Buying in Austin and wondering how much cash you need on closing day? You are not alone. Closing costs can feel confusing, especially if you are relocating or buying your first home. In this guide, you will learn what closing costs include, how much to budget in Austin and Travis County, what is customary in Texas, and how to build a confident estimate for your purchase. Let’s dive in.
What closing costs include
Closing costs are the one-time fees and prepaid items you pay to complete a home purchase beyond your down payment. They cover lender fees, title and settlement charges, inspections and surveys, prepaids for insurance and taxes, and various third-party services.
As a quick rule of thumb, buyers often budget 2% to 5% of the purchase price for closing costs. Your exact total depends on your loan type, the property, and whether you negotiate any seller concessions.
How much to budget in Austin
For most financed purchases in Austin and Travis County, the 2% to 5% range is a practical starting point. Cash buyers or smaller loans may land on the lower end, while buyers with escrow accounts and several third-party services may trend higher.
Key factors that move your total up or down include:
- Loan program and down payment size
- Local property taxes and whether you set up an escrow account
- Whether the property has HOA or MUD fees
- Whether you negotiate seller concessions to offset your costs
Line items you will likely see
Your exact fees will come from your lender, the title company, and local vendors. Here is what most Austin buyers encounter.
Lender fees and prepaids
- Origination or application fee. Sometimes a flat fee, sometimes up to about 1% of the loan amount. Ask your lender for an itemized Loan Estimate.
- Credit report fee. Typically under $50 to $60.
- Appraisal. Commonly $400 to $700, higher for larger or complex properties.
- Underwriting and processing. Often several hundred dollars combined, varies by lender.
- Prepaid mortgage interest. Prorated from your closing date to your first payment.
- Upfront mortgage insurance. Required for some loan programs.
Title and settlement charges
- Title search, exam, and settlement fee. Often $300 to $800, based on the title company and complexity.
- Lender’s title insurance policy. A one-time premium based on the loan amount, required when you finance.
- Owner’s title insurance policy. In many Texas deals the seller customarily pays for this, but it is negotiable.
- Recording fees. County fees to record your deed and deed of trust, usually under a few hundred dollars.
- Wire or transfer fees. Typically $25 to $50.
Inspections, survey, and disclosures
- Home inspection. Commonly $300 to $600 for a standard single-family home. Specialized inspections may add cost.
- Survey. Often $300 to $1,000, depending on lot size and complexity. Some lenders accept a prior survey if it is current and adequate.
- Wood-destroying insect or pest inspection. Often $50 to $150 if required.
Prepaid items and escrows
- Homeowner’s insurance. The first-year premium is often paid in full at closing.
- Escrow deposits. Many lenders collect an initial deposit equal to a few months of taxes and insurance to fund your escrow account.
- HOA transfer fees. If the home is in an HOA, expect a transfer or administrative fee. Amounts vary by community.
- MUD or special district items. Some Austin-area neighborhoods will have MUD transfer or payoff items on the closing statement.
Texas-specific items
- Option fee. A negotiated amount paid to the seller for a short, unrestricted inspection period. Commonly a few hundred dollars, based on market conditions.
- Earnest money. Not a fee, but funds you deposit that are credited to you at closing.
Texas norms that affect your bottom line
Understanding local customs helps you plan and negotiate with confidence.
Who pays what in Texas
- The seller often pays for the owner’s title insurance policy, but this is negotiable and can shift with market conditions.
- The buyer typically pays lender fees, the lender’s title policy, and many settlement and recording fees, unless you negotiate otherwise.
- There is no state or local real estate transfer tax in Texas. You will still see county recording fees and any local assessments that apply.
Title insurance is regulated in Texas
Title insurance premiums are set and regulated by the Texas Department of Insurance. The premium is a one-time charge based on the purchase price or loan amount. For an exact quote, ask the title company handling your Travis County closing.
Travis County property taxes and proration
Property taxes are a significant part of monthly housing costs and they affect your escrow deposits at closing. Taxes are typically prorated between buyer and seller based on the closing date. Ask your agent and the title company to confirm the proration method used in your contract.
HOA, MUDs, and special assessments
Many Austin-area neighborhoods have HOAs and some are within Municipal Utility Districts. Transfer fees, resale documents, and special assessments vary by community. Your title company and HOA documents will outline any required charges.
How closings work in Texas
Title companies and escrow officers typically handle closings. If you are financing, your lender will deliver a Loan Estimate within 3 business days of your application and a Closing Disclosure at least 3 business days before closing. Compare these documents carefully and ask questions early.
