Closing costs in Texas, line by line
Texas sets its title insurance premium by state rule, so the most-repeated piece of closing-cost advice does not work here. What the three buckets actually are, what the state-set premium comes to at real Texas prices, and the line worth negotiating instead.
What are closing costs in Texas?
Everything you pay at the closing table that is not the down payment. Brad teaches them as three buckets rather than as a list of thirty line items, because the buckets behave differently and only one of them is really negotiable. In his words: "there's basically three buckets of closing costs. The first bucket are fees. The biggest fees in twenty twenty five are usually on the lender fees because interest rates are higher than they used to be."
The three buckets, and which one moves
Fees are what the lender and the title company charge to do the work. Title is the policy that protects your ownership. Prepaids are not really costs at all, they are your own money moved forward: the first year of insurance and the tax and insurance escrow the lender collects at closing. Understanding which bucket a number sits in tells you whether there is any point arguing about it.
- Fees: lender origination and underwriting, and the title company's own service charges. This is the bucket worth reading line by line.
- Title insurance: the owner's policy premium, which in Texas is set by the state. See below, because this one surprises people.
- Prepaids and escrow: your first year of homeowner's insurance, plus the months of taxes and insurance the lender holds in escrow. Not a fee, and not avoidable, but it is your money rather than someone else's.
Why can you not shop for title insurance in Texas?
Because the price is fixed by the state, and this is the single most useful thing on this page. The Texas Department of Insurance promulgates the basic premium for title insurance, and every title company in Texas charges the same for the same policy amount. The standard national advice, which is to shop several title companies for a better rate, does not do anything here. You can choose a title company on service, on speed, on where their office is. You cannot choose one on premium, because there is only one premium.
And the policy is not a formality, which is easier to see with a real case
Title insurance protects against a claim on your ownership that nobody found before closing. Brad uses a Texas example to make it concrete rather than theoretical: an estate sold inherited land to a developer, and an heir discovered afterwards that what he had inherited was now underneath a new subdivision street. That is what the policy is for. It is not insurance against the house; it is insurance against the paperwork behind the house.
| Policy face amount | Texas basic premium | Note |
|---|---|---|
| $200,000 | $1,274 | |
| $250,000 | $1,521 | |
| $268,500 | $1,612 | TDI's own worked example, reproduced here as a check |
| $300,000 | $1,768 | |
| $342,000 | $1,975 | The City of Dallas assistance price cap |
| $400,000 | $2,262 | |
| $563,500 | $3,070 | The City of Frisco assistance price cap |
Can the seller pay your closing costs?
Often, within a limit, and the limit depends on your loan type rather than on negotiation. A seller contribution toward your costs is capped as a percentage of the price, and the percentage is not the same for every loan. Ask your lender what the cap is for the loan you are actually using before you write an offer around it, because writing in more than the cap allows does not get you more, it gets the contract amended.
The line Brad tells buyers to move rather than to argue about
There is a drafting point here that a practising Texas broker knows and a buyer generally does not. Brad's version: "They can pay for title insurance in a different paragraph in the contract. It doesn't even count toward that six percent." The six percent is the cap he works to; confirm the figure for your own loan type with your lender. The mechanism is the useful part, and it is that where a cost is written in the contract can matter as much as who agreed to pay it. That is a conversation to have with your agent before the offer goes out, not after.
What should a Texas buyer actually do about closing costs?
Three things, in this order. Get the lender's fee sheet early and read the fees bucket, because it is the only one where shopping changes the number. Do not spend time shopping title premium, because there is nothing to find. Then decide, with your agent, where in the contract you are asking the seller to help, since the placement affects what fits under the cap. And if you are using down payment assistance, ask whether your programme allows its funds toward closing costs, because several do and that changes the whole arithmetic.
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