Feeling unsure about who pays what at the closing table in Houston? You are not alone. Closing costs can be confusing, especially when customs and contract choices vary across Harris County. In this guide, you will see what closing costs include, who typically pays each fee in Houston, how to estimate your total, and smart ways to reduce what you bring to closing. Let’s dive in.
Closing costs basics
Closing costs are the one-time fees and prepayments due when you finalize a home purchase or sale. For buyers, these costs usually total about 2% to 5% of the purchase price. For sellers, the largest expense is often the real estate commission, which is commonly around 5% to 6% of the sale price, plus other seller-side items.
Common items you may see:
- Loan-related costs: origination, discount points (if any), underwriting, credit report, and appraisal.
- Title and settlement: title search, closing or escrow fee, document prep, notary, and the lender’s title insurance policy.
- Owner’s title insurance policy: often seller-paid in Texas by local custom, but negotiable.
- Government and recording: county recording fees for the deed and deed of trust. Texas has no state real estate transfer tax.
- Prepaids and escrows: first-year homeowners insurance, prepaid interest, and initial deposits for property tax and insurance escrows.
- Prorations: property taxes, HOA dues, and utilities split based on the closing date.
- Other items: survey or survey waiver fee, pest inspection if required, HOA transfer or resale certificate fees.
Who pays what in Houston
The contract controls who pays each item, and your loan program can set limits on concessions. That said, local customs shape expectations in Houston and across Texas.
Typical seller-paid items
- Real estate commissions, commonly around 5% to 6% of the sale price in many markets.
- Owner’s title insurance policy by Texas custom, though this is negotiable in the contract.
- Prorated property taxes and HOA dues for the days the seller owned the home.
- Any agreed seller concessions, such as credits toward buyer closing costs or rate buydowns.
- Some title or closing fees may be split or negotiated with the buyer.
Typical buyer-paid items
- Lender fees, appraisal, and credit report.
- Lender’s title insurance policy when financing.
- Recording charges for the deed and deed of trust, depending on local practice.
- Prepaids and escrows, including the first-year insurance premium and initial tax and insurance escrows.
- Survey cost or a survey waiver fee, if required by the lender.
- HOA transfer and resale package fees where applicable, depending on negotiation.
- Upfront mortgage insurance premiums for certain programs, if applicable.
Always confirm the “who pays” boxes in your contract and review the title company’s fee quote.
Houston and Harris County specifics
- No state transfer tax: Texas does not charge a state real estate transfer tax. You will still see county recording fees on your closing documents.
- Harris County recording fees: The county sets recording fees for deeds and other documents. Your title company will calculate the exact amounts on your final statement.
- Property tax proration: In the Houston area, property taxes often cover multiple jurisdictions like county, city, school district, and special districts. Taxes are prorated at closing based on the date you take ownership. If the seller has paid the current year’s taxes, you will credit the seller. If not, the seller typically credits you for their portion.
- Special districts: Many neighborhoods sit within MUDs, PIDs, or similar districts that levy separate taxes or assessments. These amounts are disclosed and prorated at closing. Ask for a tax certificate and confirm details with the title company.
- HOA fees and certificates: Condominiums and planned communities often charge transfer fees or require a resale certificate. Which party pays can vary and is negotiated.
- Title insurance practice: In Texas, who pays for the owner’s title policy is negotiable, but sellers often cover it by local custom. Buyers who finance will pay for the lender’s title policy.
Timeline and the disclosures you receive
- Loan Estimate: After you apply, your lender must deliver a Loan Estimate within three business days. It outlines your projected closing costs, rate, and loan terms.
- Closing Disclosure: At least three business days before closing, your lender must provide a Closing Disclosure showing your final itemized costs and cash-to-close. Sellers receive a seller’s statement or the seller side of the Closing Disclosure.
Review these forms line by line. Ask your lender and title company to explain any changes from the Loan Estimate to the Closing Disclosure.
