First-Time Homebuyer’s Guide in Texas – Navigating Your Path to Homeownership

Written By Sarah Ford

Home buying: it’s no less than riding a roller coaster, especially if you are a first-time buyer.

You hop on the ride, excited and nervous, thinking, “I got this.” And then what follows is a wild series of highs and lows and twists and turns.

It all goes slowly until you reach the high- finding your dream home. And once you do, you dive into mortgages, loans, and credit scores. Then comes the loop-de-loop: making an offer, and bam! You’re outbid. Cue the gut punch :).

Don’t forget the sneaky hidden repairs, the small print in the contracts – more unexpected twists. And just when you think you’ve made it, the mountain of paperwork comes into view.

Sure, buying a home can feel like a theme park adventure you didn’t sign up for, but hey, what’s life without a little thrill, right? Especially when you live in a state like Texas, where buying a home is 5x more nerve-wracking than what we described.

Luckily, when it comes to first-time home buyers, Texas draws the best bull! Agencies such as the TDHCA, FHA, HUD, USDA, VA, and PMI offer numerous services, including home buyer guidance, real estate education courses, programs, loans, and grants. You name it, and the government has your back to help you make the right decision. Want to know more about navigating buying a home in Texas as a first-time homebuyer? Here is everything you need to know!

Who is considered a first-time homebuyer in Texas?

The HUD defines a first-time buyer as “an individual who has had no ownership in a principal residence during the 3 years ending on the date of purchase (closing date) of the property.” 

To put it simply, if someone has not owned a home for three years before buying, they can be considered a first-time homebuyer.

They can be”

  • Individuals who only owned a residence through marriage with a former spouse 
  • Single parents
  • Displaced homeowners
  • People with a non-permanent residence, like an RV 

Source: 1

The ABCs of Buying a House in Texas: A First-Timer’s Roadmap

2.1 Check Your Financial Status

As a first-time home buyer, the first thing you should probably be looking at is getting financing and arranging a minimum down payment. 

Based on the most recent stats, the average home price in Texas is about $325,000. So as a first-time home buyer, you need a minimum down payment of roughly $9,750 (3% of the home price) to secure financing. That’s based on the pre-requisite that you already have a credit score of 692 and above.

Note: Even if you apply for a first-time homebuyer grant, you will be able to get a maximum grant of $40,000+, or 5% of the loan amount. 

here’s everything else that you need to do.

2.1.1 Go through your balance sheet

Looking at your financial records doesn’t necessarily mean checking your bank account balance; you need to look at your assets, liabilities, and net worth.

To calculate your net worth, start adding up all your assets-savings, investments, retirement accounts, and valuable assets such as cars.

Next, tally your liabilities-debts such as student loans, credit card balances, car loans, or any other debts you have. Subtracting your total liabilities from your total assets gives you your net worth.

Even if the numbers look good, consider your income stability, credit score, and monthly expenses like utilities, food, insurance, and transportation. This will help you determine whether you can comfortably afford the monthly mortgage payments, HOA fees, property taxes, homeowners insurance, and the costs of maintaining a home.


2.1.2 Follow the 28/36 rule

The 28/36 rule is a benchmark many lenders use to determine how much credit to offer a customer. The rule states:

  • The 28% part refers to the front-end ratio, which states that monthly housing costs (including mortgage payments, property taxes, homeowners insurance, and any homeowners association fees) should not exceed 28% of your gross monthly income.
  • The 36% part is the back-end ratio, indicating that your total monthly debt payments (including your housing costs and other debts like student loans, car loans, credit cards, and other debt obligations) should not exceed 36% of your gross monthly income.

For example: Let’s assume your average monthly income in Texas is $4,711. According to the 28/36 rule, you should spend not more than 28% of this amount (i.e., $1,319) on household expenses. This means you should spend no more than $1000 monthly on your mortgage payments (considering your housing expenses are around $300). 

Use this calculation to determine how much you can pay to the mortgagee. Using this technique is an excellent way to ensure you’re not taking on more debt than you can handle and can comfortably afford your home.

