How Much Down Payment Do You Need to Buy a House in Texas?

One of the biggest myths holding Texas renters back from homeownership is the belief that you need 20% down to buy a house. You don't. The national average down payment is around 13%, and first-time buyers average closer to 8%. In many cases — especially with Texas assistance programs layered in — buyers close with even less out of pocket. Here's the full picture.

The 20% Myth — and Why It Persists

The 20% idea comes from a real benefit: putting 20% down eliminates private mortgage insurance (PMI) on a conventional loan, which saves you money each month. But waiting to save 20% on a $395,000 Texas home means saving $79,000 — a goal that takes most households many years. Meanwhile, home prices continue to climb, effectively raising the target while you save. For most buyers, the math strongly favors buying sooner with less down and paying PMI than waiting years for the 20% threshold.

Minimum Down Payment by Loan Type

Here's what the major mortgage programs actually require in Texas:

• FHA Loan: 3.5% down with a 580+ credit score (10% down if your score is 500–579). FHA is the most common first-time buyer loan in Texas.
• Conventional Loan: As low as 3% for first-time buyers through programs like Fannie Mae's HomeReady; typically 5% for most other buyers. PMI applies until you reach 20% equity.
• VA Loan: 0% down for eligible veterans, active-duty service members, and surviving spouses. No PMI. One of the strongest loan products available.
• USDA Loan: 0% down for buyers purchasing in eligible rural and suburban areas of Texas. Many DFW-adjacent communities qualify — more than most people expect.

Real Dollar Examples on Texas Homes

Let's put those percentages into actual numbers at three common Texas price points:

Remember that down payment is just one piece. You'll also need to cover closing costs, which typically run 2–3% of the loan amount in Texas. Some sellers will contribute toward closing costs — that's always worth negotiating, especially in today's more balanced market.

What Putting 20% Down Actually Gets You

To be fair to the 20% camp: a larger down payment does have real benefits. You eliminate PMI (typically 0.5–1.5% of the loan amount annually on conventional loans). Your monthly payment is lower. You start with more equity — a buffer against market fluctuations. And in some competitive situations, a larger down payment can make your offer more attractive to sellers.

But none of those benefits are exclusive to 20%. Putting 10% down gets you much of the same protection. And for buyers with a VA entitlement, the 0% down path with no PMI is arguably the best deal in the entire mortgage industry.

Down Payment vs. Cash Reserves: Both Matter

Lenders don't just look at your down payment — they also look at what you have left over after closing, called reserves. Having two months of mortgage payments in the bank after closing demonstrates that you won't be immediately stressed if income dips. If your savings are just enough for the down payment with nothing left over, that can be a flag on the file. This is another reason DPA programs are valuable: if assistance covers part of your down payment, your own savings can stay in the bank as reserves.

Texas Down Payment Assistance Programs

Texas has two major statewide DPA programs that I work with regularly:

• TSAHC (Texas State Affordable Housing Corporation): Offers down payment grants of 3–5% that don't need to be repaid, paired with competitive mortgage rates. Income and purchase price limits apply, and both first-time and repeat buyers may qualify depending on the specific program.
• TDHCA (Texas Department of Housing and Community Affairs): Offers second-lien assistance (forgivable or repayable depending on the program) that can be stacked with FHA, conventional, VA, or USDA loans. Some programs target first-time buyers; others serve specific counties or income brackets.

The key advantage of DPA programs is that they can stack on top of your loan — meaning you might close on a Texas home using an FHA loan plus TSAHC assistance with very little of your own cash out of pocket. I help you navigate which programs you actually qualify for based on your income, county, and loan type. Learn more on my down payment assistance page.

Gift Funds: Using Family Help

If you have a parent, grandparent, or other family member willing to help with your down payment, gift funds are fully allowed under FHA and conventional guidelines — with proper documentation. The lender will require a signed gift letter stating the funds are a gift and not a loan that needs to be repaid. They'll also verify the transfer from the giver's account to yours. The documentation requirement is firm, but the process is straightforward when handled correctly.

VA loans also allow gift funds. USDA has its own gift fund rules — ask me about the specifics for your situation.

Strategies for Saving a Down Payment Faster

If you're still building your savings, a few targeted strategies work better than generic "spend less" advice. First, automate a fixed transfer to a dedicated savings account the day after each paycheck hits — paying yourself first removes the temptation to spend first. Second, if a tax refund or work bonus is coming, direct it entirely to your down payment fund. Third, explore whether a VA loan or USDA loan applies to your situation — 0% down changes the savings math entirely. Finally, talk to me early. I can tell you exactly what number you need to reach and help you get there in the most efficient path.