Home Buying Frequently Asked Questions

1. How much house can I afford?

Most lenders recommend:

• Total housing payment: 28–31% of gross monthly income
• Total debt payments: under 43–45% of income

A lender reviews your income, debt, credit score, and down payment to determine your price range.

2. What credit score do I need to buy a home?

• Conventional loan: usually 620+
• FHA loan: sometimes as low as 580
• VA loan: many lenders prefer 620+

Higher credit scores typically mean better interest rates.

3. How much do I need for a down payment?

• Conventional: 3–20%
• FHA: 3.5%
• VA: often 0% for eligible veterans

Many first-time buyers put less than 10% down.

4. What are closing costs?

Closing costs are fees paid at the end of the transaction for things like:

• Loan origination
• Title insurance
• Appraisal
• Escrow fees

Typically 2–5% of the purchase price.

5. Should I get pre-approved before looking at homes?

Yes. A pre-approval shows sellers you’re financially qualified and tells you your realistic price range before house hunting.

6. What is the difference between pre-qualification and pre-approval?

• Pre-qualification: Quick estimate based on self-reported information
• Pre-approval: Lender verifies financial documents and credit

Pre-approval is stronger when making offers.

7. How long does it take to buy a home?

From contract to closing usually takes 30–45 days, though the search process may take longer depending on inventory and buyer preferences.

8. How much earnest money do I need?

Earnest money shows the seller you’re serious about buying.

• Typically 1–3% of the purchase price
• Applied toward your closing costs

9. What happens during a home inspection?

A licensed inspector evaluates the home’s condition including:

• Roof
• HVAC
• Plumbing
• Electrical
• Foundation

The report helps buyers decide if repairs should be requested.

10. Can I negotiate the price of a home?

Yes. Buyers can negotiate:

• Price
• Closing costs
• Repairs
• Appliances

Your offer strategy depends on market conditions and competition.

11. What happens if the home doesn’t appraise for the purchase price?

• Buyer and seller may renegotiate
• Buyer may pay the difference
• Seller may reduce the price
• The contract may be terminated depending on contingencies

12. How much are property taxes in Texas?

Texas property taxes typically range 1.8%–2.5% of the home’s value annually depending on county and school district.

13. What is escrow?

Escrow is a neutral account where funds and documents are held during the transaction until all conditions of the contract are met.

14. What should I avoid doing before closing?

Buyers should not:

• Open new credit accounts
• Make large purchases (cars, furniture)
• Change jobs
• Miss bill payments

These actions can affect loan approval.

15. What is title insurance?

Title insurance protects buyers and lenders against ownership disputes or hidden claims on the property.

16. How much are monthly mortgage payments?

Monthly payments usually include:

• Principal
• Interest
• Property taxes
• Homeowners insurance

This is often called PITI.

17. What is homeowners insurance?

Homeowners insurance protects against damage or loss caused by events like fire, storms, or theft and is required by lenders.

18. Should I buy now or wait?

The best time to buy depends on your financial readiness, long-term plans, and market conditions. Waiting for the “perfect market” can mean missing opportunities to build equity.

19. What first steps should I take when buying a home?

• Check your credit score
• Speak with a lender for pre-approval
• Determine your budget
• Work with a trusted real estate agent
• Start viewing homes

20. How do I choose the right real estate agent?

Look for an agent who:

• Understands the local market
• Communicates clearly
• Negotiates well
• Has strong client reviews
• Guides you through the entire process