Buying Your First Home: Where to Start

1. Get clear on a comfortable monthly payment

Most people start by asking how much house they can afford. A better first question is what monthly payment feels comfortable. Your payment usually includes more than principal and interest. It can also include property taxes, homeowner's insurance, mortgage insurance on some loans, and HOA dues. In Texas, property taxes can be a meaningful part of the payment, so it helps to factor them in early.

2. Check your credit

You can review your credit reports for free at AnnualCreditReport.com. Look for errors, and keep paying every bill on time. If your credit needs work, that is okay. A loan officer can help you understand what matters most and how to prepare.

3. Plan your savings

You will want funds for three things: your down payment, your closing costs, and a cushion of savings for after you move in. How much you need for a down payment depends on the loan type. Some programs allow a smaller down payment than many first-time buyers expect, and down payment or closing cost assistance programs may be available in Texas.

4. Talk with a loan officer and get preapproved

A conversation with a loan officer helps you understand your options and set a realistic price range. A preapproval goes a step further: your credit is reviewed and your income and assets are verified. Many sellers and agents expect to see a preapproval letter with an offer. Learn the difference between prequalification and preapproval.

5. Choose a real estate agent

A good agent helps you find homes, understand the local market, and negotiate your offer. Your agent and your loan officer will work together throughout the process.

6. Make an offer

When you find the right home, your agent helps you write an offer. Texas purchase contracts commonly include an option period, a short window, for an option fee, when you can schedule inspections and decide whether to move forward.

7. Inspection, appraisal, underwriting, and closing

After your offer is accepted, you complete your full application, the home is appraised, title work begins, and underwriting reviews your file. You will review your Closing Disclosure before closing day, sign your documents, and get your keys.

This article is general information, not financial or legal advice, and is not a commitment to lend. Loan programs, requirements, and costs vary. Talk with us about your specific situation.