How to estimate your costs
Start with the rule of thumb: budget 2% to 5% of the purchase price for buyer closing costs. Then refine that estimate with quotes from your lender and title company.
- Request Loan Estimates from multiple lenders to compare fees and rates.
- Ask your title company for an estimated Closing Disclosure or fee quote.
- Add your prepaids and escrows, which vary by insurance premium, closing date, and tax schedule.
- For sellers, plan for the commission, the owner’s title policy if you agree to pay it, prorations, and any negotiated concessions.
Example: On a $400,000 purchase, a buyer’s closing costs could range from roughly $8,000 to $20,000 before any seller credits. Actual amounts depend on your loan type, rate choices, prepaids, and negotiations.
Ways to reduce what you bring to closing
You have options to keep your cash-to-close manageable without sacrificing protection or future savings.
- Negotiate seller concessions. You can request that the seller cover some buyer costs, subject to your loan program’s limits.
- Split fees creatively. Escrow and closing fees can often be shared if both parties agree.
- Shop services. Compare lenders, homeowners insurance, and, when allowed, title services to find competitive pricing.
- Consider lender credits. You may trade a slightly higher interest rate for a lender credit that reduces upfront costs. Compare the long-term cost before deciding.
- Ask about assistance programs. Houston, Harris County, and statewide providers offer down payment and closing cost help through programs administered by city, county, and state agencies, as well as nonprofits and HUD-approved counselors. Availability and rules change often, so confirm eligibility with a participating lender.
Cost-lowering cautions:
- Be careful with “no-closing-cost” offers. Costs usually shift into a higher rate or are covered by a credit you pay for over time.
- Do not skip title or survey reviews to save a small amount. These items protect you from future surprises.
- Confirm seller concession limits with your lender to avoid last-minute changes on your Closing Disclosure.
Seller tips for a smooth closing
- Request a seller net sheet early so you understand your likely proceeds.
- Decide in advance whether you will offer to pay the owner’s title policy or other buyer credits.
- Gather HOA documents, including any resale certificates or transfer requirements, and confirm who will pay associated fees in the contract.
- Be ready to address repair requests with either repairs or credits, keeping loan program rules in mind.
Work with a Houston-area guide
Customs in Houston and across Harris County can vary by neighborhood, title company, and loan type. A clear strategy on who pays what, plus careful review of your Loan Estimate and Closing Disclosure, will help you close with confidence. If you want a local, step-by-step plan tailored to your price point and area, reach out for a friendly walkthrough and a personalized estimate.
Schedule your free consultation with The Abiaka Team for clear, local guidance on closing costs in Houston and the northwest suburbs.
FAQs
Who pays title insurance in Houston?
- It is negotiable, but by Texas custom the seller often pays the owner’s title policy, while the buyer pays the lender’s title policy when financing.
Do Houston buyers pay property taxes at closing?
- Yes. Property taxes are prorated based on the closing date, so you pay from the day you take ownership forward, with credits applied if the seller prepaid.
Are there real estate transfer taxes in Texas?
- No. Texas does not charge a state real estate transfer tax, though county recording fees still apply.
When will I see my final closing numbers?
- Your lender must provide a Closing Disclosure at least three business days before closing, and the title company will review your cash-to-close with you.
Can seller concessions cover all buyer costs?
- Sometimes. Concessions depend on negotiation and loan program limits, so check with your lender to see how much is allowed.
Do different loan types change who pays what?
- Yes. FHA, VA, USDA, and conventional loans have different rules for fees and seller concessions, which affect negotiations and cost allocation.
What are MUD or PID taxes in Houston?
- Many areas are in special districts that levy separate taxes or assessments. These are disclosed and prorated at closing based on your closing date.
Who pays HOA transfer and resale certificate fees?
- It varies by community and negotiation. Your contract will specify whether the buyer or seller pays these HOA-related charges.
