estimate before you write an offer. If you are selling, we can build a net sheet so you know what you will actually walk away with.
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About Kory White Real Estate Group
Kory White Real Estate Group helps buyers, sellers, investors, and relocating clients throughout Texas, including Dallas-Fort Worth, Greater Houston, Austin, San Antonio, and surrounding communities. Services include buying, selling, relocation, new construction, first-time buyers, luxury, investments, and leasing.
We help clients understand the home, the numbers, the market, and the deal.
Dallas: 469-336-3027 Houston: 281-738-4446 Website: https://korywhiterealestategroup.com/
From Sugar Land to Sherman. From Manvel to Mansfield.
Figures in this article are illustrative estimates as of October 2026 and are not a quote, loan offer, or tax advice. Rates, fees, and program rules can change.
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