How Much Down Payment Do You Need to Buy a House in Texas?
Think you need 20% down to buy a house? Think again. That’s one of the biggest myths in home buying—and it stops thousands of qualified Texas buyers from pursuing homeownership every year.
The truth is, you can buy a home with as little as 0% down if you qualify for the right programs. Let me break down exactly what you need for different loan types, plus the Texas assistance programs that can help cover your down payment.
💰 The Quick Answer
Minimum down payments by loan type:
- VA loans: 0% down (eligible veterans)
- USDA loans: 0% down (rural areas)
- Conventional: 3% down (first-time buyers)
- FHA loans: 3.5% down
On a $350,000 Texas home: That’s $0 to $12,250—not $70,000!
Down Payment Requirements by Loan Type
Here’s what you actually need for each major loan program on a $350,000 home purchase:
🎖️ VA Loans
For eligible veterans, active military, and surviving spouses. No PMI required.
🌾 USDA Loans
For rural and suburban properties. Income limits apply by county.
🏦 Conventional
First-time buyer programs. 5% for repeat buyers. PMI until 20% equity.
🏛️ FHA Loans
Credit scores 580+. Lower scores need 10% down. MIP required.
The Real Cost: Down Payment + Closing Costs
Your down payment isn’t the only cash you need at closing. Here’s the full picture for a $350,000 Texas home:
| Loan Type | Down Payment | Est. Closing Costs | Total Cash Needed |
|---|---|---|---|
| VA (0%) | $0 | $8,000 – $12,000 | $8,000 – $12,000 |
| USDA (0%) | $0 | $8,000 – $12,000 | $8,000 – $12,000 |
| Conventional (3%) | $10,500 | $8,000 – $14,000 | $18,500 – $24,500 |
| FHA (3.5%) | $12,250 | $8,000 – $14,000 | $20,250 – $26,250 |
| Conventional (20%) | $70,000 | $8,000 – $14,000 | $78,000 – $84,000 |
💡 Seller Concessions Can Help
In many Texas markets, you can negotiate for the seller to pay some or all of your closing costs—reducing your out-of-pocket expenses significantly. This is common in buyer’s markets or with motivated sellers.
Texas Down Payment Assistance Programs
Here’s what most buyers don’t know: Texas has some of the best down payment assistance programs in the country. These programs can provide grants or forgivable loans to help cover your down payment and closing costs.
🌟 TSAHC (Texas State Affordable Housing Corp)
One of Texas’s most popular programs for first-time and repeat buyers.
- Up to 5% of loan amount as a grant
- Can be used for down payment OR closing costs
- Available for FHA, VA, USDA, and conventional
- Income limits vary by county
- Minimum 620 credit score
🏠 TDHCA (Texas Dept of Housing)
My First Texas Home program with down payment assistance.
- Up to 5% as a 0% deferred second lien
- No monthly payments on the assistance
- Forgiven after staying in home
- Works with FHA, VA, and conventional
- First-time buyers and veterans
🎖️ Texas Veterans Programs
Special programs for Texas veterans beyond federal VA loans.
- Texas Vet mortgage program
- Below-market interest rates
- Can combine with VA loan benefits
- Available to all Texas veterans
- Land loans available
🏘️ Local City/County Programs
Many Texas cities offer their own assistance programs.
- Houston: Houston Housing Authority programs
- San Antonio: SAHA homeownership program
- Dallas: Dallas Homebuyer Assistance
- Austin: Austin Housing Finance Corporation
- Fort Worth: HOME program assistance
✅ Do You Qualify for Assistance?
Most programs require:
- Income below county limits (often up to 115-140% of median income)
- Credit score of 620-660+
- Property must be your primary residence
- Completion of homebuyer education course
I can check your eligibility for all available programs in about 15 minutes.
Want to Know What Programs You Qualify For?
I’ll check your eligibility for all Texas down payment assistance programs—free and no obligation.
LET’S TALKShould You Put More Than the Minimum Down?
Just because you can put 3% down doesn’t mean you should. Here’s how to think about it:
Reasons to Put More Down
✅ Lower Monthly Payment
Every dollar you put down reduces your loan amount, which reduces your monthly payment. On a $350,000 home, the difference between 3% and 10% down is about $150/month.
✅ Lower or No PMI
With conventional loans, putting 20% down eliminates PMI entirely. Even putting 10-15% down reduces your PMI rate significantly.
