First-Time Home Buyer Guide: Texas

Texas at a Glance

Can You Afford a Home in Texas?

Here is what it takes to buy the median Texas home ($310K) under three common down payment scenarios, using a 6.5% mortgage rate and the 28% income rule. All figures include principal, interest, property taxes (1.8%), and homeowners insurance ($4K/yr).

Texas’s First-Time Buyer Program

How Texas’s Program Works

The TDHCA My First Texas Home provides down payment assistance as an outright grant — money you do not have to repay. This is one of the most borrower-friendly forms of DPA available, because the assistance reduces your cash-to-close without adding a second lien or increasing your monthly debt obligations. The grant is typically applied directly at closing, lowering the amount you need to bring to the table.

Grant programs like this one are funded through state housing finance authority budgets, federal HOME funds, or mortgage revenue bond proceeds. Because grant funds are limited, the program may have application windows or first-come-first-served availability. Acting early in the calendar year — or as soon as new funding is announced — gives you the best chance of securing assistance before funds are exhausted.

Eligibility Requirements

While specific requirements vary by program year, the TDHCA My First Texas Home typically requires:

• First-time buyer status: Generally defined as not having owned a home in the past three years. Some programs make exceptions for veterans or buyers purchasing in targeted areas.
• Income limits: Household income must fall below a threshold set by the program, often tied to the area median income (AMI). Limits vary by county and household size.
• Purchase price caps: The home price must not exceed a maximum set by the program, which is typically aligned with FHA loan limits or a percentage of the area median home price.
• Homebuyer education: Completion of a HUD-approved homebuyer education course is required. Many programs accept online courses, which take 4-8 hours.
• Occupancy: The home must be your primary residence. Investment properties and second homes do not qualify.
• Minimum credit score: Most programs require a credit score of at least 620-640, though FHA-backed options may accept lower scores.

How to Apply

The application process for the TDHCA My First Texas Home generally follows these steps:

1. Find a participating lender. The program works through approved lenders — not all mortgage companies participate. Check the state housing authority website for a lender directory.
2. Complete homebuyer education. Enroll in and finish a HUD-approved course before or during the application process. Keep your certificate of completion; lenders will need it.
3. Get pre-approved. Your participating lender will evaluate your income, credit, and debts to confirm you qualify for both the first mortgage and the DPA program.
4. Find a home within program limits. Work with a real estate agent to find a property that meets the program price cap and any property condition requirements.
5. Apply through the program. Your lender submits the DPA application alongside your primary mortgage application. The two are processed together, and the assistance is delivered at closing.

Closing Costs in Texas

On the Texas median home of $310K, expect to pay approximately $5K in closing costs (1.7%% of the purchase price). This total typically includes title insurance, title search fees, recording fees, appraisal ($400-$600), credit report ($30-$50), lender origination charges, and prepaid escrow items (property taxes and homeowners insurance). Your actual costs will vary with the purchase price, lender, and loan type.

One advantage for Texas buyers: the state does not charge a real estate transfer tax. This eliminates a line item that costs thousands of dollars in states like Delaware, Pennsylvania, or New York, keeping more of your closing budget focused on necessary fees like title insurance and lender charges.

Texas does not require an attorney at closing — title companies handle most transactions. This can save you $500 to $1,500 compared to attorney-closing states. That said, first-time buyers may still benefit from hiring a real estate attorney to review documents, especially on a first purchase.

Buying Timeline & Advice for Texas

The Texas median home price of $310K puts it in the moderate range nationally. First-time buyers have the full range of financing options: FHA loans at 3.5% down ($11K), conventional loans at 5% ($16K) or 20% ($62K), and VA or USDA loans for eligible borrowers. Combined with closing costs of roughly $5K, plan to save between $16K and $67K depending on your loan type.

A typical home buying timeline in Texas runs 3-6 months from the start of your search to closing day. Expect to spend 2-4 weeks getting pre-approved, 4-8 weeks searching and making offers, and another 30-45 days from contract to close. In competitive markets within Texas, homes may move faster — having your pre-approval and DPA documentation ready before you start looking gives you an edge.

One factor to plan for carefully in Texas: the 1.8% property tax rate adds $6K per year ($465/mo) to your housing cost. Property taxes are a significant share of the total monthly payment — sometimes more than the homeowners insurance and a portion of the principal combined. When budgeting, make sure you account for this ongoing cost, not just the mortgage principal and interest. Some Texas jurisdictions offer property tax abatement programs for first-time buyers or newly purchased homes — ask your real estate agent or local assessor about any available relief.

Homeowners insurance in Texas averages $4K per year ($317/mo) — well above the national average. This cost is driven by factors like severe weather risk, claims frequency, and insurer availability in the state. Shop at least three to five insurance carriers before closing to find the best rate. Consider raising your deductible to $2,500 or higher if you have an emergency fund, which can reduce premiums by 10-20%. Bundling home and auto insurance is another common way to lower the cost. Factor potential annual premium increases of 5-10% into your long-term budget, as insurance costs in high-risk states have been climbing faster than general inflation.

Plan your timeline carefully: start improving your credit score and reducing debts at least 6-12 months before you want to buy. Enroll in homebuyer education early — it is a requirement for most DPA programs, including the TDHCA My First Texas Home, and it will help you understand the process. Save consistently, automate transfers to a dedicated house fund, and get pre-approved before you start touring homes. First-time buyers who are well-prepared before entering the market close faster and negotiate better.

Cities to Consider in Texas

Home prices vary significantly across Texas. Here are cities in the state, sorted by median home price, to help you target your search.

Next Steps

Ready to take the next step? Use these tools to crunch the numbers for your situation:

Common Questions

First-Time Buyer Guides: South Region