Buying a home in Texas involves the same broad strokes as anywhere else in the country — get your finances in order, find a home, make an offer, close — but the details that actually determine your budget and timeline are specific to this state. Texas has no transfer tax at all, but property tax and homeowners insurance both run well above the national average; the state also runs an unusually deep bench of first-time-buyer assistance programs, and its homestead exemption is one of the more genuinely valuable ones in the country once you understand how to claim it. A generic national guide won't walk you through that combination, and it changes how you should think about your true cost of owning a home here.
This guide walks through the whole process in order, with real Texas figures at each step. It's written for a first-time buyer with no background in real estate or mortgage jargon — where a term matters, it's explained the first time it comes up.
A note before you start: everything below is general information to help you understand the process, not personalized financial, legal, or tax advice. Texas's real estate rules vary by county and metro area, mortgage terms vary by lender and your individual credit profile, and this guide can't account for your specific situation. For an actual loan quote, talk to a licensed lender; for legal questions specific to your purchase, talk to a real estate attorney licensed in Texas.
1. Get your finances in order before you look at a single house
It's tempting to start browsing listings first, but the single most useful thing you can do before you fall in love with a house is find out what you can actually afford — and get a lender to confirm it in writing.
Check your credit first
Your credit score is one of the biggest levers on your mortgage rate. A higher score typically means a lower interest rate, which compounds into tens of thousands of dollars over a 30-year loan. Before you do anything else:
- Pull your credit reports (you're entitled to free weekly reports from all three bureaus at annualcreditreport.com) and check for errors.
- Pay down revolving debt (credit cards) if you can — it improves both your score and your debt-to-income ratio, which lenders care about directly.
- Avoid opening new credit accounts or making large purchases in the months before applying — new inquiries and new debt can both hurt your approval odds right when it matters most.
This matters directly if you're hoping to use one of Texas's state-run buyer assistance programs: TDHCA's My First Texas Home, TSAHC's Homes for Texas Heroes, and TSAHC's Home Sweet Texas program all carry the same minimum credit score requirement of 620, so knowing exactly where you stand well before you apply gives you time to fix errors or pay down balances if you're close to that line.
Get pre-approved, not just pre-qualified
These sound similar but aren't. Pre-qualification is a quick, informal estimate based on numbers you self-report — it takes minutes but isn't worth much to a seller. Pre-approval means a lender has actually verified your income, assets, and credit, and will give you a letter stating how much they're willing to lend you. In a competitive market — and Austin, Dallas-Fort Worth, and Houston can all be genuinely competitive depending on the season — sellers routinely won't take an offer seriously without one.
Getting pre-approved also does something just as valuable for you: it turns "how much house can I afford" from a guess into a real number, based on your actual income, debts, and down payment — before you've spent a weekend touring houses you can't actually get financing for. If you think one of Texas's assistance programs might apply to you, mention it during pre-approval and ask about the required HUD-certified or TSAHC-approved homebuyer education course early, since every one of Texas's major programs requires it before closing.
Figure out your real, all-in monthly payment — not just principal and interest
A lot of first-time buyers budget around the "principal and interest" number a lender or a bare-bones calculator quotes them, and get a rude surprise when the actual bill includes property tax, homeowners insurance, and (if your down payment is under 20%) private mortgage insurance. In Texas specifically, both of the "non-mortgage" pieces run well above the national average, which is easy to miss if you're only looking at a generic estimate:
- Property tax — Texas's statewide average effective property tax rate is about 1.40% of your home's assessed value per year, meaningfully above the national average (estimates across sources range roughly 1.3%-1.8% depending on methodology). This is one of the tradeoffs of Texas having no state income tax — property tax carries more of the load. Rates vary by county, city, and school district, since Texas property tax is set by a patchwork of local taxing units, not a single statewide rate.
- Homeowners insurance — Texas homeowners pay roughly $4,915/year on average for a standard policy — among the highest in the country, driven by hail, wind, and hurricane exposure. This state-level average badly understates just how much this varies by region, though: coastal areas like Galveston can run $10,000+ per year, while inland areas like El Paso can run closer to $2,000/year. A statewide average is nearly meaningless for budgeting purposes here — get an actual quote for the specific region and property you're considering rather than relying on the statewide figure at all.
- PMI (private mortgage insurance) — required by most lenders if your down payment is under 20% of the purchase price; it typically runs about 0.5-1.0% of your loan amount per year and can be removed once you reach 20% equity.
- HOA dues — only applicable if you're buying in a community with a homeowners association; ask early, since this isn't always obvious from a listing, and many newer Texas subdivisions specifically do carry one.