✅ Better Interest Rate
Larger down payments often qualify you for better interest rates, especially if you’re on the edge of a pricing tier.
✅ More Equity Immediately
Starting with more equity protects you if home values dip and gives you options sooner for refinancing or selling.
Reasons to Put Less Down
💰 Keep Cash Reserves
Draining your savings for a bigger down payment can leave you vulnerable. You’ll want 3-6 months of expenses in reserve after closing for emergencies.
📈 Invest the Difference
If your mortgage rate is 6.5% but you could earn 8-10% investing, keeping your down payment lower and investing the difference might make sense long-term.
🏠 Buy Sooner vs. Later
Waiting years to save 20% means potentially missing out on home appreciation. Texas home values have risen significantly—waiting can cost more than PMI.
🔧 Keep Funds for Improvements
New homeowners often want to make updates. Keeping some cash available for repairs, furniture, or improvements can make your new house feel like home.
Where Can Your Down Payment Come From?
Lenders accept down payment funds from various sources:
✅ Acceptable Down Payment Sources
- Savings accounts: Personal savings, checking accounts
- Investment accounts: Stocks, bonds, mutual funds (liquidated)
- Retirement accounts: 401(k) loans, IRA withdrawals (with conditions)
- Gift funds: From family members (with gift letter)
- Down payment assistance: State and local programs
- Sale of assets: Vehicles, other property
- Employer assistance: Some companies offer homebuying benefits
⚠️ Important: Seasoning Requirements
Lenders want to see funds “seasoned” in your account for 60+ days. Large deposits right before applying will need to be documented and explained. Start saving early and avoid moving money around before applying.
Using Gift Funds for Down Payment
Family members can gift you money for your down payment, but there are rules:
- Gift letter required: Stating it’s a gift, not a loan
- Donor bank statements: Showing they had the funds
- Paper trail: Wire transfer or cashier’s check documentation
- Relationship matters: Must be from family member (rules vary by loan type)
💡 FHA Allows 100% Gift
FHA loans allow your entire down payment to come from gift funds. Conventional loans may require you to contribute at least 3-5% from your own funds depending on the program.
PMI: The Cost of a Lower Down Payment
If you put less than 20% down on a conventional loan, you’ll pay Private Mortgage Insurance (PMI). Here’s what to expect:
| Down Payment | Typical PMI Rate | Monthly PMI* | Annual Cost |
|---|---|---|---|
| 3% | 0.7% – 1.0% | $200 – $280 | $2,400 – $3,360 |
| 5% | 0.5% – 0.8% | $145 – $230 | $1,740 – $2,760 |
| 10% | 0.3% – 0.5% | $90 – $145 | $1,080 – $1,740 |
| 15% | 0.2% – 0.4% | $50 – $115 | $600 – $1,380 |
| 20% | None | $0 | $0 |
*Based on $350,000 home. Actual PMI varies by credit score, loan type, and lender.
📅 PMI Isn’t Forever
Conventional loan PMI can be removed once you reach 20% equity—either through payments or home appreciation. FHA MIP is typically for the life of the loan unless you refinance to conventional.
Texas-Specific Down Payment Considerations
🏠 Higher Property Taxes = Lower Purchase Power
Texas property taxes (1.8-2.5%) are higher than most states. This affects your debt-to-income ratio, which may limit how much you can borrow. A larger down payment can help offset this.
🔥 Competitive Markets
In hot Texas markets like Austin, Houston, and Dallas, a larger down payment can make your offer more attractive to sellers—even if you’re not paying all cash.
🎖️ Military Communities
Texas has major military bases in San Antonio, Killeen, El Paso, and more. If you’re a veteran, VA loans offer $0 down with no PMI—the best deal available.
Your Down Payment Action Plan
✅ Steps to Get Started
- Check your eligibility for VA, USDA, or down payment assistance
- Determine your target down payment based on your situation
- Open a dedicated savings account for your down payment
- Set up automatic transfers to build savings consistently
- Avoid large purchases that could affect your debt-to-income ratio
- Talk to a lender to understand all your options
The “right” down payment depends on your unique situation—your savings, income, credit score, and goals. There’s no one-size-fits-all answer, which is why it’s worth having a conversation about your specific circumstances.
Let’s Find Your Best Down Payment Strategy
I’ll review your situation, check your eligibility for assistance programs, and show you all your options. No obligation, no pressure.
LET’S TALK🎖️ Veteran-Owned | Serving Texas & 40+ States