2.1.3 Ensure you have cash saved up for the down payment.

A down payment is necessary to ensure you do not default on the mortgage. Refer to the table below to understand the down payment from different organizations for the average home price of $216,652:

Type of Mortgage Percentage of Down PaymentTotal Down Payment 
FHA Loan3.5%$7,478
VA Loan0%0
Conventional Loan20%$42,730

Don’t forget the closing costs because these are additional charges which will total approximately 3-5% of the actual sale price of your house. Some of the typical costs include:

  • title insurance and searches
  • Document recording
  • Loan origination fees
  • Escrow fees
  • Inspections and appraisal fees
  • Property taxes and more.

A total of these costs plus the mortgage will give you your monthly housing cost. This is a crucial step because you don’t want to be hollering down a well by checking for houses first.

2.2 Get Pre-Approved for a Loan


Pre-approved loans give solid proof to sellers that you can afford the home you’re eyeing. It saves you from the heartache of falling for a house entirely outside your price range. Plus, it saves a lot of time, especially when you have to close quickly after finalizing a house.

But that’s not all! Pre-approval gives you some pretty sweet negotiating power. Sellers tend to mostly agree with buyers who have pre-approvals as they are less likely to back out last minute. And as one more cherry on top – some lenders will let you lock in your interest rate at the pre-approval stage, protecting you from shot-up interest rates in the future.

A buyer is When you do this, the seller and their agent tend to take you seriously.

Also, find a home you want to buy. You can immediately give a down payment rather than lose valuable time by applying for approval at that time – in which case you could lose out to another prepared buyer.

Convinced? Perfect! Now here’s what you need to do.

Look at your finances and decide how much loan suits your monthly budget.

Before anything else, consult a lender; it will give you an idea of the loan amount you qualify for and your monthly mortgage payment. This will also give you an idea of your house-hunting budget.

In addition, check out your credit score, debt-to-income ratio, closing costs, down payment, and expenses as a homeowner. You can get a summary of your affordability after the lender reviews your earnings and credit report.

When you approach a lender for a loan, there is a list of documents you must submit to receive the money.

These documents include payment slips, bank statements, W-2 forms, tax returns, debt-related information, current income proof, and the sales contract.

2.2.1 What about Mortgage Plans?

Mortgage plans typically come in 15, 20, and 30-year options. Opting for the shortest plan can lead to significant savings on interest rates, but it also means higher monthly payments. Conversely, choosing a more extended plan will result in lower monthly payments but higher interest rates over time.

To understand this better, refer to the table below assuming the average home prices in Texas i.e., $213,652 with a 20% down payment.

Mortgage Breakdown15-Year Mortgage30-Year Mortgage
Mortgage Amount$170,992$170,992
Interest Rate 2.6%3.07%
Monthly payment $1,155$727
Interest Paid$36,985$90,827

Getting a pre-approval on your mortgage will make the process slick as a whistle. You can confidently look for a home, make a suitable offer, and leave a good impression on the seller. 

2.2 Choose a Trustworthy Realtor 

Choosing a trustworthy realtor when you’re a first-time homebuyer is much like having a knowledgeable guide in an unfamiliar city. This professional knows the market and neighborhoods, understands the ins and outs, and can help you avoid potential pitfalls during your homebuying journey.

Realtors are experts in negotiation; plus, they can help you navigate the paperwork and ensure the buying process adheres to all legal requirements, which can be quite a task. Remember, a home purchase involves a significant amount of money and a commitment for a substantial period, so choose a realtor who is good and charges you a reasonable realtor fee in Texas.

2.3.1. Finding a reliable realtor

  • Referrals: One of the best ways to hire a reliable realtor is through personal referrals from friends, family, or colleagues who recently purchased or sold a property. If your loved ones have had a positive experience with a realtor, then it’s inevitable that even you won’t have any trouble working with them.
  • Online Reviews and Ratings: Websites like Zillow,, and Trulia allow buyers and sellers to review and rate real estate agents. Read these reviews to get an idea of the realtor’s professionalism, knowledge, and experience.
  • Local Real Estate Agencies: Reach out to established real estate agencies in the area you’re interested in. They can connect you with a realtor who specializes in that area.
  • Professional Networks: Realtors who are members of professional associations like the National Association of Realtors (NAR) or local real estate boards adhere to specific ethical standards, offering an additional layer of trustworthiness.
  • Open Houses: Attending open houses allows you to meet realtors in a work setting. It’s a great way to see how they interact with potential buyers and to get a sense of their professionalism and knowledge.

A reliable realtor manages transactions and advocates for you, protecting your interests. They can help find out the right price for a property, spot potential issues with a property, recommend quality home inspectors, and coordinate the whole process.

