Texas Closing Costs Explained

Last updated: September 2026

Texas closings run on their own rulebook — a state-set title insurance rate, a buyer-only "option period" most other states don't have, and customs about who pays for what that surprise a lot of first-time buyers. Here's how it actually works, in dollars and days.

Title insurance: the one fixed cost

Texas is a promulgated rate state: the Texas Department of Insurance sets a single rate schedule that every title company in the state must charge for the same policy amount. You can't shop title insurance premiums the way you shop a lender — the number is the number, wherever you buy it. Our closing cost calculator uses that exact published formula for owner's policies between $100,000 and $1,000,000: $780 plus $4.94 for every $1,000 of value above $100,000.

A lender's title policy, issued at the same time (a "simultaneous issue"), costs a small additional flat fee rather than a second full premium — typically around $100, though your title company sets the exact simultaneous-issue add-on.

The option period and option fee

The option period is a Texas-specific feature of the standard TREC (Texas Real Estate Commission) contract, and it's one of the more buyer-friendly quirks in the country: for a short window after the contract is signed, the buyer can walk away for any reason at all, no justification required, and still get their earnest money back.

Here's how the pieces fit together:

• Option fee: a small, non-refundable payment — commonly $100 to $500, sometimes more in a competitive market — paid directly to the seller (usually via the title company) in exchange for that unrestricted right to terminate.
• Option period length: negotiated in the contract, commonly 5 to 10 days. Shorter periods signal a more competitive, motivated buyer; longer periods are common on unique properties or when specialty inspections are needed.
• What happens to it: if you close, both the option fee and your earnest money are credited toward your down payment and closing costs — they're not extra money on top of your purchase price. If you terminate during the option period, you get your earnest money back but forfeit the option fee — that's the actual "cost" of walking away.

Earnest money

Earnest money is a good-faith deposit — typically 1% to 3% of the purchase price — held by the title company (not the seller) in escrow. It signals to the seller that you're serious, and it's the buyer's money at risk if they back out of the contract for a reason the contract doesn't allow after the option period ends. Outside the option period, if you terminate without a contract-recognized reason (like a financing or appraisal contingency), the seller can typically keep the earnest money.

Who typically pays what

None of this is legally fixed — everything at a Texas closing is negotiable and gets spelled out in the contract — but there's a strong regional custom:

New construction is the biggest exception to this table — builders routinely have the buyer pay for both title policies, so read a builder contract's closing cost section closely rather than assuming resale norms apply.

Other common closing costs

Beyond title insurance and the items above, expect line items for the loan origination fee, appraisal, credit report, a survey (or survey affidavit if a recent one exists), recording fees to the county, and prepaid items your lender collects upfront — a few months of homeowners insurance and property taxes into an escrow account. Our closing cost calculator breaks out the buyer and seller sides separately so you can see who's paying for what on a given sale price.

A typical closing timeline

Most Texas financed purchases close 30 to 45 days after the contract is signed — long enough for the lender to underwrite the loan, the appraisal to come back, and title work to clear. Cash purchases can close much faster, sometimes in 1 to 2 weeks, since there's no lender underwriting to wait on. The option period runs inside the first part of that window, not after it.

Property tax proration at closing

Texas property taxes are billed annually in arrears, so at closing the seller credits the buyer for their share of the current year's taxes — the portion of the year the seller owned the home — since the buyer will be the one who eventually gets the full-year bill. This shows up as a credit line on the closing statement, not a separate check either party writes.