Are closing costs the last mystery in your Katy home budget? You are not alone. Many buyers focus on the down payment and are surprised by the separate fees due at closing. You can plan with confidence once you know what these costs include, what is typical in Katy, and how to read your lender and title company estimates. This guide breaks down each line item, shows local factors that change amounts, and includes a clear $400,000 example you can use as a benchmark. Let’s dive in.
What closing costs include
Closing costs are the non–down payment fees and prepaid items you pay at settlement. They usually include lender fees, title and escrow fees, third party reports like appraisal and inspections, prepaid taxes and insurance, HOA-related charges, and county recording fees.
Most buyers in Katy see totals in the range of about 2% to 5% of the purchase price, not counting the down payment. Lower totals are possible if you receive lender credits, negotiate seller concessions, or buy with cash. Your lender must provide a Loan Estimate within three business days of application and a Closing Disclosure at least three business days before closing so you can review the actual itemized numbers.
Katy buyer cost categories
Lender costs
- Origination or application fee. Often 0.25% to 1.0% of the loan amount or a flat fee. Sometimes offset with lender credits.
- Discount points. Optional prepaid interest to lower your rate. One point equals 1% of the loan amount.
- Appraisal. Commonly about $400 to $800 in the Houston and Katy area. Rush orders can cost more.
- Credit, underwriting, processing. Usually modest administrative fees.
- Mortgage insurance. May apply for low down payment loans or specific programs, either paid upfront, monthly, or financed per program rules.
Local note: Loan program choice in Katy, such as conventional, FHA, VA, or USDA, changes insurance and prepaid requirements.
Title, escrow, recording
- Title search and examination. Verifies ownership and existing liens.
- Lender’s title policy. Typically required when you finance a purchase, usually paid by the buyer.
- Owner’s title policy. In Texas it is common for the seller to pay for the owner’s policy, but this is negotiable and can vary by county and market conditions.
- Closing or escrow fee. Charged by the title company for handling the settlement.
- Recording fees. Statutory county clerk fees for recording the deed and mortgage. Amounts vary by county and the number of pages.
Local note: Parts of Katy fall in Fort Bend County and parts in Harris County. Recording fees and some title practices can differ slightly by county, so confirm which county your property is in.
Prepaids and escrow reserves
- Property tax proration. Taxes are billed annually in Texas and collected in arrears. At closing you pay your share from the closing date to year end. The seller covers the prior portion.
- Homeowners insurance. Lenders usually require you to pay the first year’s premium at or before closing.
- Prepaid mortgage interest. Interest from the funding date to the first payment date.
- Initial escrow deposit. Many lenders collect a few months of taxes and insurance to start your escrow account, within federal limits.
Local note: Combined tax rates vary across Katy due to county, school district, and MUD boundaries. Properties in MUDs often have higher annual tax obligations, which affect your proration and escrow.
HOA and community fees
- HOA transfer or estoppel fee. Many Katy subdivisions charge a resale or statement of account fee, often around a few hundred dollars, but each association sets its own amount.
- Prorated HOA dues. You may owe your share from closing through the next billing cycle.
- MUD and utility district items. Some properties have additional prorations or payoff requirements tied to utility districts.
Local note: Katy has many deed-restricted and master planned communities. Ask for HOA fees and turnaround times early since some associations need several weeks to produce documents.
Inspections and third party reports
- Home inspection. Often about $300 to $700 depending on size and age of the home.
- WDI or pest inspection. Commonly required by lenders in Texas and usually modest in cost.
- Survey. If a recent acceptable survey is not available, budget several hundred dollars for a new one. Cost depends on lot size and complexity.
- Flood certification and specialty inspections. Small flood zone determination fee, plus optional or lender-required specialty checks such as roof, pool, or septic.
Katy specifics to watch
- No state transfer tax. Texas does not charge a state real estate transfer tax, which helps keep closing costs down compared with some other states.
- Property tax environment. Total tax rates vary by county, school district, and any MUD or special district. Expect a tax proration at closing and an initial escrow deposit for taxes if you finance the purchase.
- County recording differences. Fort Bend and Harris counties set their own clerk fee schedules, so recording totals can vary.
- Title insurance practice. It is common for sellers to pay the owner’s policy in Texas, but it is negotiable. Confirm custom for your contract.
- HOA prevalence. Many Katy neighborhoods have HOAs with transfer packages and required estoppels. Ordering late can delay closing.
