What Are the Upfront Costs of Buying a Home in El Paso?
What are the four upfront costs?
| Cost | Typical amount | When it is due | Do you get it back? |
|---|---|---|---|
| Earnest money | Up to 1% of the price | Within 3 days | Credited to you at closing |
| Option fee | About $100 | Within 3 days | Credited to you at closing |
| Home inspection | From about $500 | First week | No |
| Appraisal | About $600 | First two weeks | No, but sometimes the lender covers it |
Read that last column carefully, because it is the whole point of this page. Two of these come back to you. Two of them are spent the moment you write the check, whether you end up owning the house or not.
When are you actually under contract?
Not when you make an offer. Not when the seller says yes over the phone.
You are under contract when you and the seller have both signed and agreed to every term. That moment is called execution, and every clock in this article starts there.
This matters more than it sounds like it does. People start counting days from the wrong moment constantly, and every deadline in the contract runs off the right one.
What is earnest money, and how much is it in El Paso?
Earnest money is the deposit that shows the seller you are serious. It is due within three days of execution.
How much depends on your price range, and the highest you should expect is about one percent of the sale price. On a $200,000 home that is around $2,000. On a $300,000 home, somewhere in the $2,000 to $3,000 range.
The higher the deposit, the more serious the seller reads you as being. That is the actual function of it. If you are competing against other offers, this is one of the handful of things besides price that a seller notices.
Where does your earnest money actually go?
Not to the seller. This is the part almost nobody understands.
Your deposit goes to the title company, which is a neutral third party in the transaction. They hold it in an escrow account, and that account does not earn interest for anybody. The seller cannot touch it. You cannot touch it. It sits there until the deal closes or dies.
And here is a detail people get wrong: at closing you do not get a check back. Your earnest money is applied toward what you owe at the closing table. Same with your option fee. The money comes back to you, just as a credit rather than a refund.
When do you get your earnest money back, and when do you lose it?
You get it back when you terminate properly, using an exit that is actually in your contract. You risk losing it when you walk away without one, which is called being in default.
People call these exits loopholes. They are not loopholes. They are outs you negotiated on purpose before you signed, and every one of them has a deadline attached.
Your option period. The unconditional one. Terminate for any reason inside that window and your earnest money comes back. Full details in the Texas option period guide.
Your financing contingency. If you are denied financing inside the number of days you negotiated for third party financing, you can terminate and your earnest money comes back.
Title objections. When the title commitment and survey come in, you get a negotiated number of days to object to what is in them. Object inside that window and you have an exit.
A late seller's disclosure. This one is separate from your option period and people constantly confuse the two. If the seller does not deliver the disclosure notice on time, you get your own window after you finally receive it to terminate. It is a different right with a different clock.
The pattern across all four is the same: the exit exists, and it expires. A contingency you did not use in time is a contingency you did not have.
What is the option fee, and why is it only $100?
The option fee is what you pay the seller for the right to change your mind. In El Paso it is commonly around $100.
Do not offer more than that trying to strengthen your offer. It does not work. Sellers are not focused on the option fee, they are focused on the earnest money deposit. If you want to signal you are serious with money, put it in the deposit where somebody will actually notice.
And unlike your earnest money, the option fee does not come back if you terminate. The seller keeps it. That is not a penalty, that is the price of the option. You bought the right to walk away and you used it.
What does a home inspection cost in El Paso?
Inspections start around $500, and it goes up from there depending on the size of the home and what you add to it.
You do not get this money back. Ever. Not if you close, not if you terminate, not if the seller turns out to be hiding something. You are paying a professional for a day of their work and a report, and you get the report either way.
You are also not required to get one. Nobody will make you.
Get one anyway. Skipping the inspection to save $500 on a $300,000 purchase is like declining the pre-flight check because you are in a hurry to take off.
What does the appraisal cost, and can you avoid paying it upfront?
Around $600. This is money you pay so your lender can order an appraisal, which is an independent opinion of what the home is actually worth.
Sometimes you do not pay this out of pocket at all. Depending on the lender, it gets covered by them or moved to the back end and rolled into your closing costs. It is worth asking your lender directly which one they do, because it changes what you need available in week two by six hundred dollars.
Does the price of the home change the appraisal cost? Slightly. The appraisal price does move a little with price point, but very minimally. A more expensive home does not mean a dramatically more expensive appraisal.
More on what happens when an appraisal comes back lower than your purchase price in the appraisal guide.
What changes on new construction?
Most of these four costs work the same when you are building instead of buying a resale home, with one big difference and one smaller one.
The cost you do not have is the option fee. There is no option fee on new construction at all, because there is no resale seller to negotiate the option period with.
Your deposit works differently too. On new construction your earnest money can be as low as $500, and it typically caps around $3,000. If you are going fully custom, expect about a 5 percent deposit instead.
The inspection and the appraisal still apply, and they still come out of your account whether you close or not. If you are weighing building against buying, the full new construction guide walks through the rest of the process, and here is how to pick a builder.
So how much do you need in the first two weeks?
On a $300,000 home in El Paso, roughly:
| Earnest money | $2,000 to $3,000 |
| Option fee | $100 |
| Inspection | $500 |
| Appraisal | $600 |
| Total out of pocket | about $3,200 to $4,200 |
| Actually gone no matter what | about $1,100 |
That second number is the one to plan around. Everything else comes back to you as a credit at closing. The inspection and the appraisal are the cost of finding out whether this is the right house, and they are spent whether the answer is yes or no.
Which is the honest way to think about it. Eleven hundred dollars to learn the truth about a three hundred thousand dollar decision is not an expense. It is the cheapest part of the whole transaction.
FAQ
How much money do you need upfront to buy a house in El Paso?
Roughly $3,200 to $4,200 on a $300,000 home, spread across the first two weeks after you go under contract. That is earnest money, the option fee, your inspection and the appraisal. About $1,100 of it is spent for good. The rest is credited back to you at closing.
How much is earnest money in Texas?
It depends on the price range, and the most you should expect is about one percent of the sale price. On a $200,000 home that is around $2,000. It is due within three days of execution.
Who holds the earnest money?
The title company, which is a neutral third party. It sits in an escrow account that does not earn interest for anyone, and neither you nor the seller can touch it until the deal closes or terminates.
Do you get earnest money back?
Yes, if you terminate using an exit that is actually in your contract and you do it before that exit expires. If you walk away without one, you are in default and your deposit is at risk. At closing you do not get a refund check, it is credited toward what you owe.
Do you get the option fee back?
It is credited to you at closing if you buy the home. If you terminate, the seller keeps it. That fee is what you paid for the right to change your mind.
Should I offer more than $100 in option money to make my offer stronger?
No. Sellers do not weigh the option fee much. They look at the earnest money deposit. If you want to signal you are serious, put the money there instead.
Can I skip the home inspection?
You can. You should not. It is around $500 on a purchase that will cost you hundreds of thousands, and it is the only chance you get to find out what is actually wrong with the house while you can still walk away.
Does the lender pay for the appraisal?
Sometimes. Depending on the lender it is covered, or moved to the back end and rolled into closing costs. Ask yours directly, because it is a six hundred dollar difference in what you need available.
Amounts shown are typical El Paso figures and will not match every transaction. The contingencies described here are general, and yours are whatever your executed contract actually says, with whatever deadlines you negotiated. This is not legal, tax, or lending advice. Read your contract and take questions to your broker or an attorney. The promulgated contract forms are published by the Texas Real Estate Commission at trec.texas.gov.