How Much Downpayment Do I Need in Austin to Buy a House?

Today I want to share with you the answer to the most common I get from home buyers, especially first-time homebuyers. I really feel bad for so many buyers I encounter who don’t know the right answer to this question because the answer brings so much hope and helps people own their own home much sooner than they thought possible.

That question is: “How much downpayment do I need to buy a house?” I’ve had many potential home buyers ask me this question and most have the perception that they need 20% down to purchase a home! That might have been true 30 years ago, but today they are many mortgage options for buyers to purchase a home with much less of a downpayment. The most common options include:

  • 0% downpayment with a USDA loan. Only certain areas qualify for a USDA loan and this loan requires a slightly better debt-to-income ratio that other loans, but it is a great option for someone who has no money for a downpayment
  • 3.5% downpayment with a FHA loan. This loan is probably the most common loan first-time home buyers use and has some of the lowest requirements to qualify.
  • 5% downpayment with a Conventional loan. Conventional loans require a higher credit score but can provide a lower monthly payment amount for buyers because it has a lower cost for mortgage insurance. There are conventional loan programs for 10% or 20% down as well that might have better terms and some lenders even offer a conventional loan with only 3% down.

Those are the three most basic types of loans, but the most important thing to know is that there are many ways you can purchase a home with a relatively small downpayment.

If you are considering a move in the Austin area, contact me because I help people like you move smart.

Texas Down Payment Assistance Program

Texas HOMEbuyer Assistance Program

Receive up to $20,000 in Down-Payment Assistance when you buy a home in the Greater Austin area, but outside Austin city limits!

The Texas HOMEbuyer Assistance Program is a new program funded through the U.S. Department of Housing and Urban Development and offers Texans up to $20,000 in down payment and closing cost assistance! This is a great resource for low- to moderate-income households who want to buy a home and applicants do not have to be first time homebuyers. The program offers a 0% interest forgivable loan of up to $20,000, and does not require repayment if the buyer remains in the home throughout the term of the assistance (5-10 years). This assistance is offered to homebuyers in the counties of Bastrop, Blanco, Burnet, Caldwell, Hays, Travis (outside of Austin city limits only) and Williamson Counties.

Here is a summary of some of the requirements for this program:

Household Requirements:

  • Household must complete an eligible homebuyer education course
  • Homebuyer my occupy the home as his principle place of residence for the entire loan term
  • Household’s mortgage payment must be at least 25% of total household income
  • Household’s mortgage payment and monthly debt must be no more than 45% of total household income

Property Requirements:

  • Property must be a single family home, condo or new manufacture home
  • Property must be environmentally cleared by the TDHCA
  • Property value may not exceed 95% of the applicable FHA Mortgage limit

Lending Requirements:

  • Loan must have a fixed interest rate; no ARMs
  • No subprime loan products
  • The loan-to-value ratio must be at or below 100%

This is not an exclusive list of requirement for this program but will give you a good idea of whether or not you will likely qualify. If you have any questions, please give us a call or contact your lender. If you interested in buying a home and have questions about this program, how to buy or sell your home or other financing questions, PLEASE give us a call at 512-636-9707!

Kyle Pfaffe, REALTOR