If you’re planning to buy a home in Texas, figuring out how much you need for a down payment is probably your first order of business. But, exactly how much money do you need? And while we’re at it, what is the average down payment on a house in Texas?
It’s a good question to ask. If you know how much people typically pay toward a down payment, you can probably pursue similar solutions.
We’ve done the math for you, calculating the average down payment statewide in Texas, as well as averages for each major metropolitan area.
Down payment assistance can help you buy a house in Texas
Saving up a down payment is the biggest challenge for most first-time homebuyers. Down payment assistance can help.
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Disclaimer: This article is for informational purposes only and should not be considered as legal or financial advice. Please consult an attorney, mortgage lender, or CPA for guidance on your specific situation.
What is the average down payment on a house in Texas?
According to the National Association of Realtors, the average down payment on a house for first-time homebuyers nationwide is 6%. Given that the median home price in Texas is $301,763*, that places the average down payment on a house in Texas at $18,105 for first-time home buyers.
Keep in mind that 6% is an average. This percentage varies up or down depending on each home buyer’s situation. Also, for many people, six percent isn’t necessarily the optimal amount to put down on a first home.
Here’s why:
Three percent is the minimum down payment for FHA loans, although some loan types have higher or lower minimums. One of the biggest benefits to making a higher down payment is the interest rate reduction it buys you. But your interest rate only decreases at 5%, 10%, or 20% down.
Since there’s no interest rate decrease for raising your down payment from 5% to 6%, it might be better in your situation to make a 5% down payment and save the extra cash for unexpected repairs, moving expenses, or the like.
Alternatively, you may be able to use the extra savings to buy down your interest rate. Your mortgage professional will help you understand all of the options available to you.
*All median home prices in this article are based on data through July 31, 2023.
Average down payments by Texas metro area
These numbers are based on the 6% national average down payment for first-time buyers, coupled with the median home price for each specific metropolitan area.
Austin: Based on a $557,292 median home price, the average down payment in Austin is $33,437.
Dallas: Based on a $309,505 median home price, the average down payment in Dallas is $18,570.
Fort Worth: Based on a $307,816 median home price, the average down payment in Fort Worth is $18,468.
San Antonio: Based on a $263,747 median home price, the average down payment in San Antonio is $15,824
Houston: Based on a $261,794 median home price, the average down payment in Houston is $15,707.
Buying a Home in Texas? Learn more
Making a down payment might be the first item you tackle in the home buying process, but it’s certainly not the only one. Check out these other articles about buying a house in Texas.
- Cheapest Places to Live in Texas: The 8 Most Affordable Cities
- Cost of Living in Colorado vs Texas: How Each State Stacks Up
- The Best Neighborhoods in Dallas for Families
- The Best Places to Live in Texas for Families
- Texas Down Payment Assistance and First-Time Home Buyer Programs
- First-Time Homebuyer’s Guide
How do first-time buyers in Texas come up with their down payments?
If these down payment numbers feel a bit intimidating, you’re not alone. Twenty six percent of first-time home buyers say that saving for a down payment was the most difficult part of their home purchase process.
It might be a challenge, but getting a down payment together is certainly possible. Here are the most common ways first-time home buyers come up with down payments.
Seasoned funds
Forty-seven percent of buyers use personal savings to make at least some of their down payment. But lenders want to make sure the money in your bank account comes from your personal savings, as opposed to another, undisclosed source (like a loan from another institution or a gift that you didn’t mention).
This means most lenders require that any personal money you use for your down payment has been “seasoned”. In other words, you’ll need to show that the money has been in your bank account for a minimum amount of time, usually sixty days.
You are definitely allowed to use money from other sources, like gifts, loans, and other down payment assistance, but you’ll need to show proof of the money’s origins.
Gifted funds
Gifts and loans from family or friends are also a common source of down payment funding for first-time buyers. Twenty-two percent of new buyers get their down payment this way.
If you go this route, do be mindful that there are rules about documenting a gifted down payment. For example, the person or organization making the gift needs to provide documentation clearly indicating the money does not need to be paid back.
Down payment assistance
Down payment assistance (DPA) may not be the most common source of down payment funds for first-time home buyers, but it likely should be.
DPA programs offer significant sums of money to help buyers make the largest down payment possible, and many programs don’t require you to repay that money.
Interested in getting down payment assistance in Texas? There are a number of DPA programs for homebuyers in the state.
Learn more about Texas Down Payment Assistance and First-Time Home Buyer Programs.
Benefits of a larger down payment
Although some types of loans allow you to purchase a home with little or no money down, there are a number of benefits to making a good-sized down payment, if you can.
As we mentioned earlier, a larger down payment helps you get the best interest rate, especially if you’re able to hit the 5%, 10%, or 20% mark. Additionally, making a large down payment means you won’t have to borrow as much money, which increases your purchasing power and lowers your monthly payments.
Of course, everything is a tradeoff. To learn more, check out our guide to the advantages and disadvantages of a large down payment.
Other upfront costs to consider
The down payment is the most notable upfront expense in buying a house, but it’s not the only one. There are also closing costs which must be paid at the time of purchase.
Closing costs cover tertiary expenses related to buying a home such as loan origination fees, title fees, and taxes. Closing costs usually get wrapped into your mortgage loan. However, you can choose to pay closing costs out of pocket to avoid increasing your loan amount.
Closing costs for buyers in Texas average around 1.5% of the home’s sale price, although this varies depending on your exact location and several other factors.
Get help buying in Texas with down payment assistance
Saving up for a down payment can absolutely be done, but it takes time and effort. Down payment assistance (DPA) can help you make the largest down payment possible with fewer months spent cutting expenses and saving every dime.
DPA programs offer thousands or even tens of thousands of dollars to help homebuyers purchase a home with less stress on their finances. Even better, there are DPA programs designed to suit all sorts of financial situations.
The toughest part about getting down payment assistance is finding information about which programs you qualify for, so you can compare your options and make the most informed decision.
Stairs Financial makes it easy to find and compare down payment assistance programs.
Stairs connects you with a trusted lender who works with DPA, then matches you with all of the down payment assistance programs you might qualify for — all in one place, so you can compare your choices apples-to-apples.
Learn more about all your down payment assistance options.
