Hidden Issues

When buying a home in Texas, many borrowers focus on the purchase price and monthly mortgage payment. But what often goes unnoticed are the hidden costs that significantly affect your budget. These expenses can catch homebuyers off guard, especially in high-demand markets like Dallas, Houston, Austin, and San Antonio.

LBC Capital ensures you’re fully prepared by identifying every potential financial factor. Here are five hidden costs every Texas homebuyer needs to understand—and how LBC Capital helps you navigate them without stress.

1. Homeowners Insurance Is Increasing Rapidly

Why Texas Has Some of the Highest Rates

Texas ranks among the most expensive states for homeowners insurance. In 2024, premiums rose nearly 19%, following a 21% jump the year before. Factors like hurricanes, hail, and wildfires are driving these increases. But there’s another reason prices keep climbing—tariffs.

Tariffs on imported building materials such as Canadian lumber, steel, and aluminum are raising replacement and repair costs. Insurance companies pass this increased risk onto homeowners in the form of higher premiums. By the end of 2025, average Texas premiums are expected to hit $6,700 or more per year.

How LBC Capital Helps

LBC Capital provides personalized insurance planning based on your property location, weather risk, and construction details. We work with reputable insurance providers to ensure you get competitive premiums that reflect your unique situation. More importantly, we build your premium projections into your loan strategy, so there are no budget shocks down the road.

2. Mortgage Insurance Adds Hundreds to Your Payment

Understanding PMI and FHA MIP

If your down payment is less than 20%, you’re likely required to pay Private Mortgage Insurance (PMI). For Texas buyers, PMI can range from 0.25% to 2.25% of the loan amount per year. This can easily translate to $200 to $400 or more per month on top of your mortgage payment.

Buyers using FHA loans pay an upfront 1.75% mortgage insurance premium (MIP) plus ongoing monthly premiums. While FHA loans allow lower credit scores and smaller down payments, the insurance cost adds up over time.

How LBC Capital Helps

LBC Capital analyzes your credit, down payment options, and loan type to reduce or eliminate mortgage insurance. We also guide you on how and when to remove PMI once your home equity increases. This long-term approach can save you thousands over the life of your loan.

3. Tariffs Drive Up Construction and Repair Costs

How Trade Policy Affects You—Even on Existing Homes

Tariffs are typically thought of in terms of global trade, but they directly affect Texas homebuyers. Tariffs on imported building materials have increased the cost of new homes by over $10,000 on average. Even if you’re buying an existing home, these tariffs push up the price of repairs and renovations.

Roof replacement, storm repairs, or even adding a patio can now cost significantly more due to higher lumber and metal prices. These added costs affect appraisals, insurance estimates, and overall affordability.

How LBC Capital Helps

LBC Capital evaluates the long-term repair and maintenance costs of the homes you’re considering. We include projected inflation from tariffs in our affordability models. If you’re buying a fixer-upper or planning upgrades, we ensure you’re not blindsided by inflated material costs or unrealistic contractor estimates.

4. Closing Costs and Escrow Requirements Surprise Many Buyers

What’s Included in Texas Closing Costs

In Texas, closing costs typically range from 2% to 5% of the purchase price. On a $350,000 home, that could be anywhere from $7,000 to $17,500. These fees cover:

  • Loan origination charges
  • Appraisal and inspection
  • Title insurance
  • Survey and document fees
  • Prepaid property taxes and homeowners insurance

In addition, most lenders require you to fund an escrow account, which covers several months of insurance and property taxes in advance. This upfront cash requirement often surprises buyers.

How LBC Capital Helps

LBC Capital reviews your Loan Estimate and Closing Disclosure line by line. We help you understand each fee, explore potential lender credits or seller concessions, and minimize your out-of-pocket expenses. We also forecast your escrow contributions to give you a full picture of your monthly and upfront costs.

5. Property Taxes and HOA Fees Add Long-Term Expenses

High Texas Property Taxes

Texas has no state income tax, but it makes up for this with some of the highest property taxes in the country. Depending on your location, you could pay over 2% of your home’s value per year. On a $300,000 home, that’s at least $6,000 annually or $500 monthly, added to your mortgage payment.

In new developments or suburbs, many homes also fall within Municipal Utility Districts (MUDs) or have HOA dues. These can cost anywhere from $300 to over $2,000 per year. Some properties even have private transfer fees due at resale—often buried in HOA or deed documents.

Real-Life Example: The True Cost of a Texas Home

Let’s say you’re buying a $350,000 home in the Dallas-Fort Worth area with a 10% down payment. Here’s what your real monthly and upfront costs might look like:

  • Principal & Interest (5.5% rate): $1,784/month
  • Homeowners Insurance: $583/month
  • PMI (1% annually): $263/month
  • Property Taxes (2%): $583/month
  • HOA Fees: $25/month
  • Escrow & Closing Costs (3.5%): ~$12,250 upfront
  • Tariff Impact on Maintenance & Insurance: +$5,000 risk buffer

Your all-in monthly housing cost: $3,238/month, nearly double your mortgage payment alone.

Why Choose LBC Capital?

Trusted Mortgage Advisors for Texas Buyers

LBC Capital offers more than just mortgage approvals. We offer total cost forecasting, factoring in PMI, insurance, escrow, HOA dues, tariffs, and taxes—so you have no surprises after closing.

LBC Capital provides personalized solutions based on your credit, budget, and goals. From first-time buyers to seasoned investors, we help you make smarter decisions that reduce risk and save money.

LBC Capital ensures you get the full picture—not just your interest rate. We’re your financial advocate every step of the way.

Tips to Minimize Hidden Costs

Smart Moves That Save Thousands

  • Put down 20% to eliminate PMI.
  • Improve credit to get better insurance and mortgage rates.
  • Bundle insurance to reduce premiums.
  • Negotiate closing costs with seller or lender.
  • Choose areas with lower taxes or avoid MUDs and extra assessments.
  • Read HOA rules before making an offer.

LBC Capital guides you through each of these strategies, customizing them to your buying profile.

Final Thoughts: Get Clarity with LBC Capital

The cost of homeownership in Texas goes far beyond the loan. Insurance, taxes, tariffs, PMI, and fees can add thousands to your monthly and yearly expenses.

But with the right guidance, you can plan ahead and stay in control. LBC Capital helps you identify every hidden cost, compare loan types, and build a mortgage strategy that protects your budget now—and in the future.