Stack 2: Costs & Taxes · 4 min read
Packing notes
- Texas sets title insurance premiums, so every title company charges the same basic premium.
- The owner’s policy on a $555,300 home carries a basic premium of $3,029 under the 2026 schedule.
- You must receive the Closing Disclosure at least three business days before closing.
Closing costs are the money you pay on top of the down payment to complete a purchase. In Texas, some of these are set by the state, some are set by your lender and some depend on your home’s taxes and insurance. Knowing which is which helps you check your estimates and spot anything unusual on the final paperwork.
Title insurance: set by the state
Title insurance protects you from problems with the ownership title that existed before the purchase; the Texas Department of Insurance gives examples such as unpaid property taxes and fraud or forgery of previous paperwork. Unlike homeowners insurance, you pay the premium one time, at closing. The Texas Department of Insurance regulates the premiums, and its consumer guidance says all Texas companies charge the same rates for title insurance, although some other closing fees can differ. The owner’s policy premium is based on the sale price; the loan policy premium on the loan amount.
TDI’s FAQ adds two points buyers should know. Texas does not require title insurance, but your lender will require a loan policy to protect its interest. And when an owner’s policy and a loan policy are bought at the same time, the loan policy is issued at a discounted price of $100; without an owner’s policy, you pay full price for the loan policy.
Working out the premium
TDI’s basic premium schedule effective March 1, 2026 gives a fixed premium for policies up to $100,000, which is $780 at $100,000. For policies between $100,001 and $1,000,000, you subtract $100,000 from the policy amount, multiply by 0.00494 and add $780. Worked examples:
| Sale price | Calculation | Basic owner’s premium |
|---|---|---|
| $268,500 | TDI’s own example | $1,612 |
| $400,000 | 300,000 x 0.00494 + 780 | $2,262 |
| $555,300 (Austin median) | 455,300 x 0.00494 + 780 | $3,029 |
Who pays for the owner’s policy is a matter for the contract. The premium itself is the same whichever title company you choose.
Lender charges
Your lender’s charges, such as origination fees and any points you pay to lower the rate, appear on the Loan Estimate. Federal rules require the lender to deliver or mail the Loan Estimate no later than the third business day after it receives your application. If you lock your interest rate later, the lender must send a revised estimate within three business days of the lock.
Third-party services
Many costs go to other providers: the appraisal the lender orders, often a survey, the home inspection you arrange during the option period, and the title company’s own escrow and recording charges. The Consumer Financial Protection Bureau suggests shopping for title insurance and other closing services where you are allowed to. In Texas the title premium does not change, but the other fees can.
Prepaid items and escrow
Some money at closing is not a fee but a prepayment: interest from the closing date to the end of the month, the first year of homeowners insurance, and an initial deposit into your escrow account for property taxes and insurance. Because Texas property taxes are high, the tax deposit can be a large line. Texas Property Tax for Austin Homeowners: Rates, Deadlines and Protests shows how to estimate the yearly tax.
The Closing Disclosure
Under 12 CFR 1026.19, your lender must make sure you receive the Closing Disclosure, with the actual terms of the loan and the final costs, no later than three business days before closing. Use those days. Compare every line with your Loan Estimate, check the sale price, loan amount, interest rate and cash to close, and ask the lender or title company to explain anything that changed. The CFPB reminds buyers that once you sign, you are responsible for the mortgage loan.
Tip: Before you wire any money for closing, call the title company at a number you found yourself, not one from an email. The CFPB warns buyers to be on alert for mortgage closing scams.
Help with closing costs
Down payment assistance programs can cover some closing costs too. The City of Austin’s program says it covers down payment and closing costs, including prepaid expenses, for income-eligible first-time buyers within the city limits. See Down Payment Assistance for Austin Buyers: City and State Programs.
Earnest money and the option fee
Two payments come early, long before closing day. Under the TREC resale contract, the buyer delivers the earnest money and any option fee to the escrow agent within three days of the contract’s effective date. TREC notes the escrow agent may release the option fee to the seller, and that the option fee is credited to the sales price at closing. Ask the title company how your earnest money will appear on the settlement statement.
A closing cost checklist
- Title insurance: owner’s policy (optional, based on price) and loan policy (required by the lender).
- Lender charges: origination, points, application or underwriting fees.
- Third parties: appraisal, survey, inspection, escrow and recording.
- Prepaids: interest, insurance and the initial tax deposit.
- Association items, if any: transfer fees and resale certificate charges.
- Property tax for the current year, as the contract and settlement statement handle it.
Totals vary with the price, the loan and the time of year. For the full sequence of the purchase, including when each document arrives, see Buying a Home in Austin, Step by Step: From First Budget to Keys.