Buying or selling a home in Austin and not sure what closing will cost? You are not alone. Closing costs can feel confusing because they include many small items that add up fast. This guide breaks down what you will likely pay in Travis County, who usually covers each item, and how credits or buydowns can change your bottom line. Let’s dive in.
What closing costs include in Austin
Closing costs are one-time fees and prepaid items due when a home transfers and when a loan is originated. They are separate from your down payment and the seller’s mortgage payoff. In Texas there is no state or local real estate transfer tax, which keeps the focus on title fees, commissions, lender costs, inspections, and prorations.
Most Austin closings use a title company as the escrow agent. Some neighborhoods include special districts like MUDs or PIDs that can affect disclosures and prorations, along with HOA fees where applicable. Recording fees and property taxes are handled through Travis County and change periodically, so your title company will provide current figures.
Buyer closing costs in Austin
If you are financing, buyer costs usually include lender fees, appraisal and credit report, discount points if you choose to buy down your rate, and the lender’s title policy. You will also see prepaid interest, your first year of homeowner’s insurance, and initial escrow deposits if your lender sets up an escrow account. Plan for inspections and possibly a survey, based on your contract and lender requirements.
As a rough guide, buyers commonly pay about 2% to 5% of the purchase price in closing costs, not including the down payment. On a $400,000 purchase, that can look like roughly $8,000 to $20,000 depending on loan type, points, taxes, insurance, and prorations. Your lender’s Loan Estimate will show a personalized breakdown within 3 business days of application, and your Closing Disclosure will arrive at least 3 business days before you sign.
Prepaids and prorations
Prepaid interest covers the period from closing to your first mortgage payment. Your first year of homeowner’s insurance is often paid at closing. Property taxes and HOA dues are prorated between buyer and seller based on the exact closing date, and the title company will calculate those figures for your transaction.
Seller closing costs in Austin
For sellers, the largest expense is typically real estate commission. The combined commission paid in a sale is negotiable, but many industry reports place it in the mid single digits as a share of the sale price. In Texas, it is customary for the seller to pay for the buyer’s owner’s title insurance policy, although this is negotiable.
Other seller costs can include the escrow or settlement fee, HOA transfer and estoppel fees where applicable, any agreed repairs or a home warranty, and the payoff of existing liens. As a rough rule of thumb, sellers often see total closing costs of about 6% to 8% of the sale price when you combine commission, the owner’s title policy, and routine fees. Your actual numbers will depend on your contract, concessions, and commission structure.
Who usually pays what in Texas
Common buyer-paid items
- Lender fees and origination
- Appraisal and credit report
- Lender’s title policy
- Inspections and, often, the survey
- Attorney fees if you choose to hire one
Common seller-paid items
- Real estate commission
- Owner’s title insurance policy
- Seller’s share of prorated taxes and HOA fees
- Any agreed repairs or concessions
- Payoff of the seller’s mortgage and liens
Many items are negotiable, including the settlement fee split, survey responsibility, and whether the seller provides a home warranty. Market conditions can shift who pays what, so spell it out in your contract.
Title insurance, recording, and Travis County specifics
Title insurance premiums in Texas are set by the Texas Department of Insurance based on the purchase price. Because rates are regulated, you will see consistent premiums across title companies for the same price point. The seller often pays for the owner’s policy by custom in Texas, while the buyer typically pays for the lender’s policy if there is a loan.
Travis County recording fees for the deed and the mortgage are relatively small compared to title premiums and commissions, but they still appear on your closing statement. If the property is in a MUD or PID, there can be special disclosures and payoff considerations, and HOA communities often include transfer or document fees. Your title company will verify all charges and prorations for your exact address.
Credits, concessions, and buydowns
A seller concession is a credit that helps cover the buyer’s closing costs or pays for discount points. Discount points are upfront fees that lower the buyer’s mortgage rate. A permanent buydown reduces the rate for the life of the loan. A temporary buydown, like a 2-1 buydown, lowers the rate only for the first one or two years and is paid upfront at closing.
Loan programs cap how much the seller can contribute. FHA commonly allows up to 6% of the sale price toward closing costs and points. VA has specific rules and some items are often described as capped around 4% for certain concessions, but details vary. Conventional loans generally allow about 3% to 9% depending on your down payment. Always check the buyer’s lender for the exact limit before you finalize the contract.
How credits change cash and net
- For buyers, a seller credit reduces cash to close or can fund a rate buydown. It does not change the sale price unless renegotiated.
- For sellers, concessions reduce net proceeds dollar for dollar, whether they cover buyer costs, points, or a temporary buydown.
- A permanent buydown can improve buyer affordability and sometimes buyer qualification. A temporary buydown eases the first years of payments while the note rate returns to normal after the buydown period.
Quick checklist before you close
- Ask your lender for a Loan Estimate early and compare at least two lenders if possible. Confirm whether points or a temporary buydown are allowed and smart for your plan.
- Request a title fee estimate that includes the owner’s and lender’s title policies and the settlement fee breakdown.
- Confirm Travis County recording fees and how property tax prorations will be handled for your closing date.
- If there is a MUD, PID, or HOA, verify transfer, estoppel, or bond-related fees and who pays them.
- Sellers should obtain written payoff statements for any mortgages or liens to forecast net proceeds.
- Buyers should confirm what any seller credits will cover and review the Closing Disclosure at least 3 business days before signing.
Two quick examples
Scenario A: typical financed purchase
A buyer purchases a $400,000 home and pays typical loan and title costs. Buyer closing costs might land around 2% to 4% of the price, or about $8,000 to $16,000. The exact amount depends on loan type, points, taxes, insurance, and prorations. Always verify with your lender and title company for precise numbers.
Scenario B: seller-funded 2-1 buydown
A seller offers a temporary 2-1 buydown by paying the upfront cost at closing. The buyer enjoys lower payments in year one and year two, then the note rate returns to normal. The seller’s net proceeds are reduced by the buydown’s cost dollar for dollar. Your lender will calculate the buydown price for your loan size and rate.
Final thoughts
Closing costs in Austin are predictable once you know the categories and who usually pays for what. Texas has no transfer tax, and title premiums are regulated, which helps you budget. The biggest variables are your loan program, discount points, prorations, and any negotiated credits.
If you would like a clear, line by line estimate for your situation or a seller net sheet for your West Austin home, our team can help. Reach out to Propertysmith Realty for local, CPA-level clarity and a smooth closing.
FAQs
What are typical buyer closing costs in Austin?
- Buyers who finance commonly pay about 2% to 5% of the purchase price, plus the down payment.
Who pays for owner’s title insurance in Texas?
- It is customary for the seller to pay the owner’s title policy in Texas, but it is negotiable in the contract.
How do Travis County tax prorations work?
- Taxes are split between buyer and seller based on the closing date, and the title company will calculate the exact amounts.
What is a 2-1 buydown and who can fund it?
- A 2-1 buydown lowers the buyer’s rate for the first two years and can be paid by the buyer or offered by the seller as a concession, subject to loan program limits.
Are there transfer taxes on Austin home sales?
- Texas does not charge a state or local real estate transfer tax, so closing costs focus on title, lender, and related fees.
How much can a seller contribute to buyer costs?
- Caps depend on the loan: FHA commonly up to 6% of price, VA has specific rules often described around 4% for certain items, and conventional allows about 3% to 9% based on down payment.
