Negotiate Seller Concessions
In slower markets, ask the seller to cover 2–3% of closing costs as part of your offer. This reduces your out-of-pocket without changing the sale price.
Buyer Resources
Understanding Closing Costs
~10 min read · Buyer cost breakdown
Many first-time buyers are surprised at the closing table. They budgeted for their down payment but didn't account for closing costs — an additional 2–5% of the purchase price that covers lender fees, title services, prepaid insurance, and more. This guide breaks down every line item so you know exactly what to expect.
Quick Estimate - Texas Buyer
On a $400,000 purchase with 5% down, expect closing costs of approximately $8,000 - $14,000 depending on your lender, loan type, and whether the seller contributes.
The Two Buckets
Closing Costs vs. Prepaids
Buyer costs at closing fall into two distinct categories — understanding the difference helps you budget accurately.
Closing Costs
One-time fees paid at closing
Loan Origination Fee
Lender's charge for processing your loan
0.5% – 1% of loan
Appraisal Fee
Lender-required property valuation
$500 – $750
Credit Report Fee
Pulled by lender during underwriting
$25 – $75
Title Insurance (Lender's Policy)
Required by lender; separate from owner's policy
$400 – $900
Title Search & Exam
Research of property ownership history
$200 – $400
Escrow / Settlement Fee
Title company's closing management fee
$400 – $750
Survey Fee
Required for most Texas purchases
$400 – $700
Recording Fees
County recording of the deed and mortgage
$50 – $200
Prepaids & Escrow Setup
Money you're paying early, not losing
Homeowner's Insurance (1 year)
Paid upfront at closing
$1,200 – $2,500
Mortgage Interest Prepaid
Interest from closing day to end of month
Varies by close date
Property Tax Escrow
Initial escrow cushion required by lender
2–3 months reserve
Insurance Escrow
Second escrow cushion for insurance payments
2–3 months reserve
HOA Dues (if applicable)
Prorated dues plus any setup / caps funding
Varies
Note: Prepaids are not “lost” — insurance and tax escrow go into your escrow account and are paid when those bills come due. You're paying ahead, not extra.
Real Numbers
Sample Closing Cost Worksheet
A $400,000 purchase, 5% down ($20,000), 30-year conventional loan. Central Texas.
Purchase Price$400,000
Down Payment (5%)– $20,000
Loan Amount$380,000
Loan Origination (0.75%)$2,850
Appraisal + Credit Report$625
Title (Lender's Policy + Search)$950
Escrow / Settlement Fee$600
Survey$500
Recording + Misc.$300
TOTAL CLOSING COSTS$5,825
Homeowner's Insurance (1yr)$1,800
Mortgage Interest Prepaid$680
Tax + Insurance Escrow Setup$2,400
TOTAL PREPAIDS$4,880
TOTAL CASH TO CLOSE$30,705
Illustrative only. Your lender will provide a Loan Estimate within 3 business days of application.
Smart Moves
Legitimate Ways to Reduce Closing Costs
Shop Lenders
Origination fees and lender credits vary significantly. Get Loan Estimates from 2–3 lenders before committing. A lender credit can offset significant upfront costs.
Time Your Close Date
Closing near the end of the month reduces your prepaid mortgage interest — sometimes by $500–$1,000 depending on your loan amount.
Use Lender Credits
Accept a slightly higher rate in exchange for closing cost credits. Best when you don't plan to stay long-term and want to minimize upfront cash.
Request a No-Closing-Cost Loan
Some loan programs allow costs to be rolled into the rate or loan balance. Trade-offs exist — evaluate your break-even carefully.
VA Loan (If Eligible)
VA loans cap some fees and eliminate mortgage insurance. Sellers can also pay all closing costs on VA purchases — a significant advantage.
Get a Personalized Closing Cost Estimate
Your lender will give you a Loan Estimate — but before you apply, let's talk through what to expect so you're not caught off guard.