In Texas, the buyer pays most of their own closing costs (lender fees, title insurance, prepaids, and third-party fees), while the seller pays for the owner's title insurance policy and the real estate agent commissions.
However, buyers can negotiate seller concessions to have the seller cover part of their closing costs. There is no legal requirement dictating who pays what. It is all negotiable in the purchase contract.
What the Buyer Typically Pays
As the buyer, you are responsible for most of the costs associated with originating and funding your mortgage. These fees appear on your Loan Estimate and closing disclosure and generally total 2-5% of the purchase price.
- Lender fees (origination, underwriting, processing): Typically $1,500-$3,000
- Lender's title insurance policy: $100-$200 to protect the lender's interest
- Appraisal fee: $400-$600
- Survey fee: $300-$500
- Prepaid items (property taxes, insurance, interest): $2,000-$4,000
- Recording fees: $50-$150
- Flood certification: $15-$25
- Credit report: $25-$50
Total buyer costs typically range from 2-5% of the purchase price. On a $300,000 home, expect $6,000 to $15,000 in closing costs.
What the Seller Typically Pays
Sellers cover a smaller set of costs, but the amounts can be significant because they include the largest single expense in a real estate transaction: the agent commissions.
- Owner's title insurance policy: $1,800-$2,200 (by custom in most Texas counties)
- Real estate agent commissions: Typically 5-6% split between buyer's and seller's agents
- Any negotiated repairs: Varies depending on inspection findings
- HOA transfer fees (sometimes): $100-$500
On a $300,000 sale, the seller's costs can easily exceed $20,000-$25,000 when commissions and title insurance are included.
Negotiating Seller Concessions
One of the most powerful tools for buyers is negotiating seller concessions. This is when the seller agrees to pay a portion of your closing costs. The concession is baked into the purchase price and the seller credits you at closing.
Maximum concession limits by loan type:
- FHA loans:Up to 6% of purchase price
- Conventional loans:3% to 9% (varies by down payment)
- VA loans:Up to 4% of purchase price
- USDA loans:Up to 6% of purchase price
Include the concession request in your purchase offer. Your agent will help you structure it so the seller sees the net benefit while you reduce your cash-to-close.
The Commissions Change (NAR Settlement Impact)
Since the 2024 NAR settlement, buyer agent compensation is more openly negotiated. Buyers may need to negotiate their agent's commission separately or pay it themselves. This can affect your total cash-to-close.
The settlement changed how commissions are advertised and offered. In some cases, sellers may no longer offer to pay the buyer's agent commission as part of the listing. That means buyers need to factor their agent's compensation into their overall closing cost budget. Your agent should explain exactly how this applies to your specific transaction before you write an offer.
Texas Custom vs. Negotiation
What is "custom" in Texas is not required by law. Every cost allocation is negotiable. In a buyer's market, sellers may pay more of the closing costs. In a seller's market, buyers may bear more. The key is knowing what is negotiable and having an agent who will fight for your interests.
There is no Texas law that says the buyer must pay certain fees and the seller must pay others. Every cost on the closing disclosure is subject to negotiation between the parties. The only fees that are truly fixed are the Texas-regulated title insurance rates, and even then, who pays them is negotiable.
The Bottom Line
Understanding who pays what at closing is the first step to minimizing your cash-to-close. The buyer pays most of the loan-related costs, while the seller covers the owner's title policy and commissions. But in practice, the lines blur through seller concessions. A good agent and loan officer will work together to structure your offer so you keep as much cash in your pocket as possible.