How to Buy a Home in Texas: Step-by-Step Guide 2025

✍ Alen Kladusak 📅 April 2, 2026 ⏱ 12 min read

Texas isn’t just one of the most popular states in America to buy a home — it’s one of the most complex. No state income tax, massive metro diversity, flood zones, no zoning laws in Houston, and some of the nation’s most powerful buyer assistance programs. Whether you’re a first-time buyer in San Antonio or relocating to Dallas for work, this step-by-step guide gives you everything you need to buy a home in Texas in 2025 — the right way.

Texas Market Snapshot 2025

Why right now is a buyer’s moment

$333,800 Median Home Price

159,608 Homes for Sale

91 days Avg. Days on Market

6 months Housing Supply

🔥 Buyer’s Market 🔥 High Inventory 🔥 Negotiating Power 🔥 Price Drops Statewide

Texas is officially in a buyer’s market in 2025. Active inventory reached 159,608 homes in February 2026 — up 2.2% year-over-year — and homes are sitting an average of 91 days before selling. Median seller price cuts hit $19,000 (5% off initial asking price) in January 2026, the highest on record. The four major metros — Dallas, Houston, Austin, and San Antonio — all saw price declines year-over-year.

This is the most buyer-friendly Texas market since before the pandemic. If you’ve been waiting for leverage, the wait is over. Here’s exactly how to use it.

“Texas buyers finally have choices again. You can care about commute time, walk away from a home that feels wrong, and negotiate without fear of losing the deal. That hasn’t been true for several years.”

Step 1 — Get Your Finances in Order

Know your numbers before you fall in love with a home

620+ Min Credit Score (Conv.)

580+ Min Credit Score (FHA)

28/36 Ideal DTI Rule

2–5% Closing Costs

🔥 Credit Score 🔥 DTI Ratio 🔥 28/36 Rule 🔥 Emergency Fund

Before you open a single listing on Zillow, you need absolute clarity on three numbers: your credit score, your debt-to-income ratio (DTI), and how much cash you can actually bring to closing. In Texas’s 2025 buyer’s market, sellers will still expect a strong financial profile — and lenders will require it.

Credit Score Requirements

Conventional loan: 620 minimum credit score required
FHA loan: 580 minimum with 3.5% down; 500–579 with 10% down
VA loan: No official minimum, but most lenders require 580–620
USDA loan: Typically 640 minimum for streamlined approval

Every 20-point improvement in your credit score can lower your mortgage rate meaningfully. If your score is below 680, spend 60–90 days improving it before applying — it’s worth the wait.

The 28/36 Rule

Most financial experts use the 28/36 rule as a baseline: your total monthly housing costs (mortgage, taxes, insurance, HOA) should not exceed 28% of your gross monthly income, and your total monthly debt payments should not exceed 36%. In Texas, property taxes are notably high — averaging 1.6–1.8% annually — so this calculation matters more than in most states.

Cash You’ll Need at Closing

Down payment: 3% conventional / 3.5% FHA / 0% VA and USDA
Closing costs: 2–5% of the purchase price (typically $6,700–$16,750 on a $335K home)
Home inspection: $300–$500
Earnest money deposit: 1–3% of purchase price, held in escrow
Moving costs and initial repairs: budget $2,000–$5,000 minimum

💡 Pro Tip: Dallas buyers typically need $64,000+ in annual income for a median-priced home. Work backward from your actual monthly budget — don’t start with the purchase price.

Step 2 — Explore Texas Assistance Programs

Most buyers leave money on the table

2,500+ DPA Programs Available

Up to 5% TDHCA Grant (Loan Amt.)

$50,000 Max Houston City DPA

$40,000 Max Austin DPA

🔥 TDHCA 🔥 TSAHC 🔥 FHA Grants 🔥 Heroes Program

Texas has some of the most powerful first-time buyer assistance programs in the country — and most buyers never use them. There are over 2,500 down payment assistance (DPA) programs available in Texas, funded by state agencies, city governments, nonprofits, and financial institutions. Most first-time buyers qualify for $2,000 to $30,000 in assistance.

