Understanding the hidden costs of buying a home in Texas is crucial. Beyond the purchase price, expect closing costs (2-5% of home value), high property taxes, and expensive homeowners insurance due to weather risks. Plan for maintenance (1-4% annually) and utilities. Factor in loan fees, appraisals, and potential HOA costs to avoid financial surprises.
Closing Costs: More Than Just a Few Fees
You’ve saved up for the down payment, but then closing day comes, and suddenly, there’s a massive list of fees you weren’t expecting.
- Loan Origination Fees – Lenders charge this to process your mortgage, usually 0.5% to 1% of the loan amount.
- Title Insurance – Protects you and the lender from any past ownership disputes. In Texas, this can run between $1,000 and $3,000 depending on the home’s value.
- Appraisal Fees – Lenders won’t finalize your loan without an appraisal. Expect to pay $500-$700for this.
- Escrow Fees – The third party handling the transaction needs their cut, usually around $350-$700.
- HOA Fees – If your neighborhood has a homeowners association, you might be hit with transfer fees or prepaid dues before getting the keys.
Property Taxes: They Pack a Punch in Texas
Texas doesn’t have a state income tax, which is great until you see the property tax bill. Depending on the county, rates range from 1.5% to 2.8% of the home’s value—every single year. That means on a $300,000 home, you could owe around $7,500 a year in taxes.
And here’s the kicker: If your home increases in value, so does your tax bill. Some counties reassess values annually, so your payment could creep up even if you haven’t done a thing to the house.
Homeowners Insurance: More Expensive Than You Think
Because of Texas weather—think hurricanes, tornadoes, hail, and flooding—insurance companies charge more here than in a lot of other states. Home insurance in Texas can run between $1,800 and $3,500 per year, depending on your location.
If you’re near the coast, don’t be surprised if you have to buy extra windstorm insurance too. And flood insurance? That’s separate if you’re in a high-risk area.
Surprise Maintenance & Repairs
Home inspections help catch big issues, but they don’t predict what will break next. Texas heat is brutal on HVAC systems, which can cost $5,000-$12,000 to replace. Roof repairs? Easily $8,000+ if a storm rolls through.
Expect to spend 1% – 4% of your home’s value per year on maintenance and repairs. That means for a $350,000 home, you could need $3,500 to $14,000 annually just to keep things running.
Don’t Forget These Extra Costs
- Utilities – Texas summers mean sky-high electric bills. Cooling a 2,000 sq. ft. home can run $200-$400 per month.
- Lawn Care & Landscaping – A healthy Texas lawn needs watering, mowing, and maintenance. If you hire help, that’s $100+ per month.
- Pest Control – Texas-sized bugs and rodents aren’t fun. A pest control plan costs around $40-$75 per month.
- Moving Costs – Hiring movers, renting a truck, or even just buying boxes adds up fast.
FAQs
How much should I budget for closing costs in Texas?
Expect to spend around 2% to 5% of your home’s purchase price on closing costs. On a $300,000 home, that’s $6,000-$15,000.
Why are property taxes so high in Texas?
Since Texas doesn’t have a state income tax, it leans heavily on property taxes to fund schools, infrastructure, and public services.
Is flood insurance required if I buy a home in Texas?
Not always, but if your home is in a high-risk flood zone, your lender will require it. Even if it’s optional, consider it—one bad storm can cause tens of thousands in damage.
How much does homeowners insurance cost in Texas?
Most Texans pay between $1,800 and $3,500 per year, but that number jumps if you need extra coverage for windstorms or flooding.
What should I know before buying a home in Texas?
Besides mortgage payments, plan for property taxes, home insurance, maintenance, and unexpected expenses. Factor in these hidden costs so you’re not caught off guard.