Note: Many realtors in Texas offer rebates or cashbacks to attract clients. Such rebates can lower your total purchase price. So, when searching for a realtor, do not forget to mention buyer rebate in Texas.

2.3. Choose a neighborhood and begin house hunting

Choosing a specific neighbourhood before starting your house-hunting process is essential as it tailors to your lifestyle and needs. Different neighborhoods cater to different lifestyles, and finding a fit to accommodate yours is crucial. For instance, some neighbourhoods are perfect for families, boasting excellent schools, parks, and family-friendly amenities. These areas tend to have a stronger sense of community, lower crime rates, and quieter environments, which many families appreciate.

On the other hand, specific neighborhoods may be more suited to single professionals or young couples. These might offer closer proximity to business districts, lively nightlife, and extensive public transportation options. This allows for easier commuting and vibrant social life, which can be important for individuals in this stage of life.

Additionally, the character and amenities of a neighborhood significantly influence property values and potential resale value. This includes factors such as walkability, access to shopping and restaurants, and plans for future development. Therefore, investing time in choosing the right neighborhood is crucial for your current lifestyle and can impact your home’s future value.

In conclusion, identifying the right neighborhood should be a critical first step in your house-hunting journey. This will streamline your search process, help you make a more informed decision

List out all the neighborhoods of the city you want to live in and compare the sale prices to find the best option. You can also gain insight into the future value of your home by looking at the trends in home prices.

Create a checklist of things you would appreciate in your neighborhood. Some of these may include but are not limited to:

  • Schools, colleges, or universities 
  • Restaurants, supermarkets, or grocery stores
  • The crime rate in the locality
  • Transportation and distance to amenities or work 
  • Outing sites such as community pools, parks, theatres, etc.

2.4 Begin your Property Search 

Start your property by doing all of the following:

  • Visit websites such as Clever, Zillow, and Trulia
  • Scan local newspapers,
  • Attend open houses
  • Check out building constructions with adverts
  • Or simply approach real estate agents.
  1. Ideally, you must begin the home-buying process at least a couple of months before you actually want to move because finding that perfect house, financially and preferentially, requires a lot of time.
  2. Understand that the housing market changes seasonally; keep track of historical trends to narrow down the best months to buy. For example, late spring and early fall are standard periods for home sales.
  3. Similarly, the seasons will also affect the pricing, so keep a lookout for that too. Climatic conditions can affect the price of a house

Once you finally have your eyes set on a home, make an offer to negotiate the final purchase price with the seller.

2.5 Make an offer 

Helping you land a great deal is where a real estate agent can help. Only they can accurately guide you on how much you must offer on a home basis, the current market and micro-market trends, the condition of the house and appraisal report.

Remember that searching for your “perfect home” is fine until you run out of houses to check, so act fast and don’t take too much time to decide on your offer.

Although we advise you not to waste, being hasty won’t get you too far, either. Remember that offering the best price will not always get you what you want. However, you can show the seller you are serious about the house by ensuring you don’t have any contingencies and choosing an early closing date.

2.6 Get your Home Inspected and Get an Appraisal 

The home inspection involves paying attention to detail and finding out what needs reparations so that you are eligible for certain mortgage types. The checklist includes the foundation, plumbing, electrical system, roof, and HVAC.

Some of these inspections are state-specific, and these are the ones common in Texas:

  • Testing for radon, an odorless, colorless gas that can put you at risk of lung cancer.
  • Pest inspection because FHA and VA loans require the house to have no pest infestations.

To check whether your option is worth the price you agreed on, the lender will ask you to get an appraisal. A licensed appraiser conducts a follow-up, which includes:

  • Doing a walk-through and observing the house
  • Gathering information about the appearance, property conditions, and amenities.
  • Compares the house with similar properties in the neighborhood 
  • Submit a report containing these notes and recommending the required upgrades which may add value to the house.

2.7 Closing the Deal

You can have a final house walkthrough to ensure nothing has gone unnoticed. Watch out for:

  • Bad electricals by checking every outlet, switch, and appliance 
  • Damaged or waterlogged walls, ceilings, or floors
  • Problematic plumbing may include pressure and temperature issues or leaks.
  • Locks and their system on all the doors and windows
  • Heat and conditioning systems

In Texas, it is mandatory to have on board a real estate attorney to complete a home sale. After you find an experienced lawyer, understand all the documentation and closing costs before signing anything.

