Now that the housing market is finally calming down after the pandemic, buyers are facing a new challenge: Soaring mortgage rates.
In Texas, the average 30-year fixed mortgage rate is 5.42% — up from 2021's historic lows. This raises the average monthly mortgage payment to $1,422 (assuming a 20% down payment at the median home value).
But buying a home in Texas is still possible, even for first-time home buyers. Many markets are seeing frequent price drops and fewer offers, giving motivated buyers the upper hand in negotiating for the best price.
In this guide, you’ll learn how to buy a house in Texas with confidence no matter what the market brings. Learn why you can trust our advice.
Whether you're actively house hunting or just starting to browse homes on Zillow, it's never too early to find a great local realtor to guide you on your search. An experienced agent can help you navigate a tricky housing market, explore your financial options, and negotiate the best deal possible.
Best of all, hiring a real estate agent comes at no extra cost to you — since the seller typically pays both their listing agent and your buyer's agent.
Ready to find a great local realtor, but not sure where to start? The best (and easiest!) option is to try a free agent matching service like Clever Real Estate. Answer a few simple questions about your home buying goals, and Clever will match you with hand-picked agents from Keller Williams, RE/MAX, and other top brokerages in your area. Find a top local agent and make your home buying dreams a reality today!
Step 1: Save for a down payment
Your down payment is the first part of your home's purchase price that you pay at closing. Your mortgage lender will pay the remaining balance.
Typically, mortgage lenders in Texas want you to contribute 20% of the purchase price as a down payment. That would be $63,163 for a $315,815 home — the typical home value in Texas.
However, you have options to lower your down payment amount.
Government backed loans, like VA and FHA loans, allow you to contribute 0% and 3.5% of your home's purchase price respectively. Even conventional loans allow for down payments as low as 3-5% (though the minimum varies by lender).
Minimum down payment (%)
Down payment ($)
Based on typical home values from Zillow (August 2022)
But making a down payment of less than 20% comes with some risks.
First, because you're borrowing more money, you'll have a higher monthly payment and pay more in interest over the life of your loan.
Based on home values from Zillow (August 2022) and a 5.42% interest rate for a 30-year loan.
Second, you may have to purchase mortgage insurance.
Conventional loans require private mortgage insurance (PMI) until your loan balance reaches 80% of the purchase price. FHA loans, on the other hand, require a mortgage insurance premium (MIP) for the life of your loans.
Mortgage insurance costs around 1% of your mortgage balance annually. However, rates vary based on your down payment and credit score. Typically, your mortgage insurance payment is added to your mortgage payment each month.
VA loans don't charge mortgage insurance. Instead, you'll pay a VA loan funding fee at closing, which can range from 1.4% to 3.6% of the purchase price.
Texas down payment assistance programs
There are several down payment assistance (DPA) programs that are designed with Texas residents in mind. If you qualify for one of these programs, you could receive a grant or a second mortgage to cover your closing costs or down payment.
Here are just a few DPA programs in Texas that you might be eligible for:
My First Texas Home
The My First Texas Home program offers first-time buyers and veterans a 30-year, low-interest mortgage of up to 5% of the loan amount.
The first mortgage must be from a lender approved by the Texas Homebuyer Program, and eligible borrowers must have a credit score of at least 620. Home purchase price and income limits apply and vary by county.
My Choice Texas Home
The My Choice Texas Home program offers a first mortgage with an option to add down payment assistance of up to 5%. Down payment assistance comes as a 30-year, 0% interest second mortgage.
This program is available to first-time and repeat homebuyers with credit scores of 620 or better. Home purchase price and household income limits apply and vary by county.
TSAHC Home Sweet Texas Home
The Texas State Affordable Housing Corporation (TSAHC) gives eligible homebuyers a grant or a deferred forgivable second loan through its Home Sweet Texas Home Loan Program.
To qualify, the borrower must have a credit score of at least 620. Home purchase price and household income limits apply and vary by county.
U.S. Department of Housing and Urban Development
Additional DPA resources in Texas can be found on the state's HUD page.
Step 2: Find a great real estate agent in Texas
Your real estate agent will be your main ally during the home buying process. Besides finding and showing you properties, your agent will help you make offers, negotiate contracts, and navigate the closing process. Plus, they can recommend other service providers like title companies and inspectors to help you buy your home in Texas.
Don't rush into choosing an agent. Instead, take the time to research and interview multiple real estate agents who have experience in the neighborhoods you're interested in. You should pay attention to a realtor's:
- Years of experience
- Number of transactions in the last year (the more the better!)
- Experience in your price range
- Overall review score
- Individual reviews and complaints
Step 3: Get preapproved for a mortgage
A mortgage preapproval letter is an offer to lend you up to a certain amount of money to purchase a home. It shows sellers that you are a serious buyer who is financially qualified to make an offer on a home.
Most sellers in Texas will require preapproval before showing you their home.
You don't have to decide on one lender right now. In fact, you should compare interest rates and preapproval amounts from several lenders to make sure you're getting the absolute best terms when you buy your Texas home.
Step 4: Choose the right location
Currently, the typical home value in Texas is $315,815, but don't worry if that doesn't perfectly match your budget. Home prices vary dramatically from city to city and even from neighborhood to neighborhood!
Also, look at past home value trends. This will give you an idea of how much your home's value could go up over the next few years.
To give you an idea of how appreciation could impact what your house is worth in the future, consider these examples from three neighborhoods in Dallas:
Home value appreciation in Dallas
Step 5: Start house hunting in Texas
Searching for homes in Texas is the fun part of the home buying process! You'll get to look at a variety of homes and discover what you really want in a home.
