Buying a home in McAllen and unsure how much cash you’ll need on closing day? You’re not alone. Closing costs can feel like a mystery, especially if it’s your first purchase. The good news is Texas customs often lower what buyers pay out of pocket, and you can plan your budget with a few simple rules.
In this guide, you’ll learn what closing costs include, who typically pays what in Texas, how much to budget in McAllen, and smart ways to save. You’ll also see local tips for Hidalgo County. Let’s dive in.
Closing costs at a glance
You should plan for total buyer closing costs and prepaids of about 2% to 5% of the purchase price. This range reflects national guidance, and Texas customs often put McAllen buyers toward the lower end because sellers commonly cover the owner’s title policy. To get your numbers early, review your lender’s Loan Estimate and your final Closing Disclosure before you sign.
- See what appears on a Loan Estimate from the Consumer Financial Protection Bureau.
- Review the Closing Disclosure timeline and details in the CFPB explainer.
How much to budget in McAllen
Use quick math to set expectations:
- $200,000 home: 2%–5% equals $4,000–$10,000 in closing costs and prepaids.
- $350,000 home: 2%–5% equals $7,000–$17,500.
Your exact total will depend on loan type, lender fees, escrow amounts for property taxes and insurance, title fee splits, and any seller concessions negotiated in your contract.
Who pays what in Texas
Customs vary by transaction, but here is common practice in McAllen and across Texas:
- Seller typically pays:
- Owner’s title insurance policy premium
- Some title or transfer-related fees per contract
- Any agreed repairs or seller concessions
- Buyer typically pays:
- Loan origination, underwriting, and any discount points
- Appraisal and credit report
- Lender’s title insurance policy
- Closing or escrow fee to the title company (often buyer, but negotiable)
- Inspections and survey if required
- Prepaid homeowner’s insurance and escrow deposits for taxes and insurance
- Recording fees for the mortgage
Many items are negotiable. Your contract can shift fees, and seller credits can offset your closing costs within your loan program’s limits.
Line items you may see
Loan fees and points
These are costs from your lender to approve and fund your mortgage.
- Origination, processing, underwriting: usually 0.5% to 1% of the loan amount, or a flat $500–$2,000 depending on lender.
- Discount points: optional prepaid interest to reduce your rate. One point equals 1% of the loan amount.
- Appraisal: typically $450–$800+ depending on property.
- Credit report, flood determination, tax service: small administrative charges, often $25–$200 each.
Compare written Loan Estimates from multiple lenders to evaluate fees and interest rates side by side.
Title and closing fees
Texas uses title companies to examine title, issue title insurance, and conduct closings. Premiums for title insurance are regulated by the state.
- Owner’s title insurance policy: protects your ownership. In Texas, the seller usually pays this premium, but it is negotiable. For rate basics and how premiums are set, review the Texas Department of Insurance title insurance page.
- Lender’s (mortgagee) title policy: protects the lender and is typically paid by the buyer.
- Title exam, endorsements, closing or escrow fee, courier/notary: custom varies; combined these often total several hundred dollars to over $1,000. Contracts can split these.
- Recording fees: paid to the county clerk to record the deed and your mortgage. These are modest and usually under $200 in total, depending on documents.
Inspections and survey
Inspections help you understand the property’s condition and any required repairs.
- Home inspection: commonly $300–$600 for a single-family home.
- Termite/Wood Destroying Insect (WDI) inspection: often $50–$150.
- Survey or survey update: $300–$1,000+, depending on lot size and complexity, and whether the seller can provide a recent acceptable survey.
Prepaids and escrows
Lenders often require upfront funding for insurance and property tax escrows.
- Homeowner’s insurance: lenders typically want the first year’s premium paid at closing. South Texas policies may reflect wind and hail exposure.
- Property tax escrows: expect 2–6 months of property taxes collected to start your escrow account, depending on timing and lender policy.
- Mortgage insurance: if applicable. Conventional loans may require PMI; FHA loans include an upfront mortgage insurance premium unless financed.
To estimate taxes for a specific McAllen property and see exemption info, check the Hidalgo County Appraisal District.
HOA and local fees
If the home is in a community association, there may be transfer or document fees.
- HOA transfer or estoppel fees: often $100–$500+, assignment varies by HOA rules and contract.