With all these pointers in place, you’re ready to close the deal on your house!

3. Application Process

3.1 Submit your Intake Application

You must submit all the required documents and the home specifications you have finalized. The lender will review all the information to accept the application and provide a Conditional Reservation Letter

3.2 Processing the Property Inspection and Underwriting

After receiving the letter, the chosen house will be put under a contract and reviewed by further documents. After the review, the loan assistance will be placed into underwriting while the property is inspected for confirmation.

3.3 Final Funding and Closing Deal

After your house is approved by a licensed inspector, you will receive a commitment letter to complete the pre-closing process. The closing will mainly be carried out at an escrow office, where you will review the forms and sign the documents. During the closing deal, you will also have to pay the closing costs and down payment to finalize your transaction.

4. Documents Required

To proceed with your home-buying process, you must submit the following documents:

4.1. Personal Documents

  • State ID, driver’s license, or resident card
  • Social Security Card
  • Address proof of two years
  • Current housing expense 
  • Contact information of the current landlord 

4.2. Property Documents 

  • Confirmed and executed sales contract
  • Contact to access the house
  • Proof of transaction of funds through bank confirmation
  • Earnest money check and option fee copies

4.3. Debts and Credit Report

  • Permission to pull your credit
  • In case of adverse credit history, a written explanation is mandatory

4.4 Income and Employment History

  • Tax returns and W-2s for the past two years
  • Two most recent pay stubs 
  • Banks and investment statements for the past two months
  • Employment proof from the workplace
  • In the case of self-employed applicants, the past two years’ tax returns of the partnership or corporation are required
  • In the case of business owners, the past two years’ personal or business tax returns are required
  • If applicable, proof of other income such as awards letters for retirement, Social Security, pension, and so on.
  • If applicable, a copy of the child support order or divorce decree.

5. Home Buying Resources in Texas You Should Not Know!

5.1. Homebuyer Assistance Organizations in Texas

  • Texas Department of Housing and Community Affairs (TDHCA)

The TDHCA state agency ensures affordable housing and is a perfect fit for low-to-moderate-income first-time buyers in Texas. They have plenty of programs to assist buyers, including community, energy, and down payment assistance programs.

  • Texas State Affordable Housing Corporation (TSAHC)

For low-income and underserved applicants, the TSAHC is the go-to non-profit organization for home-buying assistance. They work with the population that cannot receive appropriate or affordable options through conventional methods. 

5.2. Homebuyer Assistance Organizations Nation-wide

  • Federal Housing Administration (FHA)

With its inception in 1934 during the Great Depression, the FHA has been insuring construction standards and mortgages. To be eligible for FHA loans, you require a credit score of 500 or above, and the down payment is 3.5%.

  • U.S. Department of Housing and Urban Development (HUD)

This cabinet department oversees all the rules and regulations of all national housing-related policies and programs, including the FHA. The HUD also regulates development, just housing laws, and improvement.

  • United States Department of Agriculture (USDA)

Applicants who qualify for a conventional loan without any hiccups do not qualify for this loan. These programs are available to first-time homebuyers in rural areas and provide assistance in food, agriculture, and rural developments, along with the issues related to these domains.

  • U.S. Department of Veterans Affairs (VA)

The VA offers assistance, benefits, and services to veterans and individuals in the U.S. military. Among their primary services is the VA home loan program for applicants who cannot afford a down payment because of low income and savings. 

The eligible applicants can have low-interest rates with no down payment. As a substitute down payment, funding fees are applicable, which are no more than 2.4%. 

  • Private Mortgage Insurance (PMI)

Borrowers who have to pay a down payment of less than 20% require a PMI to safeguard the lender. Having a PMI protects the lender if they cannot make their loan payments. Such a situation is usually seen among low-income buyers who have made a down payment of about 3%.

  • Mortgage Credit Certificate (MCC)

Depending on the monthly mortgage payments of low-income homebuyers, the MCC allows the individual to receive a dollar-for-dollar reduction in the liability of their federal taxes. 

6. Programs and Loans designed for first-time home buyers in Texas

6.1. Texas First-Time Home Buyer Programs 

6.1.1 Texas State Affordable Housing Corporation (TSAHC)

Source: 2

  • Homes for Texas Heroes Home Loan Program

This program was created to honor and assist the heroes of the U.S. It is available to all home buyers statewide. First-time homebuyers have the option to combine the MCC program to save more.

