How To Buy A House In Texas

Are you looking to buy a house in Texas? Congratulations! The Lone Star State has much to offer. Whether you’re buying a home to live in or buying your first investment property, you might be wondering what you need to know to get started, from the required credit score to down payment programs. In this article, we’ll go over the information you need to start your home buying journey.

Requirements To Buy A House In Texas: 7 Key Steps

There are several steps you can take to get started with the home buying process in Texas.

Step 1: Take A Deep Dive Into Your Finances

The first stop on the home buying journey is to figure out how much house you can afford. The best way to do this is to assess the amount of money you have set aside for a down payment (more on that below) and how much you can reasonably afford in a monthly payment. This calculator can help you calculate what your anticipated monthly payment might be. You can also use Rocket Money to see how much you have saved across your accounts or their Smart Savings feature to start saving automatically based on your spending habits.

Step 2: Get Your Initial Approval For A Mortgage

Once you think you know your budget for a home, it’s time to talk to a mortgage lender about how much you can afford. When lenders look more closely at your financial situation, they’ll give you some information about interest rates and how they will affect your potential payment.

You also should ask them about Texas-specific programs that might help you with your down payment, closing costs and taxes. (We offer some more insight below.) Believe it or not, it’s important to get your mortgage approval early in the process to help set your budget and show the seller that you have the funds to close the deal once you make the offer.

Step 3: Find A Local Texas Real Estate Agent

Not sure what part of town you want to live in? A local real estate agent can be an invaluable resource to give you the information you need to know about various neighborhoods. Also, they can help you assess the homes you’re looking at to ensure you find one that’s a good value relative to the market. Make sure to ask the agent for references, then ask them about their process in order to find a good personality fit.

Our friends at Rocket Homes℠  can help you find and put an offer in on a Texas home that’s a fit for you.

Step 4: Begin Looking At Properties

Now comes the fun part! With a budget in mind, you can more realistically search for the homes in the neighborhoods you like. Your REALTOR^® or real estate agent can give you all the information you need about the amenities, schools and more to help you make an informed choice. Many properties have online video tours so you can check out the house from the comfort of your couch.

Step 5: Make An Offer On The House You Want

Once you’ve settled on the right property, your agent will help you create a written offer that covers all the important details, from the amount you’re offering to any contingencies, such as if you have a home to sell before closing.

Step 6: Seek A Property Inspection And Appraisal

It’s always important to have an independent third party do an official home inspection. This is a good idea because even the most perfect-looking house might have something lurking – and it could be expensive to fix, like a roof needing replacement or a foundation collecting water. An inspection will give you the peace of mind that the house is in good shape and/or give you the chance to negotiate the price to cover any necessary repairs.

Step 7: Determine Escrow And Finalize Your Deal

What Do You Need To Buy A Home In Texas?

Texas is a strong housing market. Today, people flock to the state for its culture and wide variety of options, from small towns to bustling cities, in turn making the competition tight. But don’t worry, you’re sure to find a Texas home in your price range.

The amount of money you need to buy a home in Texas depends on your financial situation, including how much house you can afford, your credit score, the down payment you can put down and the types of mortgage assistance programs you may qualify for. If you don’t know your credit score, you can check and monitor your score and credit report using Rocket Money.

The typical credit score needed to buy a house ranges from 620 to 730, but there may be programs available even if your credit report shows a lower score. It’s important to remember that the higher your credit score, the more likely it is that you’ll qualify for the best mortgage rates.

For many of the programs mentioned below, you’ll need a credit score of at least 620. To qualify for a government-backed Federal Housing Administration (FHA) loan, you only need a credit score of 580, and possibly even less if you can put down a larger down payment. Rocket Mortgage^® requires a median FICO^® Score of 580 or better for FHA loans.

How Much Down Payment Is Required For A House In Texas?

You’ve probably heard the conventional wisdom that you need to put 20% down on a home to buy a house in Texas. Now, that can be wise advice when saving for a down payment because the more you put down, the more affordable your mortgage payment will be each month. Not sure where to start? Set up a savings goal based on your spending habits using the Smart Savings feature from Rocket Money.

By putting down at least 20%, you don’t have to buy private mortgage insurance, also known as PMI. PMI isn’t required with 20% down because the more of the house you own, the more likely you are to fulfill your obligation to repay the loan responsibly. However, there are a number of other programs designed to help you achieve the goals of homeownership with far less down.

When trying to find a suitable mortgage, borrowers should ask about a home loan that falls under the Federal Housing Administration (FHA) program, which only requires a down payment of 3.5%. If you qualify, you can also get a conventional loan with as little as 3% down. Those who are eligible for USDA or VA loans don’t need to make a down payment.

Every state also has different programs that are state-specific; for example, first-time home buyer programs in California are different from those in Texas. For this reason, it’s important to work with a local source who can help you look into all your options.

One of the top first-time home buyer tips is to research programs available for you to help make the down payment as affordable as possible. The Texas Department of Housing and Community Affairs has a number of programs that you can achieve through a network of approved lenders. Three programs to consider are:

• My First Texas Home Program: If you are a first-time home buyer (or haven’t purchased a  new home in 3 years) and have a credit score of at least 620, you might be eligible for this program. You’ll receive down payment and closing cost assistance on a 30-year, fixed-rate mortgage loan. You also might qualify for first-time home buyer tax deductions.
• My Choice Texas Home: This program is for any home buyer, not just first-time home buyers, and has many of the benefits of the My First Texas Home Program – including down payment and closing cost assistance on a 30-year, fixed-rate mortgage loan. You’ll need a credit score of at least 620, and it’s subject to income and purchase price limits, among other requirements.
• Texas Mortgage Credit Certificate Program: This is another program for first-time home buyers in Texas that offers additional potential reductions on your federal tax bill. You can combine it with the My First Texas Home Program for even more savings, provided you qualify.

It’s important to note that not all lenders participate in every state program, particularly if the option requires a lien to be placed on the home by a state housing authority. However, lenders will typically accept grants as sources of down payment funding because these don’t need to be paid back.

In addition to those programs, there might be others for which you would qualify. Be sure to ask your mortgage lender to explore all the potential options that could help make homeownership even more affordable.

The Bottom Line

Are you ready to start your house hunt? With this information on how to buy a house in Texas, you should feel confident about your upcoming journey.