🏠 Home Buying Q&A

💰 How much money do I need to buy a home?

You don't necessarily need 20% down. Depending on your loan program and qualifications, you may be able to buy with a lower down payment. Some eligible buyers may qualify for down-payment assistance, and certain new-construction builders may offer incentives or closing-cost assistance.

Your actual cash to close depends on your loan, down payment, closing costs, prepaid expenses, credits, assistance and the property.

🏦 What credit score do I need?

There isn't one universal credit score requirement for every mortgage. However, 620 is an important benchmark for some conventional and Texas homebuyer assistance programs.

A higher score can potentially give you more loan options and better pricing. Your lender will also consider your overall credit history, debt, income and assets.

📊 What is DTI?

DTI = Debt-to-Income Ratio. It measures how much of your gross monthly income is committed to qualifying monthly debt.

🧮 How do I calculate my DTI?

Example: You make $84,000/year.

Your DTI is approximately 42.9%. Your lender may calculate qualifying income and debt differently depending on the loan program and underwriting rules.

🧠 What DTI should I have to buy a house?

There isn't one DTI number that guarantees approval. Different loan programs and lenders have different requirements, and automated underwriting can affect the maximum allowed.

As a general planning guideline, lower DTI is usually better because less of your income is committed to debt.

🏠 Does my future mortgage payment count toward DTI?

Yes. When determining your total debt-to-income ratio, the lender generally considers the proposed housing payment along with other qualifying monthly debts.

Your housing payment may include:

• Principal
• Interest
• Property taxes
• Homeowners insurance
• Mortgage insurance, if applicable
• HOA dues, when applicable

💵 Do I need 20% down?

No. Depending on your loan program and qualifications, you may be able to buy with significantly less.

• FHA: eligible borrowers can potentially put down as little as 3.5%.
• Conventional: certain programs can allow as little as 3% down for eligible buyers.
• VA: eligible buyers may qualify for 0% down.
• USDA: eligible buyers in qualifying areas may qualify for 0% down.

🏦 What is down-payment assistance?

Down-payment assistance, or DPA, can help eligible buyers with some upfront costs associated with purchasing a home. Texas has programs available through participating lenders, including TDHCA programs.

DPA isn't automatically available to everyone. Eligibility, income limits, credit requirements, property requirements and program terms apply.

🏗️ Can a builder help with my closing costs?

Potentially, yes. New-home builders may offer incentives such as:

• Closing-cost assistance
• Lender credits
• Interest-rate buydowns
• Upgrades
• Other incentives

Offers vary by builder, community, inventory and promotion. Some incentives require you to use the builder's preferred lender or title company.

💰 What is earnest money?

Earnest money is money deposited as part of the purchase contract to show good faith. The amount is negotiated in the contract.

You may hear people talk about 1% earnest money, but 1% is not a universal Texas requirement.

Your contract and closing documents determine how the earnest money is handled and credited.

🧾 What are closing costs?

Closing costs are expenses associated with completing the home purchase and mortgage. They can include:

• Lender fees
• Title-related charges
• Appraisal
• Prepaid interest
• Property taxes
• Homeowners insurance
• Escrow deposits
• Other transaction costs

The amount varies by loan and transaction.

💵 What is "cash to close"?

This is one of the most important numbers to understand. Cash to close is the amount you are expected to bring to the closing table after accounting for applicable credits, deposits, payments and other adjustments.

🏠 Should I shop around for homeowners insurance?

YES. Don't automatically take the first insurance quote you get.

Homeowners insurance can be a significant part of your monthly housing cost, especially in Texas. Premiums can vary based on location, home value, age and condition, roof age, deductible, coverage limits, claims history and the insurer.

Before closing, get quotes from multiple reputable insurance companies or work with an independent insurance agent who can compare options.

📈 Can my property taxes increase after I buy the house?

Yes. Texas property taxes are determined by local taxing units and based on the property's taxable value. Your future tax bill may not be the same as the seller's current bill.

Your taxes can be affected by:

• Changes in appraised value
• Local tax rates
• Improvements to the property
• Homestead exemption eligibility
• Changes by local taxing jurisdictions

If the seller has owned the home for years and has a homestead exemption, their taxable value may differ from yours after purchase.

If the home will be your primary residence, you may qualify for a Texas residence homestead exemption. Apply through the appropriate county appraisal district.

💰 Can my monthly mortgage payment increase?

Yes. Your principal and interest payment on a fixed-rate mortgage generally stays fixed, but other parts of your housing cost can change.

Your total housing payment can include:

• Mortgage principal
• Mortgage interest
• Property taxes
• Homeowners insurance
• PMI
• HOA dues, if applicable

🔍 Should I get a home inspection?

Absolutely consider one. An inspection can help identify potential issues with the home's condition, including the roof, HVAC, plumbing, electrical, foundation, structure and water damage.

An inspection isn't a guarantee that every problem will be discovered, but it can provide valuable information before you commit to the purchase.

🏠 Should I buy new construction or resale?

Neither is automatically better.

New construction may offer:

• Builder incentives
• New systems/appliances
• Less immediate maintenance
• Warranty coverage

Resale may offer:

• Established neighborhoods
• Mature landscaping
• Potentially more negotiating opportunities
• Existing homes you can inspect and compare

📈 Does buying a home build equity?

Potentially, yes. Your equity is generally the difference between your home's value and what you owe on the mortgage.

Your equity can change as your loan balance decreases and as the home's market value changes.

🧾 What is a homestead exemption in Texas?

A homestead exemption can reduce the taxable value of an eligible Texas residence for property-tax purposes. Texas homeowners who qualify can apply for a residence homestead exemption through the appropriate appraisal district.

The exemption can reduce your property tax bill, but the exact savings depend on the property and taxing jurisdictions.

🏦 Should I get pre-approved before looking at homes?

Yes. Getting pre-approved can help you understand your estimated buying power, potential monthly payment, loan options, down-payment requirement and estimated cash to close.

💳 Should I open a new credit card after getting pre-approved?

Talk to your lender first. Avoid making major financial changes during the mortgage process without understanding how they could affect your loan.

• Financing a car
• Opening new credit accounts
• Taking out loans
• Making large purchases
• Moving large amounts of money without documentation

📱 Can I calculate my mortgage payment myself?

Yep. Use the Mortgage Calculator on this website to estimate:

• Principal
• Interest
• Property taxes
• Homeowners insurance
• PMI
• Down payment
• Total monthly payment

Just remember that an online calculator is an estimate. Your lender will provide the actual loan numbers.

🏠 What numbers should I know before shopping?