How to Buy a Home in Texas: The Complete 2026 Guide

Texas is one of the fastest-growing states in the country — and for good reason. With no state income tax, diverse cities, strong job markets, and a wide range of housing options from dense urban cores to wide-open ranch country, the Lone Star State continues to attract hundreds of thousands of new residents each year.

But the Texas housing market isn't one-size-fits-all. Buying a home in Austin looks nothing like buying in Amarillo, and buyers in Dallas-Fort Worth navigate a very different landscape than those searching in the Rio Grande Valley. This guide walks you through everything you need to know about buying a home in Texas in 2026 — including financial requirements, Texas-specific buyer programs, and the step-by-step process from first search to closing day.

The Texas Housing Market in 2026

After several years of rapid price appreciation, the Texas housing market has settled into a more balanced state in 2026. Here's what buyers are seeing across major markets:

• Austin/Central Texas – Prices softened from their 2022 peak and have since stabilized. The median home price in the Austin metro sits around $425,000–$475,000 in 2026. Inventory is improving, giving buyers more negotiating power than in recent years.
• Dallas-Fort Worth – One of the most active markets in the country, with a median home price of approximately $380,000–$430,000. DFW's job market and population growth continue to fuel demand.
• Houston – Texas's largest city offers more affordability than many comparable metros, with median prices around $300,000–$350,000. The market is highly segmented by neighborhood and school district.
• San Antonio – Among the most affordable major Texas cities, with median prices in the $270,000–$320,000 range. Strong military and healthcare employment base keeps demand steady.
• Smaller Markets – West Texas, the Panhandle, East Texas, and the Rio Grande Valley offer homes well under $250,000, making them among the most accessible markets in the state.

Mortgage rates in early 2026 are hovering in the 6–7% range, which has moderated buyer demand from the frenzy of 2021–2022 but has also created opportunities for buyers who are ready to move.

Step 1: Understand the Financial Requirements

Credit Score

For a conventional mortgage, most Texas lenders require a minimum credit score of 620, though you'll need 740 or higher to qualify for the most competitive rates. Government-backed loan options have more flexibility:

• FHA loans – 580+ credit score with 3.5% down; 500–579 with 10% down
• VA loans – No official minimum, but most lenders look for 620+
• USDA loans – Typically 640+; applies to eligible rural areas (many Texas counties qualify)

Down Payment

Texas buyers have several down payment options:

• 3% – Conventional loans via Fannie Mae HomeReady or Freddie Mac Home Possible
• 3.5% – FHA loans
• 0% – VA loans (eligible veterans/active military) and USDA loans (eligible rural areas)
• 20% – Conventional loans without private mortgage insurance (PMI)

On a $350,000 home, a 3% down payment is $10,500, and a 20% down payment is $70,000. Texas's down payment assistance programs (covered below) can help bridge the gap.

Closing Costs

Texas buyers typically pay 2%–4% of the loan amount in closing costs. On a $350,000 purchase, expect to budget $7,000–$14,000 in addition to your down payment. Key costs include:

• Origination fees – Charged by your lender for processing the loan (typically 0.5%–1%)
• Appraisal fee – $400–$600
• Title insurance – Required by lenders; owner's policy also strongly recommended
• Homeowner's insurance – First year's premium often prepaid at closing
• Property tax escrow – Texas has no state income tax but relatively high property taxes (1.5%–3% annually, depending on county and city). Lenders typically require 2–3 months of property taxes to be escrowed at closing.
• Survey fee – Texas requires a current survey in most transactions; budget $400–$900

Step 2: Explore Texas First-Time Buyer Programs

Texas has robust assistance programs for qualified buyers. Here are the most important ones in 2026:

TSAHC — Texas State Affordable Housing Corporation

TSAHC offers one of the most popular homebuyer assistance programs in Texas, available to both first-time and repeat buyers in target areas, as well as specific professions (teachers, law enforcement, firefighters, veterans, and healthcare workers).

What TSAHC offers:

• Down payment assistance of 3%–5% of the loan amount, provided as a grant (does not need to be repaid) or a second lien loan
• Fixed-rate 30-year mortgages (FHA, VA, USDA, or conventional)
• Available statewide

Income and purchase price limits apply — they vary by county and loan type. Visit tsahc.org to check eligibility and find a participating lender.

TDHCA — Texas Department of Housing & Community Affairs

TDHCA administers the My First Texas Home and My Choice Texas Home programs:

• My First Texas Home – Available exclusively to first-time buyers (or those who haven't owned a home in the past 3 years). Offers below-market mortgage rates plus up to 5% of the loan amount in down payment and closing cost assistance.
• My Choice Texas Home – Available to both first-time and repeat buyers, with similar benefits.
• Both programs work with FHA, VA, USDA, and conventional loans.
• Buyers must complete an approved homebuyer education course.

Income and purchase price limits apply. Visit tdhca.state.tx.us for current program details and to find a participating lender.

Local Assistance Programs

Many Texas cities and counties offer additional assistance:

• City of Houston – The Harvey Homebuyer Assistance Program and other local initiatives provide forgivable loans to qualifying buyers.
• Dallas – The Homebuyer Assistance Program offers up to $60,000 in deferred loans for qualified buyers.
• Austin – The Down Payment Assistance Program (DPAP) serves qualifying buyers in the City of Austin limits.
• San Antonio – The Homeownership Incentive Program (HIP) provides up to $30,000 in assistance.

Contact your city or county housing department to learn what's available in your specific market.