Eligibility Variable depending on the mortgage
Minimum Credit Score620
DTI RatioDepends on lender
Assistance AmountVariable depending on mortgage
Assistance TypeDown payment assistance of 3%-5%Fixed mortgage loan with low interest
Max. Income LimitTargeted areas:  $105,140 to 133,280  annually Non-targeted areas: $93,875 to $123,625 annually 
  • Homes Sweet Texas Home Loan Program

This Home Sweet Texas Home Loan program is designed to assist moderate to low-income families buy a new home. The applicants can choose to use down payment assistance as a grant or a deferred forgivable second lien loan, which means they can avail of free money if they are eligible.

Eligibility Must fulfill the income and loan requirements. The property must be a single-family or unit home or condominium.
Minimum Credit Score620
DTI RatioDepends on Lender
Assistance AmountVariable depending on mortgage.
Assistance TypeA fixed mortgage loan with low interest. Down payment assistance grant/deferred forgivable second lien.
Max. Income Limit$56,240 to 133,280 annually (based on area and loan type)

 6.1.2. Texas Department of Housing and Community Affairs (TDHCA)

  • My First Texas Home Program

The My First Texas Home program is designed to offer home loans, down payment, and closing costs assistance. Eligible first-time homebuyers receive up to 5% of the loan amount and can get a 30-year fixed-rate mortgage loan through their chosen lender.

Eligibility Must be a first-time home buyer or veteran. 
Must fulfil income requirements.
Must fulfil purchase price limits
Minimum Credit Score620
DTI Ratio55%
Assistance AmountVariable depending on the mortgage
Assistance TypeLow-interest, 30-year fixed rate mortgage loans up to 5% off on the first lien mortgage for closing cost0% interest on the second lien. Three-year forgivable second lie,
Max. Income LimitTargeted areas: $90,120 to $138,460 annually on-targeted areas: $75,100 to 119,370 annually 
  • My Choice Texas Home Program

Although this program is quite similar to the My First Texas Home program, it has two exceptions i.e., You do not have to be a first-time homebuyer, and it cannot be used with the MCC program. It does offer 30-year fixed-rate mortgage loans and closing and down payment costs.

Eligibility Variable depending on the mortgage
Minimum Credit Score620
DTI Ratio55%
Assistance AmountVariable depending on the mortgage.
Assistance TypeFHA, VA, USDA, Conventional
Max. Income LimitDepends on lender 
  • Texas Mortgage Credit Certificate Program

The MCC Program can be combined with the My First Texas Home program to maximize your benefits. The ones who have opted for this program receive a credit of up to $2,000 on their federal income taxes on the condition that their mortgage exists and they still live in the same house.

Eligibility Must qualify as a first-time homebuyer or veteran. Must meet income and purchase price limits
Minimum Credit ScoreN/A
DTI RatioN/A
Assistance AmountDepends on Mortgage 
Assistance Type20% or 30% of the yearly interest paid on the mortgage equals the tax credit
Max. Income LimitVary based on the county

6.2. Types of Programs Nation-wide

6.2.1 Federal First-Time Home Buyer Programs

  • FHA Loans 

These loans are designed to help borrowers qualify for private mortgages to buy a new home. However, you will have to pay mortgage insurance, especially if your down payment is less than 20%, so the lender is protected if any default occurs. 

Eligibility Verifiable history of employment.
Verifiable income through bank statements, pay stubs, and federal tax returns
Property appraisal to meet HUD guidelines by FHA-approved appraiser 
Minimum Credit Score10% down payment: 500 to 5793.5% down payment: 580 or higher
DTI RatioFront-end: 31% or less of monthly income. Back-end: 43% or less of monthly income
Assistance AmountVariable depending on the mortgage
Assistance Type15 and 30-year mortgage options with fixed interest rates.
Max. Income LimitNo limit
  • USDA Loans 

Low to moderate-income homebuyers can use this program because they offer below-market interest rates with no down payments. The only downside of the USDA loan is that you will have to pay mortgage insurance.

Eligibility Variable depending on the mortgage 
Minimum Credit Score640 or higher
DTI Ratio41% or less
Assistance AmountNo down payment. Low mortgage rates
Assistance TypeNo down payment. Low mortgage rates
Max. Income LimitMust not exceed more than 15% of the median monthly income in your city
  • VA loans

These loans are created to assist active-duty military personnel and veterans with affordable home-buying costs. The regulations of this program are lenient to help you qualify easily. 

