Become A Homeowner

No, and this is the most expensive misunderstanding in residential real estate.

Per NerdWallet's 2025 Home Buyer Report, 62 percent of Americans believe a 20 percent down payment is required. Fannie Mae's research found roughly 90 percent of consumers either overstate the minimum or do not know it.

The actual minimums: Conventional 3 percent. FHA 3.5 percent at a 580 score. VA zero. USDA zero. On a $325,000 home, 3 percent is $9,750, not $65,000.

Twenty percent is the threshold where private mortgage insurance stops applying on a conventional loan. It has never been a requirement to buy. Those are two different facts, and confusing them keeps people renting for years longer than necessary.

Lower than most people assume. Fannie Mae found that 32 percent of consumers either do not know the minimum or significantly overestimate it.

Conventional: generally 620. FHA: 580 for 3.5 percent down, or 500 to 579 with 10 percent down. VA: no agency minimum, with lenders commonly requiring 580 to 620. USDA: no agency minimum, though automated approval effectively needs around 640.

Those are program minimums, not lender minimums. Individual lenders add overlays that commonly push the bar 20 to 40 points higher. A no from one lender is not a no everywhere.

Also worth knowing: your mortgage score is not the number on your phone. Lenders pull a tri-merge report using older mortgage-calibrated FICO models and take the middle of three scores. Gaps of 20 to 80 points against consumer apps are normal.

Down payment plus closing costs, and people almost always forget the second half.

Buyer closing costs in Texas commonly run 2 to 5 percent of the purchase price. On a $350,000 home that is roughly $7,000 to $17,500, covering lender fees, title fees, prepaid interest, your first year of homeowner's insurance, and funding your escrow account.

Add inspection costs during the option period, typically a general inspection plus specialty inspections where warranted.

Two things that reduce it. In Texas the seller customarily pays for the owner's title policy. And seller concessions toward closing costs are near record levels, which changes the cash-to-close conversation more than any other single negotiation point.

Two different answers, and you need both.

What a lender will approve is driven by debt-to-income ratio. Conventional files run through Desktop Underwriter can reach 50 percent back-end DTI. FHA files can go higher with compensating factors.

What you should actually spend is usually less. The traditional benchmark is 28 percent of gross income toward housing and 36 percent toward all debt, and it exists for a reason.

Lenders approve based on your ability to repay, not your ability to live. A maximum approval is a ceiling, not a target, and the gap between the two is where people get house poor.

Here is the honest answer, including the part that does not help me.

Nobody knows where rates go. Anyone who tells you with confidence is guessing with conviction. What is knowable is the tradeoff you are making while you wait.

Waiting means continuing to pay rent that builds you nothing, while prices in a growing market may or may not hold. If rates fall and prices rise, you traded one problem for another.

What is within your control: you can refinance a rate. You cannot refinance a purchase price. And a rate buydown negotiated as a seller concession is available right now in a market where nearly half of sellers are offering concessions.

Sometimes waiting is right, and when it is, I will say so. The wrong reason to wait is a rate forecast nobody can make. The right reason is a specific gap in your finances with a plan attached.

More than most buyers ever check. Roughly 70 percent of U.S. adults do not know down payment assistance exists in their area.

TDHCA runs My First Texas Home and My Choice Texas Home, both offering up to 5 percent as a deferred zero-interest second lien. My Choice is the one nobody knows about, because it is open to repeat buyers.

TSAHC runs Home Sweet Texas, open to all eligible buyers, and Homes for Texas Heroes for teachers, police, firefighters, EMS, corrections officers, nurses, and veterans. Assistance runs up to 5 percent as either a non-repayable grant or a deferred second lien.

Credit requirements: generally 620 for FHA, VA, and USDA, but 640 for HFA conventional loans. Scores between 620 and 639 on government loans carry an added lender fee.

All programs carry county income limits, purchase price caps, a homebuyer education requirement, and the need for an approved lender. Not every lender originates these.

For most program purposes, anyone who has not owned a principal residence in the past three years.

That definition catches far more people than the phrase suggests. If you owned a home four years ago and have been renting since, you likely qualify as a first-time buyer again for assistance program purposes.

Veterans and buyers purchasing in targeted areas are generally exempt from the requirement entirely. And TDHCA's My Choice Texas Home does not require first-time status at all.

Do not disqualify yourself from money you have never checked your eligibility for. This is the single most common reason people skip programs they would have received.

Three levels, and sellers know the difference even when buyers do not.

Pre-qualification is an estimate based on numbers you stated. Nothing verified. Useful for orientation, worth very little in a negotiation.

Pre-approval adds a credit pull and documentation review. This is the letter that makes your offer credible.

Fully underwritten, sometimes called TBD approval, means a human underwriter reviewed your complete file and approved it subject only to finding a property and a clean appraisal and title.

Get fully underwritten before you shop. It makes you functionally a cash buyer waiting on a house, and in a competitive situation that is the cheapest leverage you will ever buy.

Private mortgage insurance protects the lender, not you, and it applies on conventional loans when you put down less than 20 percent.

The critical part is that conventional PMI is cancellable by federal law. You may request removal at 80 percent loan-to-value, and it terminates automatically at 78 percent if you are current on payments.

FHA mortgage insurance behaves differently and this catches people. FHA charges an upfront premium of 1.75 percent financed into the loan, plus an annual premium. With less than 10 percent down, that annual premium is permanent for the life of the loan. The only exit is refinancing into a conventional loan.

FHA's life-of-loan premium is the most expensive misunderstanding in lending. If you can qualify conventional at 3 percent down, run both scenarios over the years you actually plan to stay.

Per NAR's 2025 profile, 38 percent of first-time buyers said understanding the steps and process was their single biggest challenge. Here is the order.

