What title insurance costs, and which policy you need
Title insurance is bought at closing, and there are two kinds. Most lenders require you to buy a lender's title policy, which protects the amount they lend; an owner's policy, which protects you if someone later claims rights to the home from before your purchase, is optional. The CFPB adds that buying both from the same company usually costs less than buying them separately.[3]
| Lender's policy | Owner's policy | |
|---|---|---|
| Protects | The lender, up to the loan amount | You, up to the price you paid |
| Required? | By most lenders | Optional |
| Where it appears | Loan Estimate, section C (title services) | Loan Estimate, section H (optional) |
On the CFPB's sample Loan Estimate, a $180,000 purchase with a $162,000 loan shows a lender's title policy of $535 among the services you can shop for and an optional owner's policy of $1,017 under "other."[4] Shoppable title services can change between the Loan Estimate and closing within the tolerance rules, so compare your final figures.[5]
A state-set schedule: Texas title insurance rates
In Texas the premium is set by the state, not by each title company: the Texas Department of Insurance publishes the basic premium, and an owner's policy must be issued at that basic rate.[1][2] That makes Texas a rare place where title insurance cost can be calculated exactly from the policy amount. In states without a promulgated rate, title companies set their own premiums and quotes can differ, which is why the CFPB's toolkit encourages comparing providers for the services you can shop for.[6]
| Policy amount | Basic premium | With a simultaneous loan policy |
|---|---|---|
| $150,000 | $1,027 | $1,127 |
| $200,000 | $1,274 | $1,374 |
| $250,000 | $1,521 | $1,621 |
| $300,000 | $1,768 | $1,868 |
| $400,000 | $2,262 | $2,362 |
| $500,000 | $2,756 | $2,856 |
| $750,000 | $3,991 | $4,091 |
| $1,000,000 | $5,226 | $5,326 |
Above $100,000 the schedule works by range: subtract the range start, multiply by the range rate, round to the dollar and add the premium at the start. The first range, up to $1,000,000, uses 0.00494 on top of $780; the second, up to $5,000,000, uses 0.00406 on top of $5,226.[1]
The $100 loan policy (simultaneous issue)
When the owner's and loan policies are issued together, on the same date and land, Texas Rate Rule R-5 sets the premium for each loan policy at $100, as long as the loan policy is not for more than the owner's policy; if it is, the loan premium is the basic rate for the loans minus the owner's basic rate, plus $100.[2] That is why a buyer's total in Texas is usually the owner's premium plus $100, while a refinance, with no owner's policy, pays the basic rate on the loan amount.
Worked example
A $300,000 purchase with a $240,000 loan in Texas: the owner's policy is ($300,000 − $100,000) × 0.00494 = $988, plus $780 = $1,768; the loan policy issued with it is $100; the title insurance total is $1,868. Priced alone, as in a cash-out refinance, a $240,000 loan policy would be $1,472. For comparison, Texas's owner's premium on the CFPB sample's $180,000 price would be $1,175.
The rest of closingTitle insurance is one line of your closing costs. Total them all with the closing cost calculator, budget for the home inspection cost before you commit, and see the full monthly picture with the mortgage payment calculator. Refinancing? The refi calculator shows the break-even month.
Frequently asked questions
How much does title insurance cost?
Do I need owner's title insurance?
It is optional; the lender's policy is the one most lenders require. The owner's policy protects you against claims to the home from before your purchase.[3]
Who pays for title insurance?
It depends on local custom and your contract: in some places the seller pays for the owner's policy, in others the buyer. Your Loan Estimate and contract show which.
Sources
- Texas Title Insurance Premium Rates (basic premium table and formula above $100,000)
- Basic Manual of Title Insurance, Section III: Rate Rule R-5, Simultaneous Issuance of Owner's and Loan Policies
- What is owner's title insurance?
- Loan Estimate: fixed rate loan sample (form H-24(B))
- Can my final mortgage costs increase from what was on my Loan Estimate?
- Your home loan toolkit: A step-by-step guide