Make a list of everything you want in a home and prioritize them. At the top of the list should be the items that are most important to you. This will help you separate your "must-haves" from your "nice-to-haves."
Your agent can help you understand if your wants are realistic for your budget and favorite neighborhoods or if you need to rethink what you're looking for.
Look at current housing inventory
The timing of your house hunt in Texas can have a big impact on your number of options. For example, in Texas, June has historically seen the most homes for sale. Searching in this season could give you more options and a greater likelihood of finding your dream home.
On the other hand, December gives you the fewest choices in Texas. Historically, there are 42.6% fewer homes for sale than during Texas's peak season.
Housing inventory in Texas by season
New listings per month
Based on data from Realtor.com (October 2022)
Step 6: Make an offer
Once you find a Texas house you love, it's time to make an offer. Your real estate agent will help you write a compelling offer that gives you the best shot of convincing the homeowner to sell to you.
Currently, in Texas, homes stay on the market for 60 days before going under contract. However, every market goes through seasonal changes. During busier months, homes get snatched up more quickly than others.
Historically, Texas homes sell fastest in June, where the average property is only on the market for 52 days. If your home search falls around this time, you should be prepared to move quickly and potentially make offers on several homes before yours is accepted.
On the other hand, if you buy in January, you have a bit more time to search. Homes typically stay on the market 16 days longer than Texas's annual average.
Average time homes spend on market in Texas
Based on data from Realtor.com (October 2022)
» LEARN MORE: What should an offer include?
Step 7: Inspections and appraisals
Inspections and appraisals are an opportunity for you to better evaluate the home's condition and value before officially purchasing it. You may have an opportunity after this step to renegotiate the terms of your contract with the seller if something unexpected pops up.
Home inspections in Texas
Having your Texas home inspected by a licensed inspector gives you peace of mind about the condition of the property before you commit thousands of dollars to purchase it.
Your inspector should check out the following parts of the property:
- Electrical system
- HVAC system
If the home has a septic system, you should also pay for a septic inspection to make sure it doesn't have any problems that wouldn't be covered in a typical home inspection.
Texas law requires sellers to disclose all known problems with a property to interested buyers. However, some issues can go unnoticed until serious damage has occurred. Although it isn't required, homebuyers are strongly recommended to have specialized tests conducted before closing on a home.
In addition to a general home inspection, consider having the following tests done as well:
- Radon testing: If the seller hasn't conducted a radon test within the past year, it's a good idea to do a test yourself. Elevated levels of radon can cause long-lasting health issues if the issue isn't mitigated quickly. You can request a free radon test kit from the Texas Radon Group here.
- Termite and pest inspection: Termites and other pests can cause property damage and pose health risks to residents long before they're noticed by inhabitants. Even if a seller is confident their property is pest-free, it's a good idea to have a professional inspection done to give yourself peace of mind.
Appraisals determine the value of the property. If you're using a mortgage to buy your new home, your lender will order an appraisal to make sure the home is worth the money that it's loaning you.
Step 8: Close on your new home!
To close on a home in Texas, you'll need to meet at the title company to complete some paperwork and settle your closing costs.
On the closing date, prepare to spend about an hour reviewing and signing several legal documents. This paperwork is essential for finalizing your loan and the title transfer, so take your time to make sure all of the information is correct.
A few important forms you'll need to complete will include:
- Your final loan application
- The deed
- The mortgage promissory note
- The disclosure statements
Once you finish the paperwork, you'll pay your closing costs to the title company. The company will take care of distributing the correct funds to each recipient you owe.
As a homebuyer, your closing costs can be broken down into four main categories:
- Lender fees: Fees your mortgage lender charges for preparing your loan. Appraisal fees, survey fees, and other expenses related to your loan may also apply.
- Title and escrow charges: Fees that the title company charges for conducting the closing and performing the title search. Buyers and sellers frequently split this cost.
- Prepaid costs: Ongoing costs of homeownership, such as property taxes and homeowners insurance. Some lenders require borrowers to pay for these expenses in advance.
- Other closing costs: Miscellaneous expenses that differ for each buyer. Fees for natural disaster certifications, real estate attorneys, or pest inspections are a few common examples.
Buyers in Texas typically pay 3–5% of the purchase price in closing costs. For a $315,800 home — the typical home value in Texas — that's between $9,474 and $15,790!
Frequently asked questions
Texas does not require you to hire a real estate attorney to buy a home. However, depending on your circumstances, you might consider hiring one anyways. If you do, treat the process similarly to hiring an agent. Interview multiple attorneys and proceed with the one that best meets your needs.
- Save for down payment
- Get pre-approved for a mortgage
- Choose your preferred Texas neighborhoods
- Partner with the right real estate agent in Texas
- Go house hunting
- Make a strong offer
- Inspections and appraisals
- Do a final walkthrough and close
Yes! The Texas Department of Housing and Community Affairs offers the My First Texas Home program to first-time homebuyers and veterans. The program provides eligible participants with a 30-year, low-interest mortgage and flexible down payment assistance options.
To qualify, buyers must have a minimum credit score of 620. Household income and home purchase price limits also apply and vary by county.
Federal Reserve. "Housing Market Tightness During COVID-19: Increased Demand or Reduced Supply?." Accessed October 11, 2022. Updated July 08, 2021.
Consumer Protection Financial Bureau. "The Fed is raising interest rates. What does that mean for borrowers and savers?." Accessed October 11, 2022. Updated March 17, 2022.