Texas Closing Costs: What You’ll Pay and Who Pays (Austin Guide)

Buying a home in Austin or anywhere in Central Texas means one more number to plan for besides your down payment: closing costs. This guide explains what they cover, who usually pays each part, and how to read them on your paperwork. CapFi Lending is based in Austin and licensed to make loans anywhere in Texas, so the basics here apply statewide.

What Texas closing costs cover

Quick answer: Closing costs fall into four buckets: title and settlement, government recording, third-party services like the appraisal, and prepaids and escrow for taxes, insurance and interest.

Most people picture one big fee. It’s really a list of smaller charges paid to different parties.

• Title and settlement: the title policy, the title company’s escrow or closing fee, and related charges.
• Government fees: recording your deed and deed of trust with the county clerk, such as Travis, Williamson or Hays County.
• Third-party services: appraisal, survey, credit report and similar items.
• Prepaids and escrow: homeowner’s insurance, prepaid interest, and the first deposit into your escrow account for property taxes and insurance.

In Texas, closings usually happen at a title company, which acts as the neutral party that collects and pays out the money. The amounts depend on your price, your loan, your closing date and your contract.

The Texas title policy: owner’s vs. lender’s, and who usually pays

Quick answer: There are two policies. The owner’s policy protects you, and the lender’s policy protects the lender. Who pays for the owner’s policy is set by your sales contract and is often negotiated.

A title policy is insurance against problems with ownership, such as an old lien or a recording error that surfaces after you buy.

• Owner’s policy: covers you, the buyer, for as long as you own the home. In many Texas sales the seller pays for it, but that’s a term of the contract, not a rule. Read the title section of your contract or ask your agent.
• Lender’s policy: covers the lender’s interest in the loan. The buyer typically pays for this one when financing.

One thing that’s different in Texas: title insurance premiums are not shopped the way many other costs are. The Texas Department of Insurance sets and publishes the premium rates under the Texas Insurance Code (TDI Basic Manual of Rules, Rates and Forms for Title Insurance). Your title company will quote the exact premium for your price and loan amount, and reissue discounts may apply. Title companies can still differ on other charges, such as escrow and closing fees.

Survey: when you need one, and when an existing survey may work

Quick answer: Many Texas buyers need a survey for the title company to amend the area and boundary exception in the title policy. If the seller has a recent survey and nothing has changed, the title company may accept it with a signed affidavit.

A survey shows property lines, easements, and where the house, fences and other improvements sit.

You’ll often need a new survey when:

• the seller doesn’t have one,
• improvements were added since the last survey (a pool, addition, or new fence), or
• the title company or lender won’t accept the existing one.

An existing survey may work when the seller provides it, nothing on the lot has changed, and the seller signs a statement that it’s still accurate. Texas contracts typically cover this in the survey section, including who pays for a new one. Ask early. Ordering a survey late can push back your closing.

Property taxes and escrow: proration and the first escrow deposit

Quick answer: Texas property taxes are paid once a year, after the year they cover. At closing, the seller credits you for their share of the year, and you fund the start of your escrow account.

This is where Austin buyers get surprised most often.

Proration. Texas property taxes for a year are generally billed in the fall (by about October 1) and delinquent if unpaid before February 1 of the next year (Texas Tax Code §31.01 and §31.02). So when you close mid-year, the seller usually hasn’t paid that year’s tax yet. The title company prorates it: the seller gives you a credit for the days they owned the home, and you pay the full bill when it comes due, usually from escrow.

The first escrow deposit. If your loan has an escrow account, the lender collects your taxes and insurance each month and pays the bills for you. At closing, you put in a starting balance, which usually covers several months of taxes and insurance so the account has enough when the bills arrive.

Rates differ by location. Your taxes depend on your appraised value and on the city, county, school district and other taxing units where the home sits. You can look up a property’s values and exemptions on the appraisal district site, such as the Travis Central Appraisal District. If you’ll live in the home, file for the homestead exemption after you move in.

Prepaids and third-party costs: insurance, interest, appraisal, recording

Quick answer: Prepaids are costs you pay ahead, like your first year of homeowner’s insurance and the interest from closing day to month-end. Third-party costs pay outside providers, like the appraiser and the county clerk.

