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The Lone Star State touts one of the nation’s hottest real estate markets, giving homebuyers a lower cost of living, a warm climate, and plenty of employment opportunities. Whether you’re looking for a big-city lifestyle in an urban metropolis like Dallas, a great music scene like the one in Austin, or the simple life in the country, Texas has the land and cultural diversity to make your homebuying dreams come true.

How much money do I need to buy a house in Texas?

As with any major purchase, you need to establish a budget to buy a Texas home. Homes in Texas sold for in the first half of 2022.��

If you’re buying a house in Texas, you’ll need to save enough money for:

• Down payment: 0% to 20% of the home’s sales price, depending on the loan type
• Closing costs: 2% to 5% of your loan, paid upfront��
• Property taxes: 2% to 3% of the home’s value (on the flip side, Texas residents enjoy one of the lowest sales tax rates in the country and no state income tax)
• HOA fees: $200 to $400 a month��

→ Here’s how much money you should save to buy a house

Requirements to buy a house in Texas

If you’re taking out a loan to buy a house, you’ll need to meet some minimum requirements set by the lender. These can vary based on the type of loan you have, but they are based on two things:

• Your credit score
• How much debt you have

What credit score do I need?

You’ll typically need a credit score of 620 or higher to buy a house in Texas, but you may qualify for an FHA or VA loan, which have lower credit score minimums.��

Austin real estate agent Rachel Bennett recommends keeping tabs on your credit score using a free monitoring tool, like Creditwise. You can also request a free copy of your credit report from annualcreditreport.com or even your credit card servicer.

→ Learn about buying a home with bad credit

How much debt can I have?

Your debt-to-income ratio, or DTI, is a a ratio of all of your debts to your income, and it helps lenders understand how much you can afford to pay for a mortgage each month, given your existing monthly debt payments. Generally, lenders look for a DTI below 35%.��

→ Learn how much debt you can if you want to buy a house

What is the minimum downpayment in Texas?

A down payment is the cash you pay upfront to your mortgage lender to buy a home. You may have heard that buyers should make a down payment of 20% of the house’s price. By putting down 20%, you show the lender that you’re a less risky borrower, which incentivizes the lender to offer you the most favorable interest rates. A larger down payment upfront also allows you to take on a smaller loan, keeping your monthly payments down.��

However, you can find several types of loans that allow you to make a smaller down payment.��

“You can buy a home in Texas with a down payment as little as 3.5% for an FHA loan or 3% for a conventional loan,” says Bennett. “If you’re in a USDA-eligible area or using payment assistance, your down payment could be zero.”

Putting less than 20% down

If you cannot make a 20% down payment, the lender will require you to pay for private mortgage insurance (PMI) — which can add $50 to $500 per month to your mortgage payment, depending on other factors (like loan amount, down payment, and credit score).��

Don’t let having to pay PMI stop you though: “Mortgage insurance has become more and more affordable over the last decade,” according to Cameron Phelps, a senior loan officer at 91�ƽ�� Mortgage. “Home prices have continued to skyrocket, which has led to more people making a smaller down payment, even if they have the money for a 20% down.”

First-time homebuyer programs

Texas also offers various homebuying programs that provide down payment assistance for first-time buyers and current homeowners alike to help them afford a home.

For example, the offers down payment assistance for people who earn up to a certain amount of income through two programs:

• My Choice Texas
• My First Texas Home

The can also cover your down payment, either with a grant or forgivable loan, for the following programs:

• Home Sweet Texas Home Loans: For moderate- and low-income families
• Homes for Texas Heroes: For certain professions, like teachers, nurses, firefighters, and more

How to buy a house in Texas

Ready to buy a house? Here are nine steps to guide you:

1: Assess your finances

Creating a budget is the first step to buying a house. When you know what you have to spend, you’ll learn how much house you can afford in Texas and what areas to consider. Buying a house isn’t just about setting a home price — there are other hidden costs and financial considerations to consider.��

Related: 19 questions to ask when buying a home

Step 2: Find a real estate agent

Now that you’ve assessed your finances, it’s time to find a real estate agent. You’ll want to meet and discuss your unique needs, price range, and lifestyle with your agent so they can best guide your search.��

You also want to make sure they’re knowledgeable about your local market’s current real estate trends and familiar with neighborhoods that meet your criteria and budget. As well as navigate any area-specific nuisances, like city ordinances or yearly fees that may be part of joining an HOA or master-planned community.��

If you’re set on buying land or farm property, you’ll also want a realtor who is savvy on Texas agriculture exemptions, homestead exemptions, and wildlife exemptions, which can save you thousands of dollars a year on property taxes.��

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If you also have to sell your home at the same time, it’s helpful to have one brokerage to help you with that as well. This way, you will have fewer points of contact to manage.��

Step 3: Set a homebuying timeline

Establishing a timeline to purchase your home will help you narrow your search and set limits for when you need to make a decision. The available housing inventory and demand is a key factor. If homes sell very quickly in the area where you hope to live, you should be ready to make an offer the same day or within a few days of seeing a home. If sales are more modest, you may have more time to shop around, and more leverage when making an offer.��

Another important factor to consider are local school schedules, like when summers begin and end. Housing inventory typically is lower in Texas during winter but increases in April, as sellers move to capture the interest of individuals and families wanting to relocate in the summer. If you are buying a home in Texas during a low inventory season, you may have to be less picky about particulars during your house hunt.

