The Big Picture: How Much Will You Need?
Closing Costs Are Separate From Your Down Payment
If you're putting 5% down on a $375,000 home, your down payment is $18,750. Your closing costs are in addition to that — roughly another $7,500–$18,750. Total cash needed at closing could be $26,250–$37,500. Budget for both from the start so there are no surprises.
Buyer's Closing Costs: Fee by Fee
Lender Fees
Loan Origination Fee
Typical: 0.5–1% of loan amount
The lender's fee for processing your mortgage. On a $350K loan, that's $1,750–$3,500. Some lenders charge a flat fee instead. Shop around — this is negotiable.
Discount Points (Optional)
Typical: 0–2% of loan amount per point
Prepaid interest that "buys down" your rate. One point = 1% of the loan amount and typically reduces your rate by ~0.25%. Worth it if you plan to stay 5+ years. Completely optional.
Appraisal Fee
Typical: $400–$600
Paid for the lender-ordered appraisal of the property. Usually paid upfront before closing. Non-refundable even if the deal falls through.
Credit Report Fee
Typical: $30–$75
The lender pulls your credit from all three bureaus. Small fee but it shows up on your Closing Disclosure.
Title & Escrow Fees
Owner's Title Insurance
Typical: ~$1,991 on a $350K home
In Texas, the seller traditionally pays this. State-regulated rates — same price regardless of which title company you use. Protects your ownership rights permanently.
Lender's Title Insurance
Typical: $100–$200 (with simultaneous issue discount)
Buyer pays this. Required by your lender. Much cheaper when purchased simultaneously with the owner's policy.
Title Search / Exam Fee
Typical: $200–$400
Fee for researching the property's ownership history. Identifies any liens, claims, or encumbrances on the title.
Escrow / Closing Fee
Typical: $300–$600
Fee for the title company to manage the closing process — handling documents, disbursing funds, and recording the deed. Often split between buyer and seller.
Government & Recording Fees
Recording Fees
Typical: $50–$200
County charges to officially record the deed and mortgage documents in public records.
Transfer Taxes
Texas: $0
Good news — Texas does not charge real estate transfer taxes. This saves DFW buyers compared to many other states.
Prepaid Items & Escrow Reserves
Prepaid Interest
Typical: Varies by closing date
You prepay interest from your closing date through the end of that month. Closing earlier in the month = more prepaid interest. This is why some buyers prefer closing at month's end.
Homeowners Insurance (First Year)
Typical: $1,500–$3,500/year in DFW
Your first year's premium is usually paid at closing. Texas rates are among the highest in the nation due to weather risks (hail, wind, storms). Shop multiple insurers.
Property Tax Escrow
Typical: 2–4 months of property taxes
Your lender collects an upfront reserve to ensure taxes are paid on time. Texas property taxes are high — budget for this. On a $375K home, taxes could be $7,000–$10,000/year.
Insurance Escrow
Typical: 2–3 months of insurance premiums
Additional reserve for future insurance payments held by the lender alongside your tax escrow.
Other Buyer Fees
Survey
Typical: $400–$700
Confirms property boundaries and identifies easements. May not be needed if the seller has a recent survey, but lenders often require a new one.
Home Inspection
Typical: $350–$600
Technically paid during the option period, not at closing. But it's part of your total buying costs. Worth every penny.
How to Reduce Your Closing Costs
Ask for Seller Concessions
In your offer, ask the seller to pay a percentage of your closing costs (typically 2–3%). In a balanced or buyer's market, many sellers will agree. In a hot market, this makes your offer weaker — weigh the trade-off.
Shop Lenders
Get Loan Estimates from at least 3 lenders and compare fees line by line. Origination fees, underwriting fees, and processing fees can vary significantly. Don't just compare interest rates — compare the total cost.
Choose Your Closing Date Strategically
Closing at the end of the month reduces your prepaid interest charges. Closing on the 28th vs. the 5th could save you several hundred dollars.
Ask About Lender Credits
Some lenders offer credits toward closing costs in exchange for a slightly higher interest rate. If you're cash-strapped at closing but plan to refinance within a few years, this trade-off can make sense.
Key Takeaways
Budget 2–5% of the purchase price for closing costs on top of your down payment
You'll receive a Closing Disclosure 3 days before closing with exact amounts — review it carefully
Seller concessions can cover part of your closing costs — ask in your offer
Shop at least 3 lenders and compare total fees, not just interest rates
Texas has no transfer taxes — one less cost DFW buyers have to worry about
Closing late in the month reduces prepaid interest charges