One. Talk to a lender and get fully underwritten. Two. Sign a representation agreement with an agent, now required in Texas before touring. Three. Narrow the geography before you narrow the house.

Four. Tour and write an offer. Five. Option period, inspections, and repair negotiation. Six. Appraisal and final underwriting. Seven. Closing Disclosure at least three business days before closing, then sign and fund.

The order matters more than the speed. Almost every difficult transaction I have seen started with someone touring homes before they had financing handled.

Faster than most people expect once the preparation is done.

Financing: a few days to a couple of weeks to get fully underwritten, assuming your documents are gathered.

Searching: entirely variable. Narrowing the corridor before you drive it shortens this more than anything else.

Contract to closing: commonly 30 to 45 days. ICE Mortgage Technology has reported an average near 42 to 43 days in recent years. Cash purchases can close in one to three weeks.

From a serious start to keys in hand, six to ten weeks is reasonable for a prepared buyer who finds the right house without a long search.

Usually yes, and the calculation differs enough between programs that the same borrower can fail one and pass another.

Fannie Mae uses 1 percent of the balance, or a documented payment including a documented $0 income-driven payment. Freddie Mac uses 0.5 percent when the reported payment is zero. FHA uses the actual payment, or 0.5 percent of the balance if the payment is zero.

That is not a technicality. On a $60,000 balance, the difference between the 1 percent and 0.5 percent calculations is $300 a month in your debt-to-income ratio, which can be tens of thousands of dollars in purchasing power.

If one lender says the student loans disqualify you, that is one program's math, not a verdict. Ask what happens under the other agency's guidelines before you accept the answer.

Yes, and this changed recently enough that most buyers have not caught up.

Texas SB 1968 amended the Real Estate License Act, and effective January 1, 2026, Occupations Code §1101.563 requires a written agreement between a buyer and a license holder before that agent shows residential property. This is state law binding every license holder in Texas, broader than the NAR settlement that took effect in August 2024.

Texas allows three forms: a long representation agreement, a short representation agreement, and a non-representation showing-only agreement. Know which one you are signing.

On who pays: compensation is negotiable and always was. In most transactions the seller still covers it through a negotiated concession, but it is now disclosed in writing rather than assumed.

Because the homestead cap that was protecting the previous owner does not transfer to you.

Texas limits annual increases in appraised value to 10 percent for homesteaded properties. A seller who owned for a decade may have been paying tax on a value well below market because that cap compounded in their favor.

When the property sells, the value resets to market. And the cap does not begin protecting you until you have owned and homesteaded the property for a full year, which means a buyer who closes in 2025 generally sees no cap protection until 2027.

Never budget from the seller's current tax bill. Ask what the taxes will be at your purchase price with your exemption, not what the previous owner was paying.

Texas has no state income tax and the tradeoff is comparatively high property taxes.

Combined Ellis County rates commonly run near 2 percent, ranging from roughly 1.99 percent in Midlothian to 2.15 percent in Ennis, with Waxahachie near 2.05 percent. Your exact rate depends on which city and school district your address falls in.

The school district homestead exemption is now $140,000, increased from $100,000 under Proposition 13, approved by Texas voters on November 4, 2025. Homeowners 65 or older and disabled homeowners receive an additional amount on top.

File it. The exemption is not automatic, it applies to your principal residence, and missing the filing costs you real money for a full year.

Three separate things that stack, and most buyers only ask about the HOA.

A MUD is a Municipal Utility District, a separate taxing entity created to finance water, sewer, and drainage where the city has not extended service. It appears as an additional line on your tax bill. New-construction MUD rates commonly run $0.80 to $1.40 per $100 of value, and partially built districts can run higher because fewer homeowners are carrying the same bond debt. Rates decline over decades as debt retires.

A PID is a Public Improvement District funding amenities and infrastructure through an assessment attached to the lot. It is frequently a fixed amount rather than a percentage, so it does not scale with your value and homestead exemptions generally do not reduce it. Many PIDs can be prepaid in a lump sum.

An HOA is neither. Dues are a private monthly obligation, they are not tax deductible, and lenders count them in your debt-to-income ratio.

Eligibility is address-specific, not city-wide. Read the disclosure, check Schedule C of your title commitment, and pull the parcel on the county appraisal district site before your option period expires.

Because North Texas sits in the most hail-active corridor in the country, and premiums reflect it.

Dallas-area homeowners commonly see annual premiums in the range of $5,400 to $6,300, against a Texas statewide average near $4,085 and a national average closer to $2,490. Texas logged 878 major hail events in 2024, and State Farm alone paid roughly $1.4 billion on Texas hail claims in 2025.

Two things that follow from this. Separate wind and hail deductibles, commonly 2 percent of dwelling coverage, are now standard. And roof age drives insurability — as roofs age, carriers switch to actual cash value coverage or decline the roof entirely.

Class 4 impact-resistant roofing earns premium credits commonly in the 20 to 35 percent range. Get an insurance quote during your option period, not after. A home you cannot insure affordably is a home you cannot close on.

Three things that hit differently here.

Foundations. DFW sits on Blackland Prairie expansive clay that swells when wet and shrinks when dry, stressing slabs year-round. The distinction that matters is not repaired versus never repaired. It is documented versus undocumented. A transferable warranty plus an independent engineer's letter is a manageable disclosure. An expired warranty from a company that no longer exists is not.

Earnest money. Typically around 1 percent of purchase price in Texas, held by the title company and credited to you at closing. It is refundable during your option period and within your contract's contingency windows.

Geography is money. Fifteen minutes apart in this metro can mean a hundred thousand dollars, a different school district, a different tax rate, and a completely different commute. Pick the corridor before you pick the house.