My First Texas Home (TDHCA)

The Texas Department of Housing and Community Affairs (TDHCA) offers the My First Texas Home program: a 30-year fixed-rate mortgage with down payment and closing cost assistance of up to 5% of the loan amount. The program can be combined with a Mortgage Credit Certificate (MCC) that gives you a 20% tax credit on annual mortgage interest — up to $2,000 per year.

Eligibility: First-time buyers or those who haven’t owned a home in 3+ years
Credit score: 620 minimum
Income limits apply based on county and household size
MCC credit: 20% of annual mortgage interest, up to $2,000/year

Homes for Texas Heroes (TSAHC)

If you work in a qualifying profession, the Homes for Texas Heroes program provides low-interest mortgages AND up to 5% in grant-based down payment assistance (no repayment required).

Eligible professions: teachers, firefighters, EMS personnel, police officers, correctional officers, veterans
Grant option: Non-repayable, unlike most DPA programs
Can be combined with MCC program for additional tax savings

City-Level Programs

Houston: Up to $50,000 — no-interest forgivable loan, forgiven after 5 years of owner-occupancy
Dallas (DHAP): Up to $50,000 — interest-free deferred loan for buyers at or below 80% of area median income
Austin: Up to $40,000 for low-income first-time buyers within city limits
San Antonio: Multiple programs for first responders and general first-time buyers

✔ Key Rule: To qualify for most Texas DPA programs you need a credit score of 620+, meet income limits, and complete an approved homebuyer education course. Ask your lender to layer programs together for maximum benefit.

Step 3 — Get Pre-Approved (Not Pre-Qualified)

There’s a critical difference

14–30 Days to Close in TX

280+ Lenders to Compare

6.35% Avg. 30-Yr Rate (2026)

Strong Pre-Approval Required

🔥 Pre-Approval 🔥 Lender Shopping 🔥 Rate Lock 🔥 DTI Verified

Pre-qualification is an estimate. Pre-approval is a verified commitment. In a market with 159,608 homes for sale and motivated sellers, a strong pre-approval letter puts you at the top of the consideration list. Without it, serious listing agents will not return your calls.

Pre-Qualification vs. Pre-Approval

Pre-qualification: Based on self-reported information, no documentation verified. Takes minutes. Means little to sellers.
Pre-approval: Full verification of income, assets, credit, and employment. Lender commits to a loan amount. Sellers and agents take it seriously.
Full underwrite pre-approval: The strongest option — underwriter has reviewed all documents. Near-guaranteed financing. Use this in competitive situations.

Documents You’ll Need

Two years of W-2s or tax returns (self-employed: two years of returns + year-to-date P&L)
Last 30 days of pay stubs
Last 60 days of bank statements (all accounts)
Photo ID and Social Security number
Documentation of any gift funds or down payment assistance

Shopping for the Best Rate

Texas mortgage rates averaged around 6.35% for a 30-year fixed in early 2026. A 0.25% difference in rate on a $335,000 home is roughly $50/month — $18,000 over 30 years. Shop at least 3–5 lenders. Independent mortgage brokers who work with 280+ lenders often secure rates that retail banks can’t match.

“Don’t confuse ‘can qualify’ with ‘should stretch.’ In Texas, property taxes and insurance can turn a great price into an uncomfortable monthly payment. Always work backward from what you can truly afford each month.”

Step 4 — Find the Right Buyer’s Agent

Your single highest-leverage decision

164K+ Licensed TX Agents

0% Cost to Buyer (Typically)

52% Buyers Who Negotiate

94% Achieve Some Savings

🔥 Buyer’s Agent 🔥 Local Expertise 🔥 Negotiation 🔥 MLS Access

With over 164,000 licensed real estate agents in Texas, finding the right one is not a passive process. The quality gap between an average agent and a top local specialist is enormous — and in a buyer’s market, your agent’s negotiation skills are money. Studies show 52% of buyers attempt to negotiate and 94% achieve some level of success. Your agent is your negotiator.