Eligibility Variable depending on the mortgage
Minimum Credit ScoreN/A
DTI Ratio41% or less
Assistance AmountVariable depending on mortgage
Assistance Type0% down payment. No mortgage insurance with a guarantee from the federal government. Lower closing costs
Max. Income LimitNo limit
  • Good Neighbor Next Door Program

Individuals who work in law enforcement, fire departments, emergency medical assistance, or teachers can purchase a home in a HUD revitalization area. This program offers a 50% discount on the home prices available in the inventory, and you must agree to solely reside there for at least three years.

Eligibility Professionals in all of the fields mentioned above.
Minimum Credit Score580 or more
DTI Ratio31% or less
Assistance AmountNon
Assistance Type50% discount on HUD-owned homes
Max. Income limitNo limit
  • Conventional Loans

These programs are best suited for low to moderate-income home buyers and intergenerational households. Although you do not have to be a first-time buyer, these loans are designed to offer better assistance to first-timers.

Eligibility Reliable employment and income. The selected home must be used as a primary residence.
First-time buyer education course certificate
Minimum Credit Score620
DTI Ratio43% or less
Assistance AmountNot more than $647,200 in most regions
Assistance Type3% down payment
Max. Income LimitDepends on the region
  • NADL

If you are a Native American and a Veteran, the NADL will assist you in buying, building, or improving a home on federal trust land. They ensure the qualification process is easy and offer limited closing costs.

Eligibility Valid Certificate of Eligibility for VA home loan.
The home must be on a Federally recognized trust, Alaska Native corporations, allotted lands, and Pacific Island Territories
Applicant must be a satisfactory credit risk
Credit ScoreN/A
DTI Ratio
Assistance Amount$424,100 maximum loan limit in most areas
Assistance TypeLow-interest rate starting at 4.5%. 30-year fixed mortgage. No down payment. Lender is the Department of Veterans Affairs. No private mortgage insurance cost 
Max. Income LimitN/A
  • Down Payment Assistance Programs

Down payments are usually one of the major obstacles when buying a house. To ease this burden, Texas has a huge list of down payment assistance grants, usually similar to second mortgages but with forgivable second liens and interest-free grants. We’ve mentioned the types and common Down Payment Assistance Programs below.

Types of Down Payment Assistance in Texas

  • Down payment help: Second/third mortgages or grants with no interest, forgivable loans, and deferred payments. 
  • Affordable first mortgages: These are designed to reduce the amount of mortgage payments by reducing interest rates, fees, closing costs, and mortgage insurance.
  • Mortgage Credit Certificate: These help lower your income tax by offering credits, which the Internal Revenue Services caps at $2,000.

6.2.2. TDHCA Programs

  • My First Texas Home 

With its 0% interest rate, 30-year mortgage, and up to 5% of the first lien mortgage amount, this program can be used as assistance for down payment assistance. 

The program also offers low, flexible payment plans at 2%, 3%, 4%, and 5%, along with closing cost assistance. Although it is a loan, it is considered an assistance program because the down payment and closing costs do not have to be sold, repaid, or re-financed.

  • My Choice Texas Home

Along with home loans, this program also offers assistance for closing costs and down payments to all homebuyers in Texas. It has almost the same features as the My First Texas Home program but caters to veterans and repeat homebuyers. 

It also provides a three-year forgivable 2nd lien and higher income limits than the previous program. 

6.2.3 TSAHC Programs

  • Homes for Texas Heroes 

As discussed earlier, this program applies to the same professions mentioned above. Apart from offering affordable mortgage loans, it also provides down payment assistance of up to 5% of the loan amount with a forgivable second-lien loan or a grant.

  • Homes for Texas Heroes 

This program offers the same assistance as the Homes for Texas Heroes Program, but instead of veterans, they assist low to moderate-income families. You need less than $97,000 as the gross household income to be eligible for this program. 

6.2.4. Southeast Texas Housing Finance Corporation (SETH) Programs

  • GoldStar Program

Texans classified as “Very Low Income” get assistance through this program and are offered up to 7% of the total loan amount. It also provides a forgivable second lien, and the funds are given in three, seven, and 10-year community second liens.

