When buyers think about buying a home, they tend to focus on the purchase price.  That’s the biggest expense, of course, but it’s not the full picture of the real estate costs you’ll incur with your home purchase.  There are two categories of costs to include in your house hunting budget:  (1) costs you pay before closing, and (2) costs you pay at closing.  It’s important to know what you might have to pay for, so you can work it into your budget ahead of time. Let’s break it down so you have a full understanding of the costs coming your way.

Many of these fees and costs are negotiable, but the level of negotiability will likely vary depending on market conditions and the level of competition for the particular property.  Here’s a rough outline of those costs for your planning purposes. 

BEFORE CLOSING

Once your offer to purchase a home is accepted, you can expect to immediately pay out of pocket for certain expenses related to your purchase.  Some of these expenses are sunk costs that you are spending while you engage in your due diligence to make sure this is the right home, while others will be applied at closing. As you move through the process we will make sure you understand these expenses and where the money is going.

Earnest money —   This money is a pre-paid cost sent to the title company where it is held until closing or cancellation of the contract. The amount of earnest money applies toward your down payment/closing costs if the deal closes.  However, you may forfeit this money if you back out of your home purchase without a valid contingency. Earnest money in Austin is typically 1% of the purchase price.

Option money — Usually $200 - $1,000 paid to secure an "option period" (typically 7–10 days) during which you conduct your due diligence (inspections) and can back out of the purchase contract for any reason at all. This fee is non-refundable if you cancel the contract, but if you move forward it is credited toward closing.  This amount is negotiable and highly variable depending on market conditions at the time of your purchase.

Home inspection — You want to make sure you understand that condition of the home you are buying, and a home inspection will evaluate your mechanicals, basic plumbing functionality, and more.  In Austin it costs around $300 - $600 for a standard home inspection. Plan to add $100–$300 each for specialty inspections like wood destroying insects. 

Sewer scope — A sewer scope is a camera inspection of a home's main sewer line that runs underground from the house to the city sewer line that shows the condition of the pipe from the inside. Given the prevalence of cast iron pipe in older Austin homes and the costs associated with replacing or repairing those lines, it is a good investment of $600 – $1,000 to have a sewer scope done.

Appraisal — Your lender wants to make sure the amount you are financing is supported by the value of the property, so they will require that the property be appraised by a licensed appraiser.  The appraisal may cost $500 - $1,000. This is sometimes paid upfront, or sometimes rolled into closing costs.

AT CLOSING

If you move forward with your purchase contract, you can expect to pay additional fees at closing. These fees will show up on your settlement statement at closing, but the long list of charges can be overwhelming when you see them for the first time. Here’s what to expect.

Down payment — Depending on your loan type you can expect to pay 3 - 20% of the purchase price as a down payment.  The earnest money you paid when your offer was accepted gets applied to the down payment.

Lender fees — The lender will charge a variety of fees including origination fees to cover the processing costs, underwriting, and a credit report fee.  These costs typically range from $1,000 - $2,500 or around 1% of the total mortgage.

Title insurance — While negotiable, the seller typically pays for the owner's policy, but the buyer usually pays for the lender's policy (~$400 - $700). This fee covers the title search, title examination, document preparation, and insurance.

Escrow setup — Lenders usually collect 2–3 months of property taxes beyond what’s already been paid for the year, plus one year of homeowner's insurance upfront.  This is used to ‘seed’ or fund your escrow account which will be used to pay for future property taxes and insurance.

Property Mortgage Insurance (PMI) — If your down payment is under 20% you may be required to pay PMI to cover the lender in case you fail to make payments.  Once you reach 20% equity in your home you can apply to have this removed.

Prepaid Interest — This fee covers your interest from the closing date to your first mortgage payment.  Because of that, the fee tends to be higher if you close early in the month.

HOA fees — If applicable, some HOAs charge transfer fees or require prepaid dues at closing.

Survey — This is another negotiable cost addressed in the purchase contract.  If a new survey is required by the lender, you can expect to pay $400 - $700, or maybe $1,000 if the home is priced over $1,000,000.  

Professional services — Your real estate agent will also be paid for their professional services at closing.  The amount of this fee and who is responsible for making the payment will depend on what you agreed to in your Buyer Representation Agreement and what was included in your purchase contract for your new home.

Recording fees & transfer taxes — These are government charges for recording the deed and transferring ownership in the property.

AFTER CLOSING

Closing day may feel like the end of your purchase, but there are also costs that come along with moving into your new home.  Be sure to account for moving expenses, any utility connection charges, and immediate repair or maintenance costs to address items discovered during your inspection.  You may also want to consider any redecorating or renovating costs, furniture purchases, and so on.

BE PREPARED FOR THE FULL SCOPE OF REAL ESTATE FEES WHEN BUYING YOUR HOME

Buying a home in Austin is one of the most exciting financial decisions you'll ever make, but it comes with a lot of line items that can catch you off guard if you're not prepared. Between earnest money, the option fee, inspections, appraisals, and closing costs, it's easy to feel like the fees never stop.

The good news? None of this has to be a mystery. When you understand what each cost is for and when it's due, you can walk into the process with confidence instead of anxiety. If any part of the budget feels unclear — whether it's how escrow works, what you're actually paying at closing, or why a sewer scope is worth every penny — don't hesitate to ask. We will walk you through every dollar, so there are no surprises on closing day.

May 2026