The Complete Guide to Buying Your First Home in Texas

by Erin Wall

The Complete Guide to Buying Your First Home in Texas

Written By: Erin Wall, San Antonio REALTOR® with LPT Realty

License Number: Texas - 833167

August 25^th 2025

Introduction and Benefits To Homeownership

Owning a home is more than a financial decision; it’s a milestone that can shape your entire life. When you buy a home, you’re not just paying for walls and a roof, you’re investing in a place where memories are made. Every birthday, holiday, and quiet evening becomes part of a space you truly own.

When you rent, your monthly payment goes to your landlord, who then uses it to pay their mortgage and keeps the rest. With homeownership, however, you’re the one building equity, the portion of the home that belongs to you. The more you pay off your mortgage, the less debt you have and the more equity you accumulate. This growing equity can provide security, flexibility, and opportunities for the future.

Owning a home also gives you freedoms that renting cannot. You can paint the walls, remodel the kitchen, or create the backyard you’ve always imagined. You’re no longer limited by lease restrictions, and you gain the stability to plan your life around a place that is yours.

Beyond the personal and emotional benefits, homeownership offers financial advantages. Potential tax deductions and long-term property appreciation can help you build wealth over time. Each mortgage payment increases your ownership, not your landlord’s, and when you sell, any remaining mortgage is paid off, leaving you with the equity you’ve built to reinvest, upgrade, or keep as profit.

Perhaps the most powerful aspect of owning a home is the sense of belonging and accomplishment it brings. It’s a place to grow roots, feel secure, and know that every decision you make, financial or personal, is building toward your future. Every day you live in your own home, you’re not just paying for shelter; you’re investing in a life that’s yours, on your terms, with the potential to create generational wealth. There’s a unique pride and joy in opening the door and knowing this place, with all its possibilities, belongs to you.

This guide will walk you through every stage of the process, helping you approach your first home purchase with clarity and confidence.

Step 1: Get Your Finances in Order

Most first-time buyers start with a dream house in mind, but the smartest place to begin is your finances. Before you can even start to think about looking at homes, we must determine what our budget is first. Majority of the time First Time Home Buyers don’t have the money to pay for their first home in cash. So, you got to speak with a lender! If you are unsure of where to start with this, skip to Step 5 and connect with a REALTOR® who can help you find someone first.

Lenders look at three main things:

Credit Score – A conventional loan typically requires a score of 620 or higher. FHA loans may go as low as 580. VA and USDA loans have more flexible requirements.
Debt-to-Income Ratio – Lenders want to see your monthly debt payments (credit cards, student loans, car loans) take up no more than about 36–43% of your monthly income.
Savings – Beyond your down payment, you’ll need money for closing costs, inspections, moving, and an emergency cushion once you’re in the home.

Pro Tip: Don’t make big purchases (like a car) or open new credit cards right before applying for a mortgage. It can reduce your approval amount or hurt your chances altogether.

Step 2: Understanding Specific Costs

One of the biggest adjustments for first-time buyers is moving from a rental payment to the full scope of homeownership costs. In Texas, this includes not just your principle and interest for your mortgage, but property taxes, homeowner’s insurance, and ongoing repairs.

Principle: The original amount of your loan. It does not include interest. For example, if you take a $200,000 mortgage, $200,000 is your principal.
Interest: This is the cost of borrowing money. It’s calculated as a percentage of the remaining principal and paid to the lender in addition to repaying the principal. Rates are changing constantly, but with a fixed mortgage, you lock in that rate from the time you pulled out your loan.
Property Taxes: These are taxes levied by local governments (city, county, school district, or other local authorities) on real estate you own. They are typically based on the assessed value of your property, which is determined by the local tax assessor.
Insurance: Texas weather can be tough, hail, high winds, even flooding in some areas. Homeowner’s insurance is essential when it comes to protecting your biggest asset from the unpredictable.
Repairs & Maintenance: Unlike renting, there’s no landlord to call when the AC goes out or the roof leaks. In Texas, the heat alone can shorten the life of an HVAC system, and foundation repairs are not uncommon. A smart rule of thumb is to budget about 1–2% of your home’s value each year for upkeep.

That said, these costs aren’t just money out the door. When you rent, your monthly payment disappears into your landlord’s pocket. As a homeowner, those payments are building your equity, the portion of the home you truly own. Over time, equity becomes one of the most powerful financial tools you can have. When you decide to sell, you get this equity back in a check, and from their it can be used to buy your next home, pay for major life expenses, or simply grow your net worth.

Quick Note: Texas homeowners can apply for a homestead exemption, which reduces your taxable home value and saves you money each year. But the real financial advantage of owning isn’t just in tax breaks, it’s in turning what used to be rent into long-term wealth.

