Source content updated: September 14, 2026. General education, not individual legal, tax, lending, or insurance advice. Check the dates and status notes before making a decision.
01
Separate four different amounts
The down payment, closing costs, prepaid and escrow items, and cash to close have different purposes. Closing costs cover transaction and financing charges. Prepaid items and initial escrow funds address obligations such as insurance, interest, and taxes. Cash to close is the final calculation after applicable deposits, credits, and adjustments.
Do not simply add every payment you have ever made to the down payment. Review the lender’s Loan Estimate and later Closing Disclosure, and check whether a previously paid amount is credited. Retain additional reserves for moving, maintenance, and costs outside the closing statement.
02
Track earnest money, option fee, and investigation costs
The source guide identifies TREC resale contract Form 20-19, effective July 1, 2026. It generally requires the stated earnest money and option fee to be delivered to the escrow agent within three days after the effective date, subject to the actual contract’s deadline and extension provisions. Amounts are determined by agreement, not a standard fee.
Inspection, specialist investigation, appraisal, and survey-related expenses may be incurred before closing. Understand payment timing and whether an amount is refundable or credited if the transaction does not proceed. Do not assume every investigation expense is returned or included in final cash to close.
03
Compare loan costs with the rate
Review origination charges, points, appraisal and other lender items alongside interest rate, APR, loan type, term, and monthly payment. A point is generally one percent of the loan amount, not one percent of the home price. Consider how long you expect to keep the loan when evaluating an upfront rate buydown.
Compare Loan Estimates using the same purchase, down payment, timing, and loan assumptions. A lender credit can reduce upfront charges while affecting other terms. Do not treat a promotional rate as available to every borrower or count a credit twice. Confirm qualification and written restrictions with the lender.
04
Check title, taxes, insurance, and HOA by address
Texas title insurance rates are regulated, but who pays particular items is determined by the contract. A title company should calculate premiums and settlement charges using current rules and the specific transaction. Verify transfer instructions directly through a previously known official phone number.
Tax prorations, insurance prepayments, initial escrow, HOA transfer or resale documents, and possible PID or MUD obligations vary. A seller’s tax bill may reflect exemptions you do not qualify for, and a new home’s previous bill may reflect land rather than the completed structure. Review the actual address and obtain professional estimates.
05
Read builder incentives and the final disclosure
New-home deposits, upgrade payments, closing credits, and rate promotions may have builder-specific conditions. Check the selected home, lender, loan type, occupancy, deadlines, and allowed use of each credit. A seller or builder contribution does not mean all costs disappear.
Before closing, reconcile the Closing Disclosure with earlier estimates and ask about meaningful changes. Confirm the final amount and method of payment, keep a cash reserve after funding, and independently verify any wire instruction change. Only the actual final documents establish the required cash to close.
Your checklist
- Down payment versus costs, prepaids, and cash to close
- Contract amounts and deposit deadlines
- Inspection and appraisal payments before closing
- Comparable Loan Estimates
- Address-specific taxes, insurance, HOA, PID/MUD
- Final disclosure and verified funding instructions
Frequently asked questions
Are closing costs the down payment?
No. They serve different purposes, and cash to close includes applicable credits and adjustments.
Does a builder credit cover everything?
Check permitted uses, limits, qualification, and all written conditions.
Can I use the seller’s tax bill as my future bill?
Not without checking exemptions, assessed value, completed construction, and your own eligibility.
Official sources
- TREC: current contracts and forms
- CFPB: Loan Estimate
- CFPB: Closing Disclosure
- TDI: title insurance rates
- Texas Comptroller: property tax basics
Follow the linked official source for current rules and property-specific confirmation.
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