What to Look For in a Texas Buyer’s Agent

Neighborhood-level expertise: Ask for recent closed transactions within 5 miles of your target area — not city-wide stats
Buyer-side experience: Some agents primarily represent sellers. You want someone who specializes in representing buyers
Market knowledge: They should know days-on-market trends, price-per-square-foot by zip code, and which listings are overpriced
Communication style: Confirm their preferred contact method and average response time. Slow agents lose deals
References: Ask for 3–5 recent buyer clients you can actually call

Post-NAR Settlement: What Changed for Buyers

Following the landmark NAR settlement, buyers may now need to formally agree on agent compensation before touring homes. In many Texas transactions, sellers still offer buyer agent compensation — but it’s no longer guaranteed and must be negotiated. Ask your agent directly: ‘How are you compensated and who pays?’ A good agent will explain this transparently before you sign anything.

🔥 Alen’s Advice: Interview at least 2–3 agents. The right one will give you a neighborhood-level market analysis on your first call — not a generic pitch. Local knowledge is the asset you’re hiring.

Step 5 — Hunt Smart, Not Hard

Strategy beats impulse every time

1–3 mo Typical Search Timeline

Nov–Feb Best Buying Months

28.1% Homes w/ Price Drops

96.6% Sale-to-List Ratio

🔥 MLS Search 🔥 Neighborhood Research 🔥 School Districts 🔥 Flood Zones

Successful house hunting in Texas requires patience and a clear hierarchy of priorities before you start. Expect the search to take one to three months. Define your non-negotiables (school district, commute, minimum bedrooms) and your nice-to-haves separately — and never compromise the non-negotiables under time pressure.

Best Time to Buy in Texas

November through February are statistically the best months for buyers in Texas: less competition, more motivated sellers, and better negotiating position. June through August brings the highest buyer competition as families rush to move before the school year. If your timeline is flexible, a winter offer on a home listed since summer puts you in a powerful position.

Texas-Specific Research Checklist

Flood zone status: Look up every property at FEMA’s flood map portal (msc.fema.gov). Texas has significant flood risk in Houston and coastal areas. Know before you offer.
Property tax rate: Texas has no state income tax but property taxes average 1.6–1.8% annually. A $335K home can cost $5,360–$6,030/year in taxes alone. Verify the exact rate at the county appraisal district website.
HOA rules and fees: 43.6% of Texas homes for sale had HOA fees in 2025, with a median of $135/month. Review the HOA documents (CC&Rs) before making any offer.
School district boundaries: In Texas, school district lines don’t always follow city or zip code boundaries. Verify at the Texas Education Agency website.
Foundation type: Texas’s expansive clay soils cause foundation movement. Ask about the foundation type and any past repairs. This is the #1 inspection issue in the state.

“In Houston, your agent’s flood zone knowledge is not a nice-to-have — it is the difference between a home you can insure affordably and one that costs $4,000/year just for flood coverage.”

Step 6 — Make a Smart Offer

Buyers have leverage — use it correctly

$19,000 Avg. Seller Price Cut

3.4% Avg. Offer Below List

10.8% Homes Sold Above List

28.1% Active Listings w/ Drops

🔥 CMA 🔥 Earnest Money 🔥 Contingencies 🔥 Closing Credits

With 28.1% of Texas homes taking price drops and the median sale coming in at 96.6% of list price, buyers have real negotiating room in 2025. But leverage used clumsily can kill a deal. Here’s how to negotiate effectively without damaging the relationship with the seller.

Before You Offer: Pull Comps

Your agent will prepare a Comparative Market Analysis (CMA) showing what similar homes actually sold for in the last 90 days — not what they were listed for. If a home listed at $350,000 and comps show $335,000–$340,000, start at $332,000–$335,000 to anchor your position while leaving room to negotiate up.

