Are you considering taking the leap from renting to owning? Depending on how much you’re currently paying for your monthly rent, your monthly mortgage payment might not be that much more expensive.

Buying a home certainly means saving for a down payment, but there are other costs you’ll want to consider before making your final decision.

Costs Associated with Buying a Home in Texas

When buying a home in Texas, what associated costs can you expect to pay in addition to the monthly payments on your mortgage? Here’s a short list of different fees, costs, and taxes you should take into account.

  • Property taxes
    The Lone Star State has the sixth highest property tax rate in the country. The average homeowner in Texas pays around $1,500 in property taxes annually. These rates vary depending on the value of your home, so be sure to check the rates and factor them into your budget.
  • Homeowners insurance
    While Texas’ homeowner insurance rates are similarly quite high (the seventh highest in the nation), rates also vary depending on a variety of factors, such as size and location. Additionally, you will need adequate coverage to handle the maintenance and repairs that come with home ownership.
  • Down payment
    A down payment is the upfront amount you’ll need to be able to pay when you purchase your new home.

    Unless you qualify for a no-down payment VA loan, you can expect to pay a down payment of anywhere between 3.5% and 20% of your home’s value. Because there are many types of mortgage loans, there isn’t a specific amount required. These interest rates will depend on whether you take out an FHA loan or a conventional loan, so be sure to ask about the down payment!

    If you’re unable to put down 20% (and anyway you should avoid doing this in the first place), you may be required to pay Private Mortgage Insurance (PMI) in addition to your monthly mortgage payment. PMI protects the lender. While PMI rates may vary, generally the cost is 0.05% to 1% of your total loan amount. Be sure to factor this in so you can budget appropriately for your potential monthly mortgage payment.

    You can work directly with one of our Chartway Mortgage Loan Officers to identify the best loan option for you.
  • Closing costs
    In addition to the costs listed above, closing costs are the fees you’ll incur to process and close your mortgage loan.

    The closing costs of buying a home in Texas are the various fees you have to pay upon closing the deal on a house once your offer is accepted. Everything from escrow deposits to appraisal, survey, credit report, survey, and HOA fees can fall under this category. These costs may also include items such as a home appraisal, inspection, title fees, and attorney fees.

    Ask for an itemized estimate from your mortgage loan officer, so that you’re prepared for these additional expenses when it comes time to sign the paperwork and purchase your new home.
  • Earnest Money Deposit
    So, you’ve done your research. Fast forward to selecting a real estate agent to work with. Next, you’ve searched online and viewed homes in person.

    You’re now at the point in your home buying journey that you’ve found the home you want to buy.

    In addition to writing a contract for the actual purchase, you’ll need to provide an earnest money deposit to the current owners. But what’s an earnest money deposit? It’s the amount you may be required to put down as a deposit that will show the sellers that you’re serious about buying the home. In some instances, if the contract is broken, the seller has the right to keep your deposit amount — so be sure you read and understand the fine print.

    While the amount you put down is flexible, the standard is at least $1,000, and up to 2-3% of the contract purchase price.

This can all sound like a lot, and you may be wondering if home ownership is within reach right now with all of your family’s other expenses. Not to worry. Texas offers a few options to home buyers for which you might qualify.

Here are a few grant and loan programs to research as you consider whether purchasing a home is the right step for you right now.

Texas First Time Home Buyer Programs and Grants

Created in 1994 at the Texas state legislature’s direction, the Texas State Affordable Housing Corporation (TSAHC) is an incorporated 501(c)(3) dedicated to providing affordable houses to Texans. TSAHC offers the following grants for Texans who are buying a house.

  • Homes for Texas Heroes Home Loan Program
    Texans belonging to the following professions qualify: corrections officers, EMS personnel, public school teachers, police officers, fire fighters, school librarians, veterans/active duty military, school nurses and counselors.

    Receive a 30-year fixed interest rate mortgage loan, as well as down payment assistance in the form of a grant that doesn’t need to be repaid. Find out more here.
  • Homes Sweet Texas Home Loan Program
    This grant is available to Texans with low or moderate incomes (limits vary by county). Also available as a 30-year fixed interest rate mortgage loan, down payment assistance is available up to 5% of the loan amount. Beneficiaries don’t have to be first-time home buyers.

    Learn about the range of rates and loan options here.

First-time home buyer programs offered by the Texas Department of Housing and Community Affairs, or TDCHA, offer assistance to qualified borrowers in the state. For the TDCHA to consider you a first-timer, you need to have not owned a house in the past three years as your primary residence.

  • My First Texas Home Loan
  • My Choice Texas Home
  • Texas Mortgage Credit Certificate

An important thing to keep in mind: the TDCHA doesn’t process or disburse loans. Rather, participating lenders handle them. This means rules and requirements about income and credit scores can vary.

Find out more about TDCHA first-time homebuyer initiatives here.

Are You Ready to Invest In Your Family’s Future?

When you’ve outgrown your current space or are only beginning to plan for a growing family, it’s only natural your thoughts would turn to home ownership. Providing a place for your children to grow, making memories under your own roof, and building equity are all things that can create a lasting, prosperous legacy for you and your family.

When you think about what the future holds, it’s hard to predict exactly what’s around the corner. However, you can do your best to prepare now, laying the groundwork to make it as happy and secure as possible.

Buying a home can seem daunting, but the first step is understanding what you need to do. We’re here to help! We’re happy to answer any questions you may have, even if you’re just starting to research–or even dream.

Learn more and start down the path to homeownership