Cost To Buy A House In Texas

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Thinking of buying a home in the Lone Star State? You’re not alone. The state is attracting plenty of new residents these days: In fact, it topped the list of moving giant U-Haul’s annual Growth Index in both 2021 and 2022 as the biggest destination for movers.

But before you jump to buy a new Texas home, it’s important to understand the many costs you’ll incur beyond just the price of the house. Read on to learn all about what it costs to buy a house in Texas.

How much does it cost to buy a house?

Buying a house requires shelling out for a number of related expenses, including your down payment, closing costs and moving costs. But the main expense, of course, is the price tag of the actual house. The median home price in Texas as of October 2023 was $342,400, according to Redfin data.

However, prices vary greatly depending on which part of the Texas housing market you’re looking in. For instance, the median price in Lubbock was just $245,000, while in buzzy Austin, it was a much higher $545,000.

How do these numbers translate into a monthly budget? Bankrate’s mortgage calculator can help you crunch the numbers: Let’s say you take out a 30-year mortgage for a median-priced $342,400 Texas home, with a 20 percent down payment. Assuming a 7.5 percent interest rate, your monthly principal and interest payments would come to $2,438.

Down payment

Conventional wisdom recommends that borrowers put down 20 percent on a home purchase. That figure may seem daunting, and with good reason — 20 percent of $342,400 is more than $68,000, a hefty amount to have to pay all at once.

But 20 percent is not mandatory, and there are plenty of loan options available if that kind of outlay is out of reach. In fact, if you qualify, a conventional loan can be had with as little as 3 percent down. However, if you put down less than 20 percent you’ll probably need to pay an additional monthly fee for private mortgage insurance, which will add to your overall homeownership costs.

Luckily, many down payment assistance programs are available to help borrowers afford the costs of buying a home. If you meet their eligibility criteria, you may be eligible for forgivable and low-interest loans or grants. And Texas has special assistance programs for first-time homebuyers, as well.

Closing costs

Closing costs in Texas typically add up to about 1.5 percent of the home’s sale price, according to data from CoreLogic’s ClosingCorp. For a $342,400 home, that comes to an additional $5,136.

However, buyers are not responsible for the full amount of closing costs. Most of what you’re on the hook for as a buyer consists of mortgage-related fees from the lender, as well as the cost of a home appraisal, which assesses the value of the house, and a home inspection, which checks for any safety issues or structural deficiencies. Be sure to have additional cash reserves remaining after covering these expenses, in case of…