Like most things in Texas, buying a home for the first time is a big deal. Since the second quarter of 2021, the median Texas home value has increased 19.1% to $357,388. Nearly half of the 108,390 homes sold in Texas in the second quarter of 2022 were between $200,000 and $399,000, with the typical Texas home value coming in hot at $315,235 as of writing.
To buy a home in Texas for the first time at the typical value ($315,235), you’ll need a down payment between $11,033 and $63,047 (unless you qualify for a VA or USDA loan with 0% down payment), a credit score of 620 (or 580 for an FHA loan), and enough savings to cover closing costs amounting to somewhere between $10,000 and $16,000 (depending on your lender and down payment size).
The best way to get started is to find an experienced, local agent who can guide you through the (often complicated) home buying process and help you get those keys!
You can also keep reading for a step-by-step overview of the home buying process, with specific information and resources for first-time buyers.
- Save for a down payment.
- Partner with a real estate agent.
- Get approved for a mortgage.
- Shop for a home.
- Make an offer.
- Get an inspection and appraisal.
- Close on your house! 🎉
🔎 At a glance: Typical lender requirements for first-time home buyers
1. Save for a down payment
Your down payment is the percentage of your new home’s price that you pay out of pocket. What you don’t pay upfront will be covered by your mortgage.
Many lenders in Texas recommend you have a down payment of at least 20% so you don’t have to pay private mortgage insurance (PMI). For the typical home value ($315,235), that would come out to $63,047. It's a hefty sum, but private mortgage insurance can cost between .58% and 1.86% of your mortgage amount per year.
Of course, most lenders know $63,047 is big—even for Texas standards. Fortunately, there are programs like FHA loans that allow you to put down as little as 3.5%, or $11,033. You might even be able to take a conventional loan with as little as 3% to 5%, depending on your credit score and lender.
Here’s how much down payment you’ll need for the four most common loan programs:
Does Texas offer payment assistance and grants for first-time home buyers?
Yes, the state of Texas offers numerous programs geared toward helping first-time home buyers with down payment and closing costs. Take a look at these programs for some assistance:
What it is: A 30-year, low-interest mortgage with up to 5% in down payment and closing cost assistance.
Who’s it for: First-time homebuyers, veterans, and repeat buyers who haven’t bought a home in three years or more.
How much you can get: 2–5% of your loan amount
What you need: A credit score of 620 and to meet income and property value limits.
What it is: It’s the same as My First Texas Home (a 30-year, low-interest mortgage with up to 5% in assistance), except it’s available to all homebuyers, not just first-timers.
Who’s it for: Anyone buying a home who meets the requirements.
How much you can get: 2–5% of your loan amount for down payment and closing costs.
What you need: A credit score of 620 and to meet income and property value restrictions.
What it is: Down payment assistance to first-time homebuyers. It can be a grant (which you don’t have to repay) or a second mortgage (which you repay within three years).
Who’s it for: First-time homebuyers
How much you can get: Varies based on your income
What you need: A credit score of 620 and to meet income and property value requirements.
2. Partner with a local real estate agent
Texas might be the Lone Star State, but when it comes to buying a home for the first time, you definitely don’t want to go it alone.
Real estate agents play such a crucial role in the home buying process—they can often make or break a good deal. Agents can find homes within your budget, negotiate boldly, and prepare you for the closing process.
Many first-time home buyers in Texas don’t realize that agents in their state are legally allowed to give cash-back rebates to home buyers. A “rebate” basically means the agent shares a portion of their commission with you after closing. The best rebates are usually around .5% of the home’s value, or $1,576 for the average home value in Texas. Find a real estate agent that provides cash-back rebates for an easy way to get some money back in your pocket after buying your first home.
3. Get approved for a mortgage
A mortgage pre-approval is a letter or document that states how much money a lender is willing to let you borrow to buy a house. It involves a thorough investigation of your income, debts, assets, and credit and employment history.
In Texas, a mortgage approval isn’t required to buy a home, but it’s highly recommended. Most sellers won’t take you seriously unless you have a pre-approval letter in hand, and many real estate agents like to see proof of funds before they start showing you homes.