How to estimate your closing costs
Use this step-by-step approach to build a clear estimate tailored to your property, loan, and timing.
- Get pre-approved and request a Loan Estimate
- After you apply, your lender is required to send a Loan Estimate within 3 business days. Review lender fees, appraisal, and expected prepaid items. Ask about escrow deposits for taxes and insurance.
- Ask the title company for a quote
- Request a title fee breakdown and title insurance premium quote for your exact purchase price in Travis County. The title company will also estimate recording and settlement fees.
- Price out inspections and a survey
- Obtain quotes for your general home inspection and any specialty inspections. Ask if an existing survey is available and acceptable, or budget for a new one.
- Get homeowner’s insurance quotes
- Shop coverage and premiums early. Your first-year premium is typically paid at closing and affects your escrow deposit.
- Check taxes, HOA, and special districts
- Review the current property tax bill and estimate prorations based on your closing date. Ask for the HOA resale certificate and fee schedule if applicable, and confirm whether any MUD or special assessments apply.
- Factor in option fee and earnest money
- Plan for an option fee during negotiations and earnest money upon contract. Both are separate from your closing costs, and earnest money is credited back to you at closing.
- Confirm seller concessions
- If you plan to request seller-paid costs, confirm the allowable concession limits with your lender based on your loan program. Make sure the contract reflects any negotiated concessions.
Build a quick estimate
Here is a simple way to frame your numbers as quotes come in:
- Purchase price: $X
- Rule-of-thumb closing costs: 2% to 5% of $X
- Lender fees: from your Loan Estimate
- Appraisal: estimate $400 to $700
- Home inspection: estimate $300 to $600
- Title and recording: from your title quote
- Escrow deposits: typically 2 to 3 months of taxes and insurance, depending on your closing date and lender requirements
- Survey: if needed, estimate $300 to $1,000
Use your lender’s Loan Estimate plus a title company quote to get very close to your final figure. Then compare to the Closing Disclosure you will receive at least 3 business days before closing and ask your lender and title officer to explain any differences.
Quick checklist before you close
- Review your Loan Estimate and then your Closing Disclosure line by line.
- Confirm who pays the owner’s title policy in your contract and verify lender policy costs.
- Read the title commitment and ask questions about any exceptions or requirements.
- Verify the current property tax bill and any special assessments.
- Obtain the HOA resale certificate and fee schedule, if applicable.
- Schedule inspections early and confirm whether a prior survey is acceptable.
- Confirm any seller concessions and that they meet your loan program’s limits.
Ways to keep costs manageable
- Negotiate strategically. Seller concessions can cover some or all of your closing costs, within your loan program’s limits.
- Compare quotes. Shop homeowner’s insurance and review competing lender quotes to understand fees and rates.
- Time your closing date. Closing near month-end can reduce prepaid interest. Ask your lender how timing affects your cash to close.
- Reuse what you can. If an existing survey meets lender guidelines, it may save you the cost of a new one.
The bottom line for Austin buyers
Closing costs in Austin are predictable once you know the moving parts. Start with the 2% to 5% rule, get firm quotes from your lender and title company, and build in estimates for inspections, survey, insurance, and escrow deposits. Understand Texas norms like seller-paid owner’s title insurance and the absence of a transfer tax, and use concessions when appropriate to reduce your out-of-pocket.
If you want a clear, line-by-line plan for your Travis County purchase, our team can help you compare your Loan Estimate and title quote and build a confident budget. Reach out to Soomin Kim to get started. Schedule Your Free Consultation.
FAQs
How much should I budget for buyer closing costs in Austin, TX?
- Most buyers use 2% to 5% of the purchase price as a starting estimate, then refine with lender and title quotes for precision.
Who typically pays for title insurance in Texas real estate purchases?
- It is common for sellers to pay the owner’s title policy in Texas, while buyers pay the lender’s policy when financing, but the contract can negotiate this.
Does Austin, Texas have a real estate transfer tax for homebuyers?
- No. Texas does not have a state or local real estate transfer tax, though you will pay county recording fees and any applicable local assessments.
What is an option fee in a Texas home purchase and when is it paid?
- The option fee is a negotiated amount you pay the seller for a short inspection period, and it is typically due soon after the contract is executed.
How can I get a detailed closing cost estimate for a Travis County home?
- Request a Loan Estimate from your lender and a title quote from the title company, then compare both to your Closing Disclosure before closing.
Can Austin home sellers pay some of my closing costs through concessions?
- Yes. Seller concessions are negotiable, and allowable amounts depend on your loan program, so confirm limits with your lender in advance.