What to Negotiate Beyond Price

Seller concessions: Ask the seller to contribute 1–3% toward your closing costs. This reduces your cash at closing without changing the purchase price — which protects the appraisal
Closing date flexibility: Offering the seller their preferred closing date is often worth more than a small price reduction
Home warranty: Request a one-year home warranty ($500–$700) — standard in Texas and easy for sellers to agree to
Repair credits: Rather than requesting specific repairs, ask for a dollar credit at closing. You control the work quality
Earnest money: A higher earnest money deposit (2–3%) signals seriousness without inflating your price

Contingencies That Protect You

Inspection contingency: Non-negotiable. Gives you the right to back out or renegotiate after the inspection
Financing contingency: Protects your earnest money if your loan falls through
Appraisal contingency: Allows you to renegotiate or exit if the home appraises below the purchase price
Title contingency: Ensures the seller can deliver clear title to the property

⚠ Texas-Specific Warning: Texas uses the TREC One to Four Family Residential Contract. Always use a licensed Texas agent or real estate attorney to prepare your offer. Never use online templates for Texas transactions.

Step 7 — Inspection & Due Diligence

This is where informed buyers save thousands

$300–500 General Inspection

$200–400 Foundation Inspection

$150–300 Termite Inspection

10 days Typical Option Period

🔥 Foundation 🔥 Flood Risk 🔥 HVAC 🔥 Option Period

Texas inspections are more complex than most states because of the state’s unique challenges: expansive clay soils that move foundations, hurricane and hail exposure, extreme temperature swings that stress HVAC systems, and in some areas, significant termite pressure. Budget for multiple inspections — not just the general one.

The Texas Option Period

Texas purchase contracts include an “option period” — typically 7 to 14 days — during which you pay a small option fee ($100–$500) to the seller for the unrestricted right to back out of the contract for any reason. This is unique to Texas and one of the most powerful buyer protections in any state. Use this time to complete all inspections.

Critical Texas-Specific Inspections

General home inspection ($300–$500): HVAC, plumbing, electrical, roof, windows, and appliances
Foundation inspection ($200–$400): Texas’s expansive clay soil causes more foundation problems than almost any other state. Required in most transactions
Termite/WDI inspection ($150–$200): Required by many lenders. Particularly important in Central and South Texas
Sewer scope ($150–$250): Especially important in older homes. Tree roots in clay sewer lines are common in Texas
Flood elevation certificate: If the property is near a floodplain, this determines your flood insurance cost
Pool and spa inspection ($150–$200): If applicable. Texas pool ownership comes with maintenance costs and liability

After the Inspection: Your Options

Request repairs: Seller makes specific repairs before closing
Request a credit: More common and flexible — you get cash at closing to handle repairs yourself
Renegotiate the price: Major issues discovered can justify a price reduction
Walk away: During the option period, you can exit for any reason and receive your earnest money back

Step 8 — Navigate Closing Like a Pro

The final stretch

6–10% Total Seller Closing Costs

2–5% Buyer Closing Costs

30–45 Avg. Days to Close

No State Income Tax

🔥 Title Insurance 🔥 Escrow 🔥 Final Walkthrough 🔥 Keys

Closing in Texas typically takes 30 to 45 days from accepted offer to keys in hand — though cash deals can close in 7 to 14 days. The closing process involves a title company (not an attorney, as in some other states) who coordinates the transfer of title and disburses funds. Understand what you’re signing before closing day.

Buyer Closing Costs in Texas

Loan origination fee: 0.5–1% of loan amount
Appraisal fee: $400–$700
Title insurance (owner’s policy): Typically paid by buyer; ~0.5–0.7% of purchase price
Escrow/settlement fee: $300–$600
Prepaid items: First year homeowner’s insurance, property tax escrow, prepaid interest
Recording fees: $50–$200
Total buyer closing costs on a $335K Texas home: approximately $6,700–$16,750

The Final Walkthrough

Do your final walkthrough within 24 hours of closing. Verify that all agreed repairs were completed, all personal property included in the sale is present, and the home is in the same condition as when you signed the contract. If there are issues, you can delay closing or negotiate a holdback in escrow.