  • 5 Star Texas Advantage Program

This program offers grants to cover closing costs and down payment assistance. The terms state that you do not have to repay the amount, and there isn’t a second lien on the house.

  • Homeownership Across Texas (HAT) Program

Through this program, qualified home buyers are offered grants to minimize their closing costs and down payment. These grants range from 1%-5% of the loan amount and do not require repayment.

7. Buying a Home in Major Cities of Texas

7.1. Houston 

  • 3% down payment – $9,870
  • 20% down payment – $65,800

Housing the second-largest metro in Texas, city of Houston has a flourishing job market with a considerably low cost of living. With a median home price of $329,000, homes in Space City sell after approximately 49 days of being on the market. 

The average annual salary observed in the city is $54,490, which is comparatively more than other areas in Texas. Residents in this area spend an average of 22.85% of their household income on housing-related expenses.

7.2. San Antonio 

  • 3% down payment – $8,400 
  • 20% down payment – $56,000 

Founded in 1718, the Alamo City is rich in history and heritage. It sustains a healthy job market with a reasonable cost of living and an average annual salary of $47,220. The city’s median home listing price is $285,000, and it offers affordable condos, townhouses, duplexes, and triplexes.

Despite the average being lower than the national median salary, the unemployment rate in San Antonio is around 7.3%, less than the 8.1% national average. It is considered a buyer’s market due to its great demand for homes.

7.3. Dallas

  • 3% down payment – $12,000 
  • 20% down payment – $80,000 

Although the median price listing for a home in Dallas is relatively high, at an average of $524,900, the average annual salary is also higher at $53,800. The city is filled with 112 flourishing neighborhoods and 2,960 homes for sale, ranging from $18,000 to $24,500,000. 

The homes in Dallas have a median of around 35 days on the market due to the population influx. It has 508 public schools, 128 private or charter schools, and various other amenities.

7.4. Beaumont

  • 3% down payment – $6,750
  • 20% down payment – $45,000 

Despite a higher annual salary average of $48,830, which is more than Houston, Beaumont has quite a low cost of living. With an average home value of $225,000, it has extremely affordable townhomes in around 33 neighborhoods. 

Residents in Beaumont spend around 21.07% of their overall household income on rent, property taxes, and mortgage payments. It is a buyer’s market, and each house listing spends an average of 70 days on the market.

7.5. Killeen

  • 3% down payment – $6,630 
  • 20% down payment – $44,200 

This military “boom town” holds the 5th place among the best places to live in Texas. With an average annual salary of $45,190, the cost of living is lower than the national average. The average home listing price is around $221,100 and can range from $12,000 to $6,000,000.

The most affordable neighborhood is Rose, with an average home price of $130,000, and the most expensive is Purser Crossing, at $324,000. The average period a house is listed on the market is 38 days, which also means it is a seller’s market.

8. Cheapest Locations to Buy a Home in Texas

8.1. Breckenridge

  • 3% down payment – $5,475
  • 20% down payment – $36,500 

Surrounded by numerous lakes, ski resorts, plenty of hunting sites, and overall natural beauty, this city attracts visitors from all across the globe. The cost of living in Breckenridge is 25% lower than the average in the U.S., with the median housing listing price at $182,500.

Considering the numbers, this city is the cheapest place to own a residence in Texas. The average annual income is $57,000, and if you’re looking to settle here, it is a buyer’s market with an average of 119 days on the market.

8.2 Brownsville 

  • 3% down payment – $6,390 
  • 20% down payment – $42,600 

Located near the U.S. – Mexico border, this city has a unique culture and Hispanic oomph. Also known as “The Sunset Capital of the World”, Brownsville is paired with fantastic weather. Despite its serenity, the cost of living here is around 19% lower than the average in Texas. 

With house prices at an average of $213,000, an astonishing 41% less than the Texan median home prices. The annual income average is $42,371, and you can choose affordable condos ranging from $20,900 to $13,700,000.

8.3. Pecos

  • 3% down payment – $6,600 
  • 20% down payment – $44,000 

A small, traditional town towards the southern border of New Mexico, Pecos is a regional commercial center for gas and oil, agriculture, and ranching. The annual income in this city is estimated at around $40,000, along with affordable housing options.

On average, the typical home listing price is $220,000, with quite a few homes for sale starting at as low as $12,500. As of March 2022, Pecos is a buyer’s market, with houses being sold after 125 days on the market.