Step 3: Explore FHA, VA, and Low-Down Conventional Loans

One of the biggest myths in real estate is that you need 20% down to buy a home. While putting 20% down can help you avoid private mortgage insurance (PMI), it’s not required. In fact, many buyers in Texas, especially first-time buyers and veterans, are purchasing homes with much less.

FHA Loans: Backed by the Federal Housing Administration, FHA loans allow buyers with credit scores as low as 580 to purchase a home with just 5% down. They’re especially popular with first-time buyers who may not have a large savings cushion.
VA Loans: For eligible veterans, service members, and surviving spouses, the VA loan is one of the strongest benefits available. It requires no down payment, has no PMI, and often comes with lower interest rates than conventional and FHA loans. In a state like Texas, with a large military population, VA loans are a powerful tool to make homeownership accessible sooner to those who have served for our country.
Conventional Loans: Even outside of FHA and VA programs, many conventional loans allow down payments as low as 3%–5%. While PMI is required if you put less than 20% down, it can be canceled once you’ve built enough equity in your home.

The bottom line? Waiting until you have 20% saved up could keep you renting, and building someone else’s equity, for years. With today’s loan options, many buyers can get into a home sooner and start putting their monthly payments toward their own future wealth.

Step 4: Get Pre-Approved

During pre-approval, the lender will review your income, assets, credit history, and debts. They’ll give you a pre-approval letter that shows what you qualify for. This will state the max they will give you a loan for, your interest rate and the term of the loan. This also gives us our maximum budget to keep you from falling in love with homes of your current scope.

Pre-approval from your lender is more than a letter, it’s proof to sellers that you’re serious and financially capable of closing. In competitive Texas markets, sellers often won’t consider an offer without pre-approval.

Step 5: Find the Right Real Estate Agent

Working with the right REALTOR® can make the entire home buying process so much smoother. An agent’s role is more than unlocking doors. They:

Explain the contract and timelines
Help you craft strong offers
Protect you during negotiations
Recommend inspectors, lenders, and title companies
Ensure you don’t miss important deadlines

As a first-time buyer, you’ll benefit from an agent who knows how to slow down and explain the process step-by-step.Another piece first-time buyers often don’t realize is that, in most transactions, the seller pays for both the listing agent’s commission and the buyer’s agent’s commission. That means you typically don’t pay out-of-pocket for your agent’s help. Still, commissions and contract terms are always negotiable, and every deal can be tailored to fit the needs of both sides.

Pro Tip: Think of it like going to court. Sure, you might be able to defend your case well enough to get by, but would you really trust yourself to know all the ins and outs, what to sign, what to say, and what’s normal in the process? Now imagine going up against a top-notch lawyer on the other side. Would you feel confident winning that case alone? Probably not. That’s why you hire the lawyer, and the same logic applies to buying or selling a home. A REALTOR® is your guide, your advocate, and your expert, helping you navigate the process and avoid costly mistakes.

Step 6: House Hunting in Texas

When it comes to house hunting, it’s easy to get caught up in photos and curb appeal. But the smartest buyers take time to think about the bigger picture before falling in love with a home. Here are some key factors to keep in mind as you start touring properties:

Proximity to Work/School: Daily commutes can add up quickly in both time and gas. Make sure your new home is in a location that fits your lifestyle, not just your budget.
Minimum Bedrooms and Bathrooms: Think about what you need today and what you may need in a few years. A “just enough” layout now can feel tight very quickly.
School Zones: Even if you don’t have children, school district ratings can affect your home’s resale value down the road.
HOA Rules and Fees: Some neighborhoods in Texas have active homeowners associations that maintain amenities and community standards, but they come with restrictions and monthly/annual fees. It is important to make sure you’re comfortable with both.
Flood Zones: Certain areas in Texas are prone to flooding. A home in a designated floodplain may require separate flood insurance, which adds to your monthly cost.

Once you’ve factored in these practical details, don’t forget the fun part, the features that make a house feel like home! Do you want a big, open kitchen for entertaining? A walk-in closet that fits your whole wardrobe? Maybe a backyard for your dog or a soaking tub to relax in after work. Balancing the must-haves with the “wouldn’t-it-be-nice” items makes house hunting both strategic and exciting.

Step 7: Making an Offer

Once you’ve found the home you want, it’s time to put together an offer. In Texas, this includes a few key pieces:

A Written Offer: The One to Four Family Residential Resale Contract is the most commonly used contract for making an offer on a home. It is a TREC-promulgated form designed for the purchase of pre-owned single-family homes. It is primarily used by licensed real estate agents who guide buyers through completing this detailed contract and setting the terms of their offer. Once it is agreed to, signed and communicated it becomes the Executed Contract.
Earnest Money: Typically about 1% of the purchase price, this deposit shows the seller you’re serious about buying. The money is placed into an escrow account, a neutral, third-party account managed by the title company. Think of escrow as a secure holding place where funds stay until the deal is finalized, making sure both buyer and seller are protected. If the sale closes, your earnest money is applied toward your closing costs or down payment.
Option Fee: Usually around $100, this fee gives you the right to back out of the contract for any reason during what’s called the option period (often 5–10 days). This is the time when inspections happen and negotiations over repairs take place.