• Homeowner’s insurance: lenders usually require the first year’s premium paid at or before closing. Shop quotes early, since Central Texas premiums vary with roof age, location and coverage.
• Prepaid interest: mortgage interest is paid after it accrues. At closing you pay the interest from your closing date through the end of that month. Closing later in the month means less prepaid interest, though not lower total costs.
• Appraisal: an independent appraiser confirms the home’s value for the loan.
• Recording fees: the county clerk charges to record your documents.
• Other services: credit report, flood certification, and HOA transfer or resale certificate fees if the home is in an HOA.

How lender-paid broker pricing works

Quick answer: As a mortgage broker, CapFi Lending compares loan pricing from more than 50 wholesale lenders. On many loans, the lender pays the broker’s compensation, so it isn’t added as a separate charge to you.

A retail bank offers its own loans. A broker shops your scenario across many lenders and helps you pick the option that fits your goals, whether that’s a lower payment, less cash at closing, or a balance of both.

With lender-paid compensation, the wholesale lender pays the broker. You’ll see how compensation is handled on your Loan Estimate. Federal rules require the broker’s pay to be disclosed and limit how it can be structured (CFPB, Loan Originator Rule).

Lender credits vary by lender

Quick answer: A lender credit is money from the lender that lowers your closing costs, usually in exchange for a higher interest rate. How much is available varies by lender and by loan.

Think of it as a trade-off:

• Take a credit: less cash at closing, higher rate and payment over time.
• Skip the credit: more cash at closing, lower rate and payment.

Which is better depends on how long you plan to keep the loan and how much cash you want to keep on hand. Because we compare more than 50 wholesale lenders, we can show you side-by-side options instead of one take-it-or-leave-it offer. Lender credits vary by lender, so ask us to lay out the choices in writing.

Seller concessions and buydowns

Quick answer: A seller can agree to pay part of your closing costs or fund a buydown that lowers your rate. Loan programs cap how much a seller can contribute.

When the market gives buyers room to negotiate, asking the seller for help can be worth more than a price cut. Two common uses:

• Closing cost help: the seller credits you money toward your costs at closing.
• Buydowns: the seller’s money lowers your interest rate, either for the first few years (a temporary buydown) or for the life of the loan. See how a seller-paid buydown works, and how to use a buydown to reduce your mortgage interest rate.

Concession limits depend on your loan program and down payment. We’ll confirm your limit before you write the offer so no credit goes unused.

Reading your Loan Estimate and Closing Disclosure

Quick answer: Your Loan Estimate arrives within three business days of applying. Your Closing Disclosure arrives at least three business days before closing. Compare them line by line.

Both forms use the same layout so you can compare them (CFPB, Know Before You Owe).

• Loan costs: origination charges, services you can’t shop for, and services you can shop for.
• Other costs: taxes and government fees, prepaids, initial escrow payment, and other items like the owner’s title policy.
• Cash to close: the number you’ll actually bring, after your deposit, seller credits and lender credits. Our guide on understanding cash to close walks through it.

If a number changed between the two forms, ask why. Some charges can’t increase, some can increase only within limits, and some can change freely, such as prepaid interest that depends on your closing date.

FAQ

Origination fee vs. lender fees: what’s the difference?

An origination fee is a charge for making the loan. “Lender fees” is a broader term that can include underwriting, processing and similar charges. Both show in the “Origination Charges” section of your Loan Estimate. At CapFi Lending: No lender fees on agency loans (conventional, FHA, VA). Third-party costs may apply.

Who pays closing costs in Texas, the buyer or the seller?

Both pay some. Your sales contract decides items like the owner’s title policy and the survey, and the seller can agree to credit you toward your costs.

Are Texas title insurance rates the same at every title company?

The premium rates are set by the Texas Department of Insurance, so the premium for the same policy should match. Other title company charges, like escrow fees, can differ.

Why do I pay property taxes at closing if they aren’t due yet?

You fund the start of your escrow account so it can pay the next tax bill. The seller usually credits you for their share of the current year.

Can I roll closing costs into my loan?

On a purchase, closing costs generally aren’t added to the loan amount, though some programs finance certain items, such as the FHA upfront mortgage insurance premium. You can lower cash at closing with seller concessions or a lender credit.

When will I know my exact closing costs?

Your Closing Disclosure, which arrives at least three business days before closing, shows the final numbers.

---

Ready to see your own numbers? Talk to the CapFi Lending team in Austin. Apply online or get a quote.

CapFi Lending, 2617 Willow St, Unit 1, Austin TX 78702. (512) 593-1336. NMLS 1692019. Dustin Edwards, NMLS 577050. Clay Wilson, NMLS 1849979.