- Capital contributions or reserves: sometimes collected at closing per HOA policy.
- Special districts or assessments: Municipal Utility Districts (MUDs) or other districts may affect your tax rate or charge transfer fees; confirm with the title company.
Transfer taxes in Texas
Texas does not charge a state real estate transfer tax, and local transfer taxes are generally not imposed. You will not see a state transfer tax line item in Texas closings.
McAllen and Hidalgo County specifics
A few local checks can prevent surprises and help you budget accurately.
- Property taxes and exemptions: Multiple taxing entities contribute to the bill. Use the Hidalgo County Appraisal District to review values, estimated taxes, and homestead exemption details. Applying for a homestead exemption after closing can reduce future tax liability if you occupy the home as your primary residence.
- Flood risk and insurance: Parts of Hidalgo County have flood-prone areas. Lenders will order a flood determination. If the property is in a Special Flood Hazard Area, flood insurance will be required for federally backed loans. You can look up flood zones for an address via the FEMA Flood Map Service Center and compare coverage options.
- Recording and title practices: Title companies in McAllen handle the closing and recording with the county clerk. Ask your title company for an itemized estimated settlement statement so you can review fees well before closing.
Ways to reduce your cash to close
You have several levers to lower the amount you bring to closing without risking your purchase.
- Negotiate seller credits: Request a seller concession to cover some of your closing costs. Your loan program will cap the maximum credit, so confirm limits with your lender.
- Shop lenders: Compare interest rates and fee structures. Ask for written Loan Estimates and evaluate total cost, not just the rate.
- Be strategic with points: Pay discount points only if you plan to keep the loan long enough to break even on the upfront cost.
- Time your closing: The timing of your closing affects prepaid interest and the number of months collected for taxes. Ask your lender how the calendar impacts your estimate.
- Leverage existing survey: If the seller has a recent acceptable survey, providing it may avoid the cost of a new one.
Timeline and what to expect
A smooth closing comes from clear steps and early document review.
- Within 3 business days of application: Your lender must send a Loan Estimate that outlines expected closing costs. See the CFPB overview of the Loan Estimate.
- 2 to 4 weeks typical: Appraisal and underwriting occur, and you complete inspections and negotiate any repairs or credits.
- At least 3 business days before closing: You must receive the final Closing Disclosure that lists your exact cash to close. Review every line with your lender and title company.
- Day of closing: Bring a cashier’s check or arrange a secure wire for the exact amount shown on the Closing Disclosure. Confirm wire instructions directly with the title company.
Example budgets for quick planning
Here is a simple way to think about totals before you get quotes:
- Entry-level home around $200,000: Plan for $4,000–$10,000 in closing costs and prepaids.
- Mid-market home around $350,000: Plan for $7,000–$17,500.
Your final amount will reflect your loan program, lender pricing, HOA or survey needs, escrow timing, and whether the seller provides credits or covers certain fees.
Ready to buy with confidence in McAllen?
When you understand closing costs, you can shop with a clear budget and negotiate from a stronger position. If you want a local, marketing-savvy guide who knows Hidalgo County contracts, title practices, and builder processes, connect with Mauricio Saldana. He’ll help you compare lender quotes, structure your offer to reduce cash to close, and move from offer to keys with confidence.
FAQs
McAllen buyer closing costs: how much should I budget?
- Plan for about 2% to 5% of the purchase price for closing costs and prepaids, then refine with your lender’s Loan Estimate and your title company’s fee quote.
Texas title insurance: who pays the owner’s policy?
- In Texas, the seller usually pays the owner’s title insurance premium, but it is negotiable and should be confirmed in your purchase contract.
Texas transfer taxes: will I pay any at closing?
- Texas does not charge a state real estate transfer tax, and local transfer taxes are generally not imposed, so you should not see a state transfer tax line.
Taxes and insurance escrow: will my lender require it?
- Many lenders require escrows, which means you will prepay several months of property taxes and the first year of homeowner’s insurance at closing.
Flood insurance in McAllen: how do I know if I need it?
- If the property is in a Special Flood Hazard Area and your loan is federally backed, flood insurance will be required; check the FEMA Flood Map Service Center and ask your lender early.