8.4. El Paso

  • 3% down payment – $6,900 
  • 20% down payment – $46,000 

Although Chucotown is one of the largest Texas cities, along with fun amenities, it is also among the most affordable. El Paso is also one of the highest manufacturing cities in the U.S., making it incredible for employment with an average annual income of $59,657.

The city comprises 178 neighborhoods with around 1,419 homes on the market. You can buy affordable condos, townhomes, two-bedroom homes, and multi-family units. The median listing home price is $230,000, and the houses get sold within approximately 47 days of the listing.

8.5. McAllen

  • 3% down payment – $7,485 
  • 20% down payment – $49,900 

McAllen has made its way to among the top 15 most affordable cities in the U.S. with its family-friendly prices. It is also considered an ideal relocation region due to its fast-growing industries and employment status.

A full-time job in McAllen pays an annual income of around $49,000; the median home listing is estimated at $249,500. There are 620 houses for sale across eight neighborhoods where you can buy cheap but unique condos.

8.6 Odessa 

  • 3% down payment – $7,485 
  • 20% down payment – $49,900 

The multicultural influences in Odessa make it quite an attractive place to have a permanent residence, especially with its average annual salary of ABOUT $66,000. From embarrassing the cowboy culture to the Friday Night Lights’ football-loving area, it has a lot of activities to offer.

The median home price is $266,600, with around 1,199 house listings across 14 neighborhoods as cheap as $27,500. This is a buyer’s market; you can choose from affordable condos and townhomes.

Why is Texas one of the “It” places to buy a home?

People are moving to Texas, and the reason lies beyond its substantial real estate industry. With the fastest growing population in the U.S. due to net migration, there are over 28.3 million residents in the states. So, what is so special about Texas? Let’s find out below.

  1. Tax Laws are Easy on Homeowners

Buying a home in Texas, especially for first-time homebuyers, is a miracle with various tax breaks and incentives through grants and programs. The law states that if you’re less than $1,000,000, the monthly interest paid on that loan is deductible, and so is some housing-related expenditure and property taxes.

Similarly, Texas is among the only seven states in the U.S. to waive the State Income Tax, which means residents do not have to pay any state-related income tax. Although this works because Texas makes money through property taxes, the overall burden on homebuyers is way less here than in other states.

  1. Every Season is Enjoyable

As odd as it may sound, people are in Texas because of its pleasant weather. Contrary to the popular opinion that Texas is hot and dry, you can experience spring, summer, fall, and winter at its best. No more weary, endless cold, or irritating humidity because there is close to moderate weather all year.

Its comfortable climate also allows year-round outdoor activities. Texas is suitable for all, from simply biking, swimming, or running to hiking or dining. 

  1. Up and Rising Housing Market

Generally, Texas is an affordable, family-friendly state with a thriving amount of real estate. Despite the increasing prices, houses are comparatively cheaper and will continue to rise at a low rate. Due to the influx of people in the area, the prices are bound to appreciate, which means you can receive a great return on your investment. 

  1. Culture Diversity

 Young families are among the common people who are moving to Texas, and one of the main reasons is the cultural variety in its population. The state ranks 2nd in diversity in the U.S., and Houston is known to have 145 actively spoken languages. 

Texans are warm and welcoming to newcomers, making it easier for people to adjust to a different state within a new community. 


1. What to do if your credit score is not up to the mark?

Repairing it is the only option for buyers with a bad credit score. Go through the details of your credit report, such as payment history, age of credit, credit utilization, type of credit, new credit amount, and so on. All these aspects affect your score, and repairing even one can make a huge difference.

2. How much do Texas home buyers pay to own a home in Texas?

The average cost price of a home in Texas is $325,000. Typically, the endless list of fees, which make up about 2% or more of the house price, also add to the final cost. In this case, the total amount would be $331,500. Similarly, down payments also range from 3%-5% of the mortgage, adding to the overall cost.

Parting Thoughts

Now that we’ve finally reached the end of what seemed like a never-ending article, we hope you got a profound insight into all the aspects of being a first-time homebuyer in Texas. Be patient and cautious; after all, it will become a place you and your family call home.

Written By:

  • An experienced marketing consultant with a decade of hands-on experience in real estate. You might catch her at a local jazz bar on a Friday night or at home experimenting with vertical kitchen gardens.

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