Buying new construction in Texas

Little to pay at closing

Texas charges no transfer tax on the sale of a home, and since 2015 its constitution (Article VIII, section 29, opens in a new tab) has barred new ones. There is no state income tax either. The largest closing cost is usually title insurance, and its premium is set by the Texas Department of Insurance, so a policy of the same amount costs the same from any title company. The contract says who pays for it.

Expect escrow and recording fees, lender charges if you borrow and, in many new neighborhoods and buildings, a payment to the owners’ association at closing. A finished condominium bought from its developer also comes with the information statement and escrow described in our pre-construction guide.

Property tax carries the weight

Texas pays for local government through property tax, set each year by the county, the city, the school district and any special district, on the value the appraisal district assigns. That value is fixed as of January 1, so a house finished during the year may carry only part of its value on that year’s bill. Budget for the next one on the finished house.

If the home is your primary residence, apply for the homestead exemption. Since voters approved it in November 2025 (FOX 4 Dallas–Fort Worth, opens in a new tab), it takes $140,000 off the value for school district taxes. From the January after your first year with the exemption, the appraised value of the home can rise no more than 10 percent a year under section 23.23 of the Tax Code (opens in a new tab).

Many new neighborhoods, around Houston above all, lie in a municipal utility district, which borrows to build water, sewer and drainage and repays the debt through its own property tax. Under section 49.452 of the Water Code (opens in a new tab), the seller must give you a written notice of the district and its tax rate. Add that rate to the others before you compare prices.

What the builder owes you

Texas has no statute that sets warranty periods for a new home. Its courts read two warranties into the sale of a new house: that it was built in a good and workmanlike manner, and that it is fit to live in. In Centex Homes v. Buecher (2002), the Texas Supreme Court held that a builder may replace the first with a contract that sets out how the work will be done and to what standard, but generally may not disclaim the second.

Most builders also give a written limited warranty, often one year for workmanship, two for the main systems and ten for the structure. Read what it covers, how a claim is made and what it says it replaces.

Before suing over a construction defect, the Residential Construction Liability Act, in chapter 27 of the Property Code (opens in a new tab), requires written notice to the builder at least 60 days ahead and gives the builder the chance to inspect and to offer a repair or a settlement. Keep dated records of every defect and every request.

Questions to ask before you sign

1. Who pays for the owner’s title policy, and who chooses the title company?
2. Is the home in a municipal utility district or another special district, and at what tax rate?
3. What will the tax bill be on the finished home, not the lot?
4. Which written warranty comes with the home, and what does it replace?
5. Will the home pass a final inspection before closing, and may my own inspector see it first?
6. What will I pay the owners’ association at closing and each month?

Why an advisor helps

A new home in Texas is often priced from the builder’s list, with incentives that come and go. A buyer’s advisor knows what builders have agreed to before, which taxes sit on top of the price and how this home compares with the ones around it. If you are weighing a new home or condominium in Dallas, Austin or Houston, we are glad to talk it through. 

General information only, not legal or tax advice. Texas law and local tax rates change, and every contract is different. Review your documents with a Texas real estate attorney before you sign.