Your Ultimate Guide to Buying a House in Texas in 14 Steps

Whether you grew up in Texas, are relocating for work, or always dreamed of living in this affable state, it’s a great place to buy a house. Nicknamed the Lone Star state, Texas is the second most populous state in the country and the second largest state in land mass.

“Everything’s bigger in Texas” is a popular slogan, and this is true for houses as well. Buyers from other areas, especially New York City or Los Angeles, are often pleasantly surprised by how much square footage and outdoor space you get when buying a house in Texas. Your dollars might stretch much farther here than they do in many other states.

Another plus is that Texas doesn’t have state income tax, according to Rach Potter, who sells homes 42% quicker than the average agent in Dallas, Texas. Texas also has diverse scenery, major cities including Dallas, Houston, and Austin, rolling countryside, beaches, and lots of culinary delights and live music venues.

Steps to buying a home in Texas

Let’s dive into the steps of buying a house in Texas:

1. Assess your readiness and know your financial standing

Before you start looking for homes, you want to determine if you’re ready to purchase one. Consider factors such as how long you plan to be in the area, if you have steady employment, and if you have enough money saved for not just the down payment, but for closing costs, maintenance, property taxes, and more. If you plan on applying for a mortgage, your lender will want to see at least two years of steady employment or business ownership if you’re self employed.

It’s also important to review your credit score and determine if it’s considered excellent, good, fair, or poor. Typically, the higher your credit score, the lower your interest rate will be, which saves you money over the life of the loan. You may want to pay off any collections accounts, dispute errors on your credit report, and pay down your credit card balances before you start shopping for a home.

2. It’s all about the down payment

The median home price in Texas is $345,000 as of Q2 2024. So, expect to spend somewhere around that number depending on what part of Texas you’re purchasing in, the amenities you want, and the size of the property, among other factors.

Different loan programs will require different down payment amounts, but you do not always need to put 20% down when buying a home. There are loan programs out there that allow buyers to make low down payments on their dream homes. Some conventional loans allow for first-time buyers to put as little as 3% down, subject to qualification requirements. Putting less than 20% down, however, might require you to purchase mortgage insurance, but it may be worth it to become a homeowner sooner than you anticipated.

FHA loans usually require a minimum down payment of 3.5% — so if you purchase a house for $325,000, expect to put down at least $11,375 with this type of loan. Keep in mind that this doesn’t include the funds you will need for closing costs.

Before stressing about not having enough money for a down payment, research down payment assistance and first-time homebuyer programs available in Texas to see if you might qualify. It’s best to contact the down payment assistance programs directly for a list of qualified lenders and specific details, as program funding changes frequently.

Consider the following down payment assistance programs in Texas:

My First Texas Home is strictly for first-time homebuyers, veterans, or buyers who haven’t owned a primary residence within the past three years. They provide assistance up to 5% towards the down payment and closing costs. They work with VA, FHA, and USDA loans and require a minimum credit score of 620. There are some fees involved, including loan review and compliance fees.
My Choice Texas Home doesn’t require that participants be first-time homebuyers and this program works with VA, USDA, FHA, and conventional loans. It also offers down payment assistance up to 5% and requires a minimum credit score of 620, but this program has higher income limits compared with the My First Texas Home program.
Texas Mortgage Credit Certificate is only for first-time homebuyers, veterans, or buyers who haven’t owned a primary residence in the past three years. This program allows for qualified buyers to receive reductions toward their federal income tax liabilities. Assistance amounts vary, and funds are limited.