🔓 Mortgage pre-approvals don’t "lock you in" with a lender
Getting a pre-approval from a lender doesn’t mean you have to get a mortgage from them or that your loan won’t run into any hitches during the underwriting process. Nor does it mean your lender will for sure give you the amount specified in the letter (you could get more if your financial situation changes). A pre-approval letter simply means a lender has looked over your finances and believes you're eligible for a mortgage.
4. Shop for a home
This is where having a great real estate agent comes in handy. Your agent can help you find homes in neighborhoods and areas that fit your budget. They can also help you get information on schools, distance to nearby shopping and grocery stores, average property taxes, HOA fees, and even noise levels in certain areas.
Agents have access to the MLS (multiple listing service), which shows listings for properties in the area you’re looking to buy. They can also help you find unlisted properties, such as foreclosures, auctioned homes, and houses that are for sale by owner. As of writing, homes in Texas spend around 27 days on the market before going under contract. So it’s important to have an agent’s eyes on new listings at all times.
🗓️ When is the best time to buy a home in Texas?
For the lowest home price, buy during the winter (January has the lowest average listing prices). For more home choices, buy during the spring and summer months (June has the highest inventory).
5. Make an offer on a home
Given the competition and the rapid rate at which homes sell in Texas, making a compelling offer is super important to snagging your first home before someone else does.
Again, your agent will play a vital role here. They keep a pulse on how fast homes are selling and at what price. They can conduct a comparative market analysis (CMA), which compares the home in question with similar properties that have recently sold in the same area. This will help you package a competitive and fair offer to send to the seller.
6. Get an inspection and appraisal
A home inspection is a close examination of the home you’re looking to buy. An inspector will check for defects, structural problems, or expensive repairs lurking underneath the home’s appearance. In Texas, home inspections cost between $350 and $600—and they’re worth every penny.
Much like an inspection, an appraisal takes a deeper dive into your home. But instead of looking for hidden defects, an appraiser estimates how much your home is worth, regardless of the price you’ve negotiated with the seller. Lenders require appraisals, mainly because they want to know if the home is worth the agreed-upon purchase price.
In addition to a standard home inspection, you may want to hire an another inspector for the following tests:
Radon testing: Radon is an odorless gas that can potentially cause lung cancer. Texas has no “high-level” radon areas, but some areas in the Panhandle have moderate levels. You can do a radon test yourself (a kit costs around $10–$15), or you can hire an inspector (around $153 for a four-bedroom home.
Termite and pest inspection: A general home inspection doesn’t include a test for termites or other pests. Termite and pest tests are often conducted separately, but you can bundle them with the same company for a lower price. The inspection for termites usually costs $100.
🕵Will the home seller tell me about any known issues?
Texas requires by law that sellers tell buyers all known problems in a “disclosure statement.” That doesn’t mean you shouldn’t get a home inspection though. Many sellers aren’t aware of new or ongoing issues in their home.
7. Close on your house.
Once the seller accepts your offer and your inspection comes back clear, you’ll go through a flurry of paperwork and signatures known as the “closing process.”
In Texas, a title company will act as a neutral third party to guide you and the seller through closing. You’ll both meet at the title company to complete and sign all closing documents. At this time, you and the seller will pay closing costs.
In Texas, buyers usually pay around 3–5% of the home’s final purchase price in closing costs (seller closing costs are around 7.7% to 8.7%). For the typical home value ($315,235), that means you’ll pay between $10,000 and $16,000 in closing costs.
- To buy a home in Texas for the first time you’ll need to save a 3.5–20% down payment. ($11,000–$63,000 for a $315,235 home).
- You’ll also need a credit score of 620 for most loan programs, or 580 for an FHA loan.
- Before you start the home buying process, get a mortgage pre-approval and find a real estate agent.
- Your agent will help you find a neighborhood within your budget and make a competitive offer.
- As you’re closing on a home, be sure you conduct a home inspection, including a radon and termite test.
- Closing costs for buyers in Texas are 3–5% of the home’s final purchase price. That’s around $10,000–$16,000 for the typical home value ($315,235).
Zillow.com. "Texas (79505) Home Values."
Urban.org. "Mortgage Insurance Data Glance."
ProMatcher.com. "Texas Radon Testing & Abatement Costs & Prices."
HomeAdvisor.com. "How Much Does A Termite Inspection Cost?."