Because both property tax and insurance run above the national average — and because insurance specifically varies so much by region — your true all-in monthly payment can differ enormously between two homes at the same price in different parts of Texas. If you want to run your own numbers with Texas's actual averages already built in, our Texas mortgage payment calculator and affordability calculator do this automatically and show you the all-in monthly number first, not just principal and interest.
2. Budget for Texas's closing costs — no transfer tax, and genuinely low costs overall
This is the part of buying a home that catches first-time buyers off guard most often: closing costs are separate from your down payment, due at the closing table. Texas buyers get a real break here that a lot of the country doesn't.
Texas has no real estate transfer tax — by constitutional amendment
Since a 2015 constitutional amendment took effect on January 1, 2016, Texas constitutionally prohibits state or local governments from levying a real estate transfer tax. Texas is one of just 13 states with no transfer tax at all. That said, Texas counties still charge a small deed recording fee — this is a flat administrative fee, not a percentage-based transfer tax, and it's genuinely small: roughly $25-$50 total in most counties (for example, Harris County charges $25 for the first page plus $4 per additional page). This fee is customarily paid by the buyer as part of standard closing costs. Don't confuse this modest recording fee with the transfer taxes buyers face in many other states — Texas simply doesn't have one.
Total closing costs
Because there's no transfer tax to drive up the total, Texas's buyer-side closing costs run genuinely low by national standards: typically 1-3% of the purchase price, well below the national average. On a $345,000 home (roughly Texas's statewide median), that's roughly $3,450-$10,350 in cash you'll need at closing, on top of your down payment — a real, meaningful savings compared to what a buyer would pay in a state with a significant transfer tax. One data point pins the Texas average even lower, around 0.93% of the sale price for narrowly-scoped lender/title/recording fees alone (excluding prepaid items, insurance, and commissions), which is notably below the roughly 1.6% U.S. average for the same narrow scope. Keep in mind that a broader accounting — including prepaid insurance and escrow deposits, which run higher here given Texas's above-average insurance costs — will land you toward the higher end of the 1-3% range rather than the very low end.
Ask your lender for a Loan Estimate early in the process — it's a standardized form required by federal law that itemizes exactly what your closing costs will be for your specific loan, so you're not relying on rules of thumb by the time you're actually closing.
3. Look into Texas's first-time-buyer programs before you assume you can't afford to buy
Texas runs an unusually deep set of official first-time-buyer and assistance programs across two state agencies — the Texas Department of Housing and Community Affairs (TDHCA) and the Texas State Affordable Housing Corporation (TSAHC) — worth checking even if you assume you make too much or don't otherwise qualify.
- My First Texas Home (TDHCA) — a below-market 30-year fixed-rate first mortgage, paired with up to 5% down payment/closing cost assistance structured as a 0%-interest deferred second lien (you don't repay it until you sell, refinance, or pay off the home), for first-time homebuyers and veterans. The statewide "Balance of State" baseline income limit for a non-targeted area, 1-2 person household is $101,500 (3+ persons: $116,725), but higher-cost metro areas run above this — the Austin-Round Rock-San Marcos MSA allows up to $134,400/$154,560 non-targeted. The statewide baseline purchase price limit is $566,354 (targeted areas: $692,211; the Austin-Round Rock MSA specifically allows up to $598,019 non-targeted). Minimum credit score is 620. You generally must not have owned or occupied a primary residence in the prior three years (waived for qualified veterans and buyers in Qualified Targeted Census Tracts), must complete a HUD-certified homebuyer education course, and must occupy the home as your principal residence within 60 days of closing.
- Homes for Texas Heroes (TSAHC) — for teachers, teacher aides, school librarians/counselors/nurses, allied health or nursing faculty, peace and public security officers, firefighters, EMS personnel, corrections and juvenile corrections officers, county jailers, and veterans/qualifying military members: a 30-year fixed mortgage plus down payment assistance and Mortgage Credit Certificates. The statewide baseline income limit (170% of Area Median Income, most counties) is $172,550, but higher-cost counties run well above that — Travis, Hays, Williamson, Bastrop, and Caldwell counties allow up to $228,480; Collin, Dallas, and Denton counties up to $205,870; Bexar, Comal, and Guadalupe counties up to $178,339. The statewide baseline purchase price limit is $566,355, higher in specific high-cost counties (Travis/Hays/Williamson up to $598,019). Minimum credit score is 620, and an approved homebuyer education course is required before closing.