At the heart of any offer is compromise. You want to get the best terms possible, but the seller also has needs and expectations. This is where having a strong REALTOR® matters, it’s our job to guide you through negotiations, explain your options, and help you find common ground so the deal works for everyone.

Step 8: Inspections and Negotiations

Once your offer is accepted, you’ll schedule a home inspection during the option period. The inspector’s job is to give you a clear picture of the home’s condition, not to pass or fail it.

A standard inspection looks closely at the five major systems of the home:

Roof – Is it in good shape, or will it need repair or replacement soon?
Foundation – Texas soil can be especially tough on foundations, so inspectors watch for cracks, movement, or uneven settling.
Electrical – Inspectors check that wiring, panels, and outlets are safe and functional.
Plumbing – From water pressure to leaks, plumbing problems can add up quickly if left unaddressed.
HVAC – Cooling systems are critical in Texas summers, so the inspector makes sure they’re operating correctly.

They’ll also look at smaller things like windows, outlets, doors, and so much more. And here’s the thing: it’s normal for an inspection report to have a list of findings. No home is flawless. What matters most are any concerns that impact safety or major systems, not perfection.

If repairs are negotiated, those are usually handled before closing. The seller typically arranges to have the agreed-upon items fixed before closing, and you’ll verify them during your final walkthrough.

Step 9: HOA Documents, Appraisal, and the Survey

If the home is in a neighborhood with a homeowners association (HOA), you’ll receive a full set of HOA documents to review. These cover rules, restrictions, and fees, things like whether you can park a boat in your driveway or what color you can paint your fence. It’s important to read through them so there are no surprises after closing.

Meanwhile, your lender will order an appraisal. An appraiser is an independent professional who determines the fair market value of the property. This protects both you and the lender from overpaying. If the appraisal comes in at the contract price, you’re good to go! If it is above, this is amazing! You have already built equity in your home! But, if it comes in lower, this means the seller is trying to sell it for more than it is truly worth. You and the seller may need to renegotiate with the advice of your agents, or you may have to make up the difference.

Title will then order a Survey if there was not an old one that was acceptable. A survey is a professional measurement of a property that determines its exact boundaries, dimensions, and location of structures on the land. It shows where the property lines are, including any easements, encroachments, or other issues that could affect ownership or use.

Step 10: Closing on Your Home

Whoop Whoop! Its Closing Day!

Closing day is when everything becomes official. In Texas, this usually takes place at a title company. You’ll sign the final paperwork, and the title company will record the deed.

Here’s an important distinction: Texas is a title theory state. That means you hold legal title to your home once you close, not the bank. The lender holds the mortgage as a lien against the property, giving them the right to foreclose if payments aren’t made. In other words, the home is truly yours, but staying current on your mortgage is essential to protect it!

Step 11: Celebrate Your Accomplishments!

Congratulations! You did it! After all the paperwork, negotiations, inspections, and waiting, you’re officially a homeowner. This is one of the biggest milestones in life, and it deserves to be celebrated. Owning a home comes with a sense of stability, pride, and freedom that renting can’t quite match. You can paint the walls your favorite color, plant a garden, or finally get that big dog you always wanted. It’s yours!

Here are some of the benefits you’ve unlocked with homeownership:

Building equity every time you make a mortgage payment
Stability in knowing you’re not subject to rent increases or sudden lease changes
Tax advantages such as mortgage interest deductions (check with a tax professional)
The ability to create and customize a space that’s truly your own

But don’t forget a few important notes now that you’re in your home:

Your monthly mortgage payment typically consists of PITI: Principal, Interest, Taxes, and Insurance. You pay this all at once every month into another escrow account. Escrow amounts may change from year to year if property taxes or insurance go up. Consistently follow up with your lender to confirm that your payments are adding up accordingly as they should.
Keep up with regular maintenance and repairs, it’s easier (and cheaper) to spread them out over time rather than face big costs all at once.
Keep that inspection report! Slowly work through items that came up on your inspection that weren’t repaired before closing. This keeps your home safe and its value strong.
Along with your inspection report, keep ALL closing documents from title as well as things like your survey. These can come in handy down the road when you need to sell!
Be mindful of your mortgage type. Some loans (like FHA) may require you to stay in the home for a certain time before selling. Equity matters too, selling too soon might mean you owe more than you can get out of the home. Talking to a REALTOR® about timing could be key with this decision!

And one more thing, don’t forget the relationships you built during this journey. If your REALTOR® did a great job guiding you through the process, recommend them to your friends and family. Keep their number saved for when you need a trusted painter, handyman, roofer, or if you ever decide it’s time to sell down the road. A good agent isn’t just there for the purchase, but for all the years of homeownership that follow.