What You’ll Sign at Closing

Closing Disclosure: Verify every number matches what your lender quoted you
Promissory Note: Your legal promise to repay the mortgage
Deed of Trust: Gives the lender a security interest in the property
Warranty Deed: Transfers title from seller to you

“Review your Closing Disclosure at least 24 hours before closing — your lender is required to provide it 3 business days in advance. Compare every line to your Loan Estimate. Surprises at the closing table are preventable.”

City-by-City Buyer’s Guide 2025

What to expect in each major Texas market

Each Texas metro plays by different rules. Here’s what buyers need to know city-by-city:

Dallas – Fort Worth

$420K Dallas Median (Dec 2025)

51.7% Listings w/ Price Cuts

84–102 Days on Market

-6.25% YoY Price Change

DFW has softened significantly. With the median close price down 6.25% year-over-year and 51.7% of listings taking cuts, buyers have real negotiating power for the first time since 2019. Corporate relocation from major companies (Toyota, Goldman Sachs, Charles Schwab) continues to create underlying demand. Target homes priced at the 2025 median ($375K) or below for the most buyer competition from financing programs.

Houston

$320K Houston Median (Dec 2025)

39.7% Listings w/ Price Cuts

91 days Days on Market

-5.4% YoY Price Change

Houston is the most affordable major Texas metro and has the most buyer inventory (34,676 active listings). Its lack of zoning laws creates unique opportunities — and unique risks. Never buy in Houston without researching flood zone status for every property. The $50,000 city DPA program is one of the most generous in the state for qualifying buyers.

Austin

$499K Austin Median List Price

53.4% Listings w/ Price Cuts

84 days Days on Market

-2.5% YoY Price Change

Austin represents the biggest correction opportunity in Texas. After peaking near $600K, prices have retreated and 53.4% of listings are cutting. Buyers who were completely priced out during 2020–2022 can re-enter the market now. The Austin DPA program (up to $40,000) is available for income-qualifying buyers. Focus searches on the $400K–$500K range in suburban corridors like Cedar Park, Kyle, and Pflugerville for the best value.

San Antonio

$290K San Antonio Median

50.5% Listings w/ Price Cuts

81 days Days on Market

-1.8% YoY Price Change

San Antonio is Texas’s most affordable major metro and moves faster than the state average (81 days vs. 91). The VA loan community is massive here — military buyers should explore VA-specific programs and ensure their agent understands VA appraisal requirements and funding fee structures. The $290,000 median price makes this the most accessible entry point among the four major metros.

The Bottom Line

Buying a home in Texas in 2025 is the best opportunity buyers have had in years. Inventory is up. Prices are down. Sellers are cutting and offering concessions. Assistance programs are fully funded. And mortgage rates — while elevated — are expected to ease into the 5–6% range through 2026.

The buyers who will win in this market are the ones who come prepared: finances verified, pre-approval in hand, target area researched, and the right local agent by their side. Skip any of those steps and you’ll leave thousands on the table — or miss the home entirely.

Use this guide as your blueprint. Take each step in order. And when you’re ready to talk about your specific market, city, and situation — Alen is here.

Data Sources

Redfin — Texas Housing Market Data, February 2026
Texas REALTORS® — 2025 Texas Real Estate Year in Review, March 2026
Texas Real Estate Research Center (TRERC) — Texas Housing Insight, March 2026
Realpha — How to Buy a House in Texas 2026 Guide
AnyTimeEstimate — Steps to Buy a House in Texas 2025
TheMortgageReports — Texas First-Time Home Buyer Programs & Grants 2026
LendingTree — Texas First-Time Home Buyer Programs 2025
TSAHC — Texas State Affordable Housing Corporation Program Guide
TDHCA — My First Texas Home Program Details
Norada Real Estate — Texas Housing Market Trends 2025–2026

bestrealtortx.com · ask4alen.com · (817) 210-2699 · Alen@LilyMooreRealty.com