Step 3: Get Pre-Approved for a Mortgage

In Texas's competitive markets, sellers expect buyers to arrive with a pre-approval letter — not just a pre-qualification. Pre-approval means a lender has verified your income, assets, and credit and has conditionally agreed to lend you a specific amount.

To get pre-approved, gather:

• W-2s and tax returns from the past two years
• Recent pay stubs (last 30 days)
• Bank statements (last 2–3 months)
• Investment/retirement account statements
• A complete list of monthly debts

Shop multiple lenders — aim for at least three. Comparing loan estimates can reveal meaningful differences in rates and fees. In a rising rate environment, even a quarter-point difference in your interest rate translates to thousands of dollars over the life of your loan.

If you're planning to use a TSAHC or TDHCA program, you'll need to apply through a participating lender in that program.

Step 4: Find a Texas Real Estate Agent

Texas is a buyer-agent state where the seller traditionally pays the buyer's agent commission — though the real estate compensation landscape has evolved following the 2024 NAR settlement. You should always sign a buyer representation agreement before working with an agent, and understand how your agent is compensated.

Look for an agent who:

• Is licensed by the Texas Real Estate Commission (TREC)
• Has experience in your target neighborhood or city
• Knows the local price trends, school districts, and flood zone landscape
• Has a track record of successfully closing transactions

Ask specifically about flood zone experience if buying in Houston or coastal areas — this is critical and can significantly affect insurance costs and property values.

Step 5: Start Your Home Search — Texas-Specific Factors to Know

Property Taxes

Texas has no state income tax, but funds public services through property taxes — some of the highest in the nation. Tax rates vary significantly by county, city, and school district. In the DFW metro, effective tax rates of 2%–2.5% are common; on a $400,000 home, that's $8,000–$10,000 per year in property taxes. Always verify the current tax bill and understand how the assessed value may change after purchase.

Homestead Exemption – Once you close on your primary residence in Texas, file for the homestead exemption as soon as possible. It reduces the taxable value of your home by $100,000 for school district taxes (as of 2023 legislation), saving most homeowners $1,000–$1,500+ per year.

Flood Zones

Texas experiences significant flooding — from coastal storm surges to inland flash floods. Before making an offer, check FEMA flood maps (msc.fema.gov) and ask your agent and insurance professional about flood insurance requirements. Even homes outside of high-risk zones can flood, as countless Texas homeowners have learned.

4-Point Inspections

Many Texas insurance companies require a 4-point inspection for older homes (generally pre-1990), covering four systems: roof, electrical, HVAC, and plumbing. This can affect your ability to insure the home — and your insurance premiums.

Texas Disclosure Rules

Texas uses a Seller's Disclosure Notice that requires sellers to disclose known defects and material facts about the property. Review this document carefully with your real estate agent and attorney.

Step 6: Make an Offer

When you find the right home, your agent will help you prepare a competitive offer using the Texas Real Estate Commission (TREC) residential purchase contract — the standard form used across the state.

Key offer terms:

• Purchase price – Based on comparable sales and current market conditions
• Earnest money – Typically 1%–2% of the purchase price in Texas. This is held in escrow and applied to your closing costs.
• Option fee – Texas uses an "option period" system. By paying an option fee (typically $100–$500+), you get an unrestricted right to terminate the contract within a negotiated window (usually 5–10 days) — giving you time for inspections without risking your earnest money.
• Contingencies – Financing and appraisal contingencies protect you if the loan doesn't come through or the home appraises below the purchase price.
• Closing date – Typically 30–45 days after the executed contract.

Step 7: Due Diligence — Inspections and Appraisal

During the option period, schedule a general home inspection immediately. Consider additional specialized inspections based on the home's age and condition:

• Foundation inspection (critical in Texas, where clay soil causes significant foundation movement)
• Roof inspection
• HVAC inspection
• Pest/termite inspection
• Pool/spa inspection (if applicable)
• Sewer scope (for older homes)

Your lender will also order an appraisal — an independent assessment of the home's market value. If the appraisal comes in below the purchase price, you can negotiate with the seller, pay the difference in cash, or exit the contract if you have an appraisal contingency.

Step 8: Close on Your Texas Home

Texas closings typically take place at a title company (not an attorney's office, as in some other states). The title company handles the escrow, title search, and closing paperwork.

Before closing day, you'll receive a Closing Disclosure at least three business days prior — review it carefully and compare it to your Loan Estimate to catch any unexpected fees.

On closing day, you'll:

1. Conduct a final walkthrough of the property
2. Sign all loan documents and transfer paperwork
3. Pay closing costs via wire transfer or cashier's check
4. Receive the keys

In Texas, the deed is typically recorded within 1–2 business days of closing, at which point the home is officially yours.

The Homestead Exemption: Don't Forget This Step

After closing, file your Texas Homestead Exemption with your county appraisal district. This reduces your taxable home value by $100,000 for school district purposes and provides additional protections including a cap on how much your assessed value can increase per year. The exemption is not automatic — you must apply, and you can file any time during the year you take ownership.

The Bottom Line: Buying a Home in Texas in 2026

Texas remains one of the best states in the country to buy a home — no state income tax, strong job markets, and a wide variety of communities and price points make it attractive for buyers at every stage of life. The key is going in prepared: understand your local market, explore state and local assistance programs, and build a team (lender, agent, title company) that knows the Texas landscape.

With interest rates stabilizing and inventory improving in many Texas markets, 2026 is shaping up to be a strong year for buyers who are ready to move forward.