→ Read more about how long it takes to buy a house

Also, think about how long it’ll take to sell your existing home. You may end up having to find short-term housing if you sell too quickly, or risk missing out on a great home if yours hasn’t sold.����

Step 4: Get a mortgage

Buying a house in Texas (or anywhere) is no small feat, and a good mortgage broker or lender will walk you through the financing process from start to finish. Your mortgage broker will help you evaluate your debt-to-income ratio, provide information on interest rates and home loan types and help you get pre-approved for a mortgage loan. You’ll also want to determine whether a 15-year or a 30-year loan term is right for you.��

→ How to get pre-approved for a mortgage

Step 5: Choose a neighborhood

Finding the right house location is just as important as the home’s layout or features. You want to consider your family, lifestyle, and work commute, to make sure the home suits everybody’s needs.��

Texas boasts numerous master-planned communities that include features tailored to specific interests, from community gardens to kid-friendly pools and play areas.��

Whatever your preference, you can find a neighborhood that suits your taste and budget. If you need help discovering the right area, check out our neighborhood guides for:

• Dallas
• Houston
• San Antonio
• Austin��

Step 6: Start your home search

Once you’ve determined the neighborhood or cities of interest for your Texas home, it’s time to begin the house hunt. Viewing homes is the fun part of buying a house, and you can quickly get started by browsing homes online.

If you’re looking for a place to find the latest listings, our home search tool has all these features and more. (We show all the available listings in Austin, Dallas-Fort Worth, San Antonio, and Houston.)��

With the few homes available selling that quickly, it’s important to remember that no house is perfect, and make sure to prioritize your “must-haves” as you shop for your new residence.

→ Check out our house-hunting checklist

Step 7: Make an offer & negotiate

Homes in Texas sell faster than the national average, and you don’t want to wait too long before making an offer on a home you love. A skilled Realtor can put your offer above all others by making it the most attractive to the seller.��

• Consider including a personalized letter to the sellers on why this house is special to you.
• In a highly competitive market, making an all-cash offer is another savvy strategy to ensure that your offer stands out above the rest.
• Remove contingencies in your offer.��

Don’t be surprised if the seller first makes a counter-offer. Negotiations often can go back and forth two or three times until both parties are comfortable with things like repairs, contingencies, and closing timelines.��

Step 8: Get a home inspection

Once you’ve made a winning offer on the house and signed the purchase contract, you’ll kick off the option period and submit your earnest money deposit and option fee. Most buyers use this time to schedule a home inspection.

A home inspection ensures you have all the details on the property’s current condition, including the home’s foundation, structure, electrical, and plumbing. In the state of Texas, homeowners also are required to provide a Seller’s Disclosure Notice for a previously occupied single-family residence, which details issues concerning the home’s physical condition. Even if you have a disclosure, it’s essential to schedule an inspection for added protection.

Additional inspections

Because many parts of Texas have clay soil, you may consider having a foundation specialist assess the house and identify potential foundation issues.��

If you’re buying a house with a pool or a septic system, you will want to hire a certified inspector for that too, as Texas soils are prone to shifting, which can cause issues for both pools and septic systems alike.��

Taking the time to address all of these issues during the option period will help prepare you to negotiate the final sale price and inform your decision on whether to purchase a home warranty.��

Step 9: Go to closing

Closing on your new home is the last step in the homebuying process. Working with your agent, you will negotiate the closing date with the seller, and it will be listed in the purchase agreement.��

• Get title insurance��
• Get home insurance
• Receive a closing disclosure��
• Do a final walkthrough of the house

The official process of closing on a house generally takes place at the title company’s office, and in Texas you do not need to have an attorney present (which means you’ll save on attorney’s fees).

If you are legally married, the state of Texas requires that your spouse is present at closing as well, even if they are not on the loan. (Texas is a community property state, which means that your spouse owns 50% of the house. More on buying a house as a married couple here.)��

Don’t be shocked at the amount of paperwork involved. Closing documents generally are 50 to 100 pages long, and although you may be tempted to sign quickly, these are binding legal agreements. Take the time to read through everything carefully, and ask your agent for clarification if anything is confusing or seems inaccurate.

Should I buy a house in Texas?

Your agent can also help you review recent home sales in your preferred area. This will give you an idea of home value trends and a guideline for how much your home’s value might appreciate over time. Specific neighborhoods are booming in cities like Houston, Austin, and Dallas, which means you may have to pay a premium to live in one of the current hotspots.��

With so many factors to consider when buying a home in Texas, it can be tough to keep track of everything. But having an experienced agent and a modern, easy process can make it easier.��

When you work with 91�ƽ��, we can help you make a cash offer on a new home. We’re also local to Texas, currently serving customers in San Antonio, Dallas-Fort Worth, Austin, and Houston. Learn more about us here.