Sample estimate for a $400,000 Katy home
The numbers below are illustrative and rounded. Your Loan Estimate and Closing Disclosure will show exact amounts for your property and loan.
Assumptions:
- Purchase price: $400,000
- Down payment: 20% ($80,000) with a conventional loan
- Loan amount: $320,000
- Closing in about 30 days
- Annual property taxes for illustration: 2.5% of value ($10,000 per year)
- Homeowners insurance premium: $1,200 for the first year
- Lender collects two months of taxes and insurance for initial escrow
- Buyer pays lender’s title policy and closing fee, seller pays owner’s policy
Illustrative buyer costs at closing:
- Lender origination and processing: $1,600
- Appraisal: $550
- Credit and underwriting admin: $150
- Lender’s title policy and title search: $1,200
- Closing or escrow fee: $450
- County recording fees: $150
- Home inspection: $450
- Pest or WDI inspection: $100
- Survey if needed: $600
- HOA transfer or estoppel fee: $200
- Prepaid homeowners insurance, first year: $1,200
- Property tax proration, buyer share for remainder of year: $4,167
- Prepaid interest, funding to first payment: $250
- Initial escrow deposit for taxes and insurance: $1,867
- Miscellaneous, such as courier or wire: $150
Illustrative total due at closing: about $12,452.
That equals roughly 3.1% of the purchase price. If the seller provides concessions or a recent acceptable survey is available, your out of pocket could be lower. If you put less than 20% down, buy discount points, or the property has higher taxes or assessments, your total could be higher.
Smart questions to ask
Ask your lender for a detailed Loan Estimate early and request clarity on:
- Origination fees, discount points, and which fees are negotiable.
- Estimated prepaid taxes, homeowners insurance, and initial escrow deposit.
Ask the title company to confirm:
- Lender’s title policy cost and whether seller customarily pays the owner’s policy for your county.
- County clerk recording fee estimates for Fort Bend or Harris, depending on the property.
- HOA transfer or estoppel fee amount and expected delivery time.
Ask the HOA or management company:
- Current year’s assessments, transfer or resale package fees, and proration rules.
As you approach closing:
- Request your Closing Disclosure at least three business days before settlement and compare it to your Loan Estimate.
- If the property is in a MUD or special utility district, request details on bonds, assessments, and special taxes.
- If you are using FHA, VA, or another program, confirm program specific fees and seller concession limits.
Common surprises and how to plan
- Escrow cushion. Lenders may require a cushion within federal limits, which increases your initial deposit.
- Survey or title exceptions. Boundary or title issues can add time and cost to resolve.
- Seller credits and caps. Seller paid costs are negotiable, but loan programs limit how much the seller can contribute.
- Timing issues. Last minute adjustments for HOA dues or tax changes can affect your final total. Review your Closing Disclosure early and ask questions right away.
How to reduce out of pocket
- Compare at least two lender quotes, including rates, points, and lender credits.
- Ask about no point options versus buying points to lower your rate.
- Negotiate seller credits in your offer where market conditions allow.
- Confirm whether a prior acceptable survey exists to avoid ordering a new one.
- Shop homeowners insurance and confirm any discounts you qualify for.
Your next step
You do not need to guess. Get a property specific worksheet that reflects the correct county, HOA, and tax district for your target home in Katy. For a tailored estimate and step by step guidance from first tour to funding, connect with Lauren Patton.
FAQs
What are typical buyer closing costs in Katy, Texas?
- Most buyers see totals around 2% to 5% of the purchase price, excluding the down payment, with exact amounts based on the loan, taxes, HOA fees, and escrow requirements.
Do Texas buyers pay a real estate transfer tax at closing?
- No, Texas does not charge a state real estate transfer tax, which helps reduce total closing costs compared with some other states.
Who pays for the owner’s title insurance policy in Katy?
- It is common in Texas for the seller to pay the owner’s title policy, but it is negotiable and can vary by county and contract.
How do property taxes affect my closing costs in Katy?
- You pay a prorated share of the current year’s taxes at closing and usually deposit a few months of taxes into escrow, which depends on the home’s tax rate and your lender’s requirements.
What inspections should I budget for as a Katy buyer?
- Plan for a general home inspection, a pest or WDI inspection, and possibly a survey or specialty inspections such as roof or pool if needed.
When will I see my exact closing numbers?
- Your lender provides a Loan Estimate within three business days of application and a final Closing Disclosure at least three business days before closing for review.
