Let's clear something up that's keeping a lot of people stuck renting: you do not need 20% down to buy a house in Texas. That myth — about $70,000 on a $350,000 home — has scared more people out of homeownership than almost anything else. And it's just not true.

Here's every real dollar it actually takes to buy a home in Texas, using a $350,000 home as our example — plus how to need even less.

1. The Down Payment (and the 20% Myth)

Here's what you can actually put down:

• Conventional loan: as low as 3% (~$10,500 on a $350K home)

• FHA loan (popular for first-time buyers): 3.5% (~$12,250)

• VA & USDA loans: 0% down for eligible veterans and rural-area buyers

That's a completely different conversation than $70,000.

2. Earnest Money

A deposit (often ~1% in Texas, ~$3,500 on our example) you put down when you go under contract to show you're serious. It goes to the title company — and it's credited back to you at closing. You need it ready up front, but you're not losing it.

3. The Texas Option Fee

A Texas-specific perk: for a small fee (usually a few hundred dollars), you get an option period — a set number of days to inspect the home and walk away (with your earnest money back) if you don't like what you find. And like earnest money, the option fee is credited back to you at closing. A little money up front for a lot of protection.

4. Inspection & Appraisal

The two costs you actually spend out of pocket — usually before closing:

• Home inspection: ~$400–600 (do not skip this)

• Appraisal (required by your lender): ~$500–700

Budget roughly $1,000–1,200 up front. It's the cheapest insurance you'll buy on the biggest purchase of your life.

5. Closing Costs

Typically 2–5% of the price — lender/origination fees, title work, recording fees, and smaller line items. On a $350K home, roughly $7,000–$14,000 depending on your loan and lender. Good news: many are negotiable, and the seller or lender can often help cover them.

6. Prepaids & Escrow (the Texas Surprise)

The one that catches everyone off guard. Your lender collects money up front to set up your escrow account — the account that pays your property taxes and homeowners insurance. Both are high in Texas, so the amount collected up front is bigger here. It's not a fee — it's your own money going into your own account — but you need it ready at closing. (See our [Texas Property Taxes] and [Texas Home Insurance] videos.)

7. Reserves & Moving Money

Lenders often want to see a few months of payments in the bank after closing, and you'll need moving costs, utility deposits, and setup money. Don't drain every dollar into the purchase.

The Real Number

Add it up — on a $350,000 home with an FHA loan (down payment + closing costs + prepaids + inspection/appraisal) — and you're realistically looking at roughly $20,000–$30,000 to get in. A chunk of money, sure, but a world away from the $70,000+ the 20% myth had you believing.

How to Need Even Less

• Down payment assistance: Texas programs through TDHCA (My First Texas Home, My Choice Texas Home) and TSAHC (Home Sweet Texas, Homes for Texas Heroes) can cover thousands toward your down payment and closing costs — sometimes as a grant or forgivable second loan. Special programs exist for first-time buyers and for teachers, police, firefighters, nurses, and veterans. (Confirm current terms at tdhca.texas.gov and tsahc.org.)

• Zero-down loans: VA (veterans) and USDA (many areas just outside the city).

• Seller concessions & lender credits: In today's market it's common to negotiate the seller covering part of your closing costs.

The Bottom Line

Buying in Texas almost certainly costs less up front than you've been told. Bust the 20% myth, plan for the real pieces, and tap the programs built to help you — and homeownership gets a lot closer.

(I'm a Realtor, not a lender — your exact numbers depend on your loan, credit, and situation. The best move is a personalized Loan Estimate from a good local lender.)

Thinking About Buying in DFW? Let's Run Your Real Numbers

If you're even thinking about buying here, reach out. I'll walk you through your real numbers, point you to the right assistance programs, and connect you with a lender I trust — no pressure and free.

🏡 Free buyer game plan: 817-856-0599 📅 Book a call: https://bit.ly/44wojfM 🌐 HomeforSaleDFW.com ▶️ Watch the full video: https://youtu.be/aBKfClKTe68

Mark Hewitt leads Hewitt Group, a North Texas real estate team that has helped families buy and sell across the Dallas–Fort Worth area.

Hewitt Group, a team at Real Broker, LLC. TREC #0640931.

Disclaimer: This article is general information only and is not lending, financial, or legal advice. Figures are typical ranges that vary by loan, lender, credit, and location, and change over time. Confirm specifics with a licensed lender and the assistance-program agencies.

FAQ

How much money do you need to buy a house in Texas? Less than most people think. On a $350,000 home, you don't need 20% ($70,000). With a low-down-payment loan, realistic total cash to close — down payment, closing costs, prepaids/escrow, and inspection/appraisal — is roughly $20,000–$30,000, and down payment assistance or seller concessions can lower that further. Your exact number depends on your loan, credit, and the home.

Do you really need 20% down to buy a house in Texas? No. Conventional loans can go as low as 3% down, FHA is 3.5%, and VA and USDA loans can be 0% down for eligible buyers. The 20% figure is a common myth; it's not required to buy, though putting less down may mean mortgage insurance.

What is the option fee in Texas? The option fee is a small payment (often a few hundred dollars) that buys you an "option period" — a set number of days to inspect the home and terminate the contract if you choose, while getting your earnest money back. Under current TREC rules, the option fee is credited back to you at closing.

Is earnest money refundable in Texas? Earnest money is generally refundable if you terminate during the option period, and it's credited toward your purchase at closing if you proceed. Outside the option period, whether it's refundable depends on the contract's contingencies (such as financing or title).

What are closing costs for a buyer in Texas? Buyer closing costs typically run about 2–5% of the purchase price and include lender/origination fees, title work, recording fees, and prepaids/escrow for property taxes and insurance. On a $350,000 home that's roughly $7,000–$17,500, though sellers and lenders can often cover part of it.

Are there down payment assistance programs in Texas? Yes. Statewide programs through TDHCA (My First Texas Home, My Choice Texas Home) and TSAHC (Home Sweet Texas, Homes for Texas Heroes) offer down payment and closing-cost help — often 2–5% — as grants or second loans, with special options for first-time buyers and public-service workers. Typical requirements include around a 620 credit score and a homebuyer education course; income limits vary by county.