- Home Sweet Texas Home Loan Program (TSAHC) — the general-purpose counterpart to Homes for Texas Heroes, open to low- and moderate-income Texas homebuyers without an occupation restriction: a 30-year fixed mortgage plus down payment assistance and Mortgage Credit Certificates. The statewide baseline income limit (150% AMI, most counties) is $152,250, again running higher in specific counties (Travis/Hays/Williamson/Bastrop/Caldwell up to $201,600; Collin/Dallas/Denton up to $181,650; Bexar/Comal/Guadalupe up to $157,358). Same statewide purchase price limit and 620 minimum credit score as Homes for Texas Heroes. First-time-buyer status is only required if you're pairing this program with a Mortgage Credit Certificate.
- Texas Mortgage Credit Certificate (MCC) — a federal tax credit worth 15% of the annual mortgage interest you pay, translating to roughly $2,000/year in real tax savings for eligible first-time homebuyers, usable alongside a first mortgage. It uses the same income and purchase-price limits as My First Texas Home. TDHCA states there's no minimum credit score for the stand-alone MCC option, though if you combine it with a My First Texas Home first mortgage, that program's 620 minimum applies instead.
Because eligibility and price/income limits vary so much by county and metro area — with Austin-area counties in particular running well above the statewide baseline across every one of these programs — don't rule yourself out based on a single statewide number. Check TDHCA's or TSAHC's official combined limits tables for your specific county, or ask a participating lender directly. These are official state programs and a state-created nonprofit housing finance corporation, not lender marketing — start at welcomehome.tdhca.texas.gov or tsahc.org directly. Our Texas first-time-buyer page also walks through how these programs interact with your specific numbers.
4. House hunting and making an offer
Once you know your real budget, the search itself is where a good local real estate agent earns their fee — they know the specific neighborhoods, school districts, and pricing trends better than any national listing site. A few Texas-specific things worth knowing as you search:
- Median home prices vary enormously by region, and Texas is genuinely a collection of distinct housing markets. The statewide median sale price is around $345,000, but that blends fast-growing, higher-priced metro areas — Austin in particular has run well above the state median for years — with far more affordable smaller cities and rural counties. Treat the statewide figure as a reference point, not a prediction for whatever specific area you're targeting.
- Browse by county if you're focused on a specific metro area. Texas is large enough that county-level detail matters more here than in many states — our site has dedicated pages for Harris County (Houston) and Travis County (Austin) with more localized figures, worth checking if you're specifically house hunting in either of those metro areas.
- Get an insurance quote on a specific property before you finalize an offer — this matters more in Texas than almost anywhere else. Given how much homeowners insurance varies by region (from roughly $2,000/year in El Paso to $10,000+ in Galveston), the statewide average tells you almost nothing about what a specific home will actually cost to insure. Confirm real numbers for a specific property before you're deep into an offer, not after.
- Move quickly, but don't skip steps, in a competitive market. Having your pre-approval letter, proof of funds for your down payment, and a clear sense of your maximum offer ready in advance lets you act fast without cutting corners on the parts of the process that protect you.
- Understand what "as-is" means before you offer on a listing marked that way — it typically signals the seller won't make repairs, not that you can't still get an inspection to know what you're buying.
5. Inspection, appraisal, and Texas's closing process
Home inspection
A professional home inspection (separate from and in addition to the lender's appraisal) is how you find out about a property's actual condition — roof, foundation, electrical, plumbing, HVAC — before you're legally committed. It typically costs a few hundred dollars and is one of the best-value steps in the entire process. Given Texas's real exposure to hail, wind, and hurricane risk in different parts of the state, paying close attention to your inspector's assessment of roof age and condition specifically is worth the extra time — it's one of the single biggest drivers of both repair cost and your eventual insurance premium. Waiving the inspection entirely to make your offer more competitive is possible but genuinely risky — see the mistakes section below.
Appraisal
Your lender will require an independent appraisal to confirm the home is actually worth what you're paying for it — this protects the lender's collateral, but it protects you too, since it's an independent check against overpaying. It's also worth noting that this lender appraisal is a separate process from the county appraisal district's valuation used to calculate your property tax bill, which is a common point of confusion for first-time Texas buyers.
Who runs your closing
Texas closes through title companies, not attorneys — there is no attorney legally required for a standard residential closing in Texas, and this classification is undisputed across every source available, per Texas Department of Insurance guidance. You're still free to hire your own attorney to review documents if you want that extra layer of protection, particularly for a first purchase or an unusual transaction, but it isn't required or the regional norm.
6. Closing day
At closing, you'll sign a stack of legal documents, pay your down payment and closing costs (usually via cashier's check or wire transfer — ask in advance how your specific closing wants funds delivered), and receive the keys. Bring a government-issued photo ID and be prepared for the process to take one to two hours.
File for Texas's homestead exemption — it's genuinely one of the more valuable ones in the country
This is one of the single most important things a new Texas homeowner should not forget to do, and it's worth understanding in detail. Texas offers a mandatory general residence homestead exemption for school district property taxes: $140,000 of assessed value is exempted (this was increased from a prior $100,000 baseline by a 2026 constitutional amendment). If you're 65 or older, or disabled, you qualify for an additional $60,000 school-district exemption on top of that — a combined $200,000 exempted from school taxes. Individual local taxing units (cities, counties, and special districts) may also offer their own additional optional exemptions, worth up to 20% of your home's appraised value, with a minimum of $5,000.
There's a second, arguably even more valuable benefit built into the homestead exemption: once your home qualifies as a homestead, annual increases in your home's appraised value are capped at 10% per year for tax purposes — a real, meaningful protection in a state where home values in fast-growing metro areas have risen well above 10% in a single year at various points. This cap means your taxable value can't spike overnight the way your home's actual market value might.
You do have to file for this exemption — it is not automatic the very first year you own the home — but once you've filed it once, it applies automatically in subsequent years without needing to reapply annually. Given both the direct dollar exemption and the appraisal-increase cap, this is genuinely one of the more valuable homestead exemptions in the country, and it's worth filing with your county appraisal district as soon as you're eligible after closing rather than putting it off.
7. Five mistakes first-time Texas buyers commonly make
- House hunting before getting pre-approved. Beyond the seller-credibility issue, you risk falling in love with a home priced above what you can actually finance — and given how much county-specific income and price limits vary across Texas's assistance programs, pre-approval is also when you find out which programs actually apply to you.
- Using the statewide average insurance figure to budget for a specific home. This is the single biggest Texas-specific mistake. A $4,915/year statewide average is nearly meaningless when actual costs range from around $2,000/year in El Paso to $10,000+ in Galveston. Get a real quote for the specific property and region you're considering before you commit to an offer.
- Waiving the home inspection to make an offer more competitive. This can work out fine, and it can also mean discovering storm or hail damage, or a foundation issue (common in parts of Texas with expansive clay soils), after you already own the house. Understand the specific risk before you waive it, don't do it reflexively because it's common advice in a hot market.
- Draining every dollar of savings for the down payment. A larger down payment lowers your monthly payment and can eliminate PMI, but leaving yourself with zero reserves for moving costs, immediate repairs, or an emergency is a common source of new-homeowner financial stress — and given Texas's storm and hail exposure, a cash cushion for an insurance deductible matters more here than in many states.
- Forgetting to file for the homestead exemption after closing. Because it isn't automatic the first year, some new Texas homeowners simply never get around to filing — and miss out on both the direct dollar exemption and, more significantly over time, the 10% cap on annual appraisal increases. File with your county appraisal district promptly once you're eligible.
Frequently asked questions
Does Texas really have no real estate transfer tax? Correct — Texas constitutionally banned real estate transfer taxes effective January 1, 2016, and is one of only 13 states with none at all. Counties do still charge a small deed recording fee (roughly $25-$50), customarily paid by the buyer, but this is a flat administrative fee, not a percentage-based transfer tax.
Why does the same statewide insurance average not tell me what I'll actually pay? Because Texas's insurance costs vary more by region than almost any other state's — coastal hurricane exposure (Galveston can run $10,000+/year) versus inland areas with much lower risk (El Paso around $2,000/year) means the statewide average of $4,915/year blends two very different realities. Always get a quote for the specific property and region you're considering.
What to do next
If you want to see these numbers applied to your actual situation rather than Texas's averages, our affordability calculator takes your income, savings, and debts and shows you a maximum home price and an honest qualification signal — or, if you already have a home price in mind, the payment calculator breaks down your real all-in monthly cost with Texas's tax and insurance figures already built in. If you want to explore TDHCA's or TSAHC's first-time-buyer assistance, the first-time-buyer page walks through all four programs against your specific numbers, and if you're focused on the Houston or Austin metro areas specifically, our Harris County and Travis County pages offer more localized figures. All of these show every number they use and where it came from — see our methodology page for the full sourcing behind every figure in this guide.
This guide is general information about the home-buying process in Texas, based on publicly available average figures current as of August 2026. It is not a loan quote, pre-approval, legal advice, or tax advice, and it does not reflect your individual financial situation, credit profile, or the closing customs of your specific county. For a real quote, speak with a licensed mortgage lender; for legal or tax questions specific to your purchase, speak with